Rajen Amrit Lal Parikh vs Asset Reconstruction Company (India) ...

IN THE MATTER OF: Mr. Rajen Amrit Lal Parikh .....Appellant Vs. Asset Reconstruction Company (India) Ltd. & Anr. ......Respondents

Present : For Appellant: Mr. Ashish Kothari, Advocate

For Respondents: Mr. Dinkar Singh, Advocate

06.08.2019 - The Appellant - ' Mr. Rajen Amrit Lal Parikh', Director of 'GPT

Steel Industries Ltd.' ('Corporate Debtor') has preferred this appeal against the

order dated 2nd May, 2019 passed by the Adjudicating Authority ('National

Company Law Tribunal'), Ahmedabad Bench, Ahmedabad admitting application

u/s 7 of the Insolvency & Bankruptcy Code, 2016 ('I&B' Code, for short) preferred

by Asset Reconstruction Company (India) Ltd. ('Corporate Debtor').

2. Earlier, when the matter was taken up, learned counsel appearing on

behalf of the Appellant submitted that the application u/s 7 of the 'I&B' Code is

barred by limitation and placed reliance in the decision of Hon'ble Supreme Court

in B.K. Educational Services Pvt. Ltd. vs. Parag Gupta & Associates (Civil Appeal

...contd.

2

No. 23988 of 2017).

It was further submitted that the Adjudicating Authority while admitting

the application under Section 7 has not appointed any 'Interim Resolution

Professional'. According to the learned counsel for the Appellant, the

application under Section 7 was not complete.

3. However, while discussing the matter on the issue of limitation, learned

counsel for the Appellant sought some time to settle the matter with the

Respondent - 'Financial Creditor'. The case was adjourned from time to time

but no settlement is reached and it is informed that the matter is pending

consideration.

We have heard learned counsel for the parties and perused the records.

4. For maintaining the application u/s 7 of the 'I&B' Code, Article 137 of Part

II of Third Schedule of the Limitation Act, 1963 is applicable which deals with

'Other applications' and reads as follows :

PART II - OTHER APPLICATIONS Description of application Period of Time for which period limitation being to run

137. Any other application Three years Where the right to apply accrues for which no period of

limitation is provided

elsewhere in this

division.

...contd.

3

5. As the present case has admittedly the right to apply accrued to the

Appellant ('Financial Creditor') since 1st December, 2016 i.e. the date when 'I&B'

Code came into force, we hold that the Application under Section 7 of the 'I&B'

Code is well within the time and maintainable.

6. So far as the claim of the Respondent is concerned, the Adjudicating

Authority noticed that the 'Corporate Debtor' admitted the debt, as reflected in

para 13 of Impugned Order as quoted below: -

(I) "Letter dated 01.12.2010 addressed to

consortium of banks proposing for one-time

settlement of loans availed from six banks;

(II) Letter dated 23rd October, 2012 addressed to

State Bank of India requesting the respondent

company to allow continuing operations and to

convert 75% of principal amount as

Redeemable Preference Shares;

(III) Letter dated 08.03.2013 addressed to State

Bank of India Proposing one-time settlement;

(IV) Letter dated 29.05.2015 addressed to

consortium of banks to review the status of one-

time settlement;

...contd.

4

(V) Letter dated 23.03.2016 addressed to the

applicant/ financial creditor putting forward a

one-time settlement proposal."

7. The 'Corporate Debtor' while borrowing the amount also mortgaged its

immovable property on 10th March, 2005. The corporate guarantee / personal

guarantee was also given by the 'Corporate Debtor' on 5th March, 2005.

8. From the aforesaid facts, it is clear that there is a continuous cause of

action. Further, we find that the 'Corporate Debtor' by its letter dated

23.06.2016 also requested the 'Financial Creditor' to accept one-time settlement.

Thus, we find that the claim of Respondent ('Financial Creditor') was not barred

by limitation. Further, there being mortgaged property the period of limitation

to enforce payment of money secured will be 12 years when money sued for

becomes due. For the reason aforesaid, we hold that the claim of 'Financial

Creditor' is not barred by limitation.

9. On the earlier occasion when we heard the matter, learned counsel for the

Appellant sought some time to settle the matter but it is informed that

negotiation is still going and is pending. However, on such ground, we are not

inclined to keep appeal pending in absence of any substance in the appeal.

....contd/ 5

10. In the facts and circumstances we are not inclined to interfere with the

Impugned Order dated 2nd May, 2019 passed by the Adjudicating Authority

('National Company Law Tribunal'), Ahmedabad Bench, Ahmedabad, allow the

Appellant to take benefit of Section 12A of the 'I&B' Code. Interim Order passed

on 2nd May, 2019 stands vacated.

The appeal stands disposed of with the aforesaid observations. No costs.

[Justice S. J. Mukhopadhaya] Chairperson

[Justice A. I. S. Cheema] Member (Judicial)

[Kanthi Narahari] Member (Technical)

ss/gc

Company Appeal (AT) (Insolvency)No. 604 of 2019