Rajradhe Finance Limited vs Decolight Ceramics Limited

Raj Radhe Finance Ltd. ...Appellant(s)

Versus

Decolight Ceramics Ltd. ...Respondent(s)

Present:

For Appellant : Mr. Karan Valecha, Mr. Jaimin R. Dave, Advocates.

For Respondents : Mr. Manan Shishodia, Advocate.

ORDER

(Hybrid Mode)

05.08.2025: This appeal is filed against an impugned order dated

09.07.2024 passed by the Ld. NCLT, Ahmedabad. Before we proceed to the

impugned order, it would be appropriate to state the brief facts as under:

(a) admittedly on 24.11.2004 a loan of Rs. 27,35,00,000/- was given by the Bank of India to the Respondent herein;

(b) various documents were executed between the period 25.11.2004 to 30.12.2010;

(c) on 18.01.2013, a limit of loan was reduced to Rs. 33.81 crores. However, the account of the corporate debtor was classified as Non- Performing Asset (NPA) on 30.09.2013;

(d) on 04.02.2014, the Bank of India issued notice under Section 13(2) of the SARFAESI Act to the appellant herein for repayment of Rs. 36,81,86,806/- . The said notice was challenged by the corporate debtor before the Ld. DRT- II, Ahmedabad and it was quashed/set aside;

(e) on 23.05.2015, the Bank of India issued another notice under Section 13(2) of the Act for repayment of Rs. 44,39,71,966/-;

(f) on 14.07.2015, the Bank of India had also filed an Original Application bearing no. 425 of 2015 under Section 19 of the Recovery of Debt and Bankruptcy Act, 1993 before the Ld. DRT;

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(g) acknowledgment of debt was made by the Respondent company herein on 11.03.2015, 17.02.2017; 05.04.2021 and 07.04.2023. On 23.09.2022 the last payment of Rs. 25,00,000/- was made by the Respondent company herein hence the petition being filed within limitation.

2. It is the submission of the Learned Counsel for the appellant on

30.01.2019 an OTS scheme was offered to the Respondent herein but it did

not went through. On 27.10.2020, the Bank of India had assigned debt to the

financial creditor viz. appellant herein. The necessary assignment deed was

also executed and even the charge was modified in the name of the financial

creditor on 06.01.2021.

3. Admittedly, as on 30.01.2024 the outstanding amount against the

Respondent was Rs. 38,35,55,949.14/-. Form D was issued by NeSL

reflecting the date of default as 30.06.2013. The said Form D is dated

14.03.2024.

4. It is the submission of the Learned Counsel for the appellant on

08.06.2024, the Respondent company had admitted the dues of an amount

of Rs. 38,35,55,949.14/- in its reply to the petition and it had no objection in

case petition for CIRP was admitted.

5. We have also perused the impugned order, the analysis given is as

under:

"13. The present petition is filed on 27.03.2024. The date of default recorded in Form D - record of default issued by the NESL is 30.06.2013, though, as per the ledger statement annexed by the applicant, the last payment was made by the corporate debtor on 23.09.2022. Therefore, it appears that the date of default is contradictory. Even, the statement of the applicant that various attempts were made to recover the amount from the corporate debtor appears to be misleading, as no communication in this regard has been produced on record.

-3- 14. Further, it is observed that the applicant has brought this insolvency application after taking over the debt from Bank of India, even though, the applicant had not specified the dates for repayment of the assigned debt culminating to a default, the Corporate Debtor (by signature of one of the directors) has acknowledged the amount due to be paid and as such, the admission amounts to a default which actually is the debt due and payable on 30 June 2013 (as per Form D). There also appears to be parallel proceedings before DRT. No bank statement of proof of repayment has been submitted by the applicant after acquiring the debt. Prima facie this appears to be a recovery effort made by the applicant of a past debt acquired for which proper arrangements have not been made to make a fresh schedule of payment. In the absence of the same, the debt (which was already overdue) crosses through the limitation process not by establishment of fresh date of default but by the covert measures adopted for a recovery mechanism.

15. Moreover, the respondent has submitted by its reply that it has no objection if the matter is admitted for CIRP against itself. Be that as it may, the respondent - corporate debtor was always at liberty to initiate CIRP proceedings against itself as per Section 10 of the IBC, 2016.

16. As per the requirements of Section 7 of IBC, once, the Tribunal is satisfied as to the existence of default and that the petition is complete, the petition can be admitted. However, the present petition is incomplete, insofar as the requirement of regulation 2A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 is not complied. Since, the Financial Creditor has mentioned N.A. in the relevant column of Part V of Form-1 and annexed ledger statement only. Therefore, the petition is liable to be rejected on this ground also."

6. It is the submission of the Learned Counsel for the appellant despite no

objection given by the Respondent company for initiation of the CIRP yet its

petition was dismissed for non compliance of provisions of Section 2A of the

Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for

Corporate Persons) Regulations, 2016 and without giving any opportunity to -4-

the appellant to comply with such provisions/formalities and if time was

given, the appellant would have complied with all such

requirements/formalities, if any.

7. In any case, since the Ld. NCLT was of the view the compliances as were

required and noted in the para 16 of its impugned order were not made,

hence, it would be appropriate if the impugned order is set aside and the

matter is remanded to the Ld. NCLT for giving an opportunity to the appellant

to comply with the requirements per para 16 of the impugned order.

Accordingly, the observation of the Ld. NCLT qua an advice to move under

Section 10 of the IBC is also set aside. The company petition bearing no.

CP(IB)148(AHM)2024 is, thus, restored at its original number and after

completion of compliances, the Ld. NCLT may take a fresh view of the matter

in accordance with law.

8. In view of the above, the appeal stands disposed of. Pending

application(s), if any, are also disposed of.

[Justice Yogesh Khanna] Member (Judicial)

[Mr. Indevar Pandey] Member (Technical)

R.N./Manu.