State Bank Of India vs Ms Deccan Florabase Limited
- CitationCompany Appeal (AT) (Insolvency) No. 1310 of 2022
Ratio decidendi
The rule this decision rests on
Where a financial creditor has declared the corporate debtor's account an NPA and has already initiated proceedings under the SARFAESI Act against it, it is aware of the default and could have initiated action under Section 7 of the Insolvency and Bankruptcy Code, so that its failure to do so within limitation is not excused by the fact that the lending bank was later amalgamated with another bank under a Central Government scheme.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
State Bank of India ...Appellant
Versus
Deccan Florabase Ltd. ...Respondent
Present: For Appellant: Mr. Azeem and Ms. Ishani, Advocates. For Respondent:
ORDER
07.11.2022: This Appeal has been filed against the order dated
10.08.2022 passed by the Adjudicating Authority rejecting I.A. No. 679 of
2021 in C.P./IB/3408/MB/2019. The Appellant filed an application for
condonation of delay of 1150 days under Section 5 of the Limitation Act. The
account of the Corporate Debtor was declared NPA on 28.02.2013. The
financial facility was extended by the State Bank of Patiala and after account
of Corporate Debtor having been declared NPA, proceedings under SARFAESI
Act, 2002 was initiated by filing an OA on 05.11.2014. The proceedings under
SARFAESI are still pending. Under the scheme of the Central Government
the State Bank of Patiala was amalgamated with State Bank of India vide
Gazette Notification dated 22.02.2017. Thereafter, on 20.09.2019 Section 7
application has been filed by the State Bank of India, the Appellant before us.
An application for condonation of delay under Section 5 of Limitation Act was
filed. The Adjudicating Authority has rejected the Section 5 application
holding that there is no sufficient cause for condoning delay of 1150 days.
Cont'd.../ 2
2. Learned counsel for the Appellant submits that in the process of
amalgamation about two years' time was taken and after process was
complete, the State Bank of India came to know about the NPA, hence
application was filed.
3. We have considered submissions of learned counsel for the Appellant
and perused the record.
4. The State Bank of Patiala after declaration of account of Corporate
Debtor as NPA has already initiated proceedings under SARFAESI Act, 2002,
hence, the Financial Creditor was well aware of the default and could have
initiated action under Section 7 of the Code against the Corporate Debtor.
The mere fact that the State Bank of Patiala was amalgamated with the State
Bank of India by notification of the Central Government issued in the year
2017 i.e 22.02.2017, the filing of application under Section 7 by the Appellant
on 20.09.2019 cannot give any sufficient cause for condonation of delay under
Section 5 of the Limitation Act. We are of the view that the Adjudicating
Authority has rightly rejected the Section 5 application filed by the Appellant
by order dated 10.08.2022, which order does not warrant any interference in
exercise of our appellate jurisdiction. Appeal is dismissed.
[Justice Ashok Bhushan] Chairperson
[Barun Mitra] Member (Technical) Archana/nn
Company Appeal (AT) (Insolvency) No. 1310 of 2022
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