Union Bank Of India Limited vs Supreme Manor Wada Bhiwandi ...

IN THE MATTER OF: Union Bank of India Ltd. ...Appellant

Versus Supreme Manor Wada ...Respondent Bhiwandi Infrastructure Pvt. Ltd.

Present: For Appellant: Mr. J Rajesh, Mr. Dhrupad Vaghani, Ms. Ananyaa Mazumdar, Mr. Arpan Bahl, Mr. Jaitegan Khurana, Mr. Yashwardhan Agarwal, Advocates For Respondents: Mr. Abhijeet Sinha, Mr. Aman Varma, Mr. Saikat Sarkar, Advocates

ORDER

(Virtual Mode) 11.07.2022: This appeal is against the order dated 11.08.2020 passed

by the Adjudicating Authority (National Company Law Tribunal, Mumbai

Bench), by which an application filed by the Appellant under Section 7 of

the Insolvency and Bankruptcy Code, 2016 (in short 'Code') read with Rule

4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority)

Rules, 2016 (in short 'Rules'), alleging that the Corporate Debtor has

defaulted in making payment to the extent of Rs. 165,19,44,297/-, has been

dismissed, solely on the ground that the Application filed under Section 7 of

the Code, on the basis of the Reserve Bank of India (RBI) Circular dated

12.02.2018, which has since been set aside as ultra-virus of the provisions

of the Banking Regulation Act by the Hon'ble Supreme Court in the case of

Dharani Sugars & Chemicals Ltd vs Union of India & Ors. (2019) 5 SCC

480. Shorn of the unnecessary details, Counsel for the Appellant has

submitted that the application filed under Section 7 of the Code was not

based upon the RBI Circular dated 12.02.2018 because it does not apply to

the facts of the present case. It is submitted that as per the timelines

provided for large accounts to be referred under the IBC, the aggregate

exposure of the lenders has to be Rs. 20 billion and above, on or after March

1,2018. It is submitted that since the exposure of the lenders is not Rs. 20

billion and above on the date mentioned hereinabove, therefore, the RBI

Circular dated 12.02.2018 does not apply. He has further submitted that

this issue had earlier been raked up in the matter of CA (AT) (Ins) No. 260 of

2020, which was answered in favour of Applicant/Appellant vide order

dated 07.09.2020 by three Members Bench of this Appellate Tribunal that

the RBI Circular would apply to an amount of Rs. 2000 Crores and above

and not below the same.

Counsel for the Respondent has been fair enough to concede that for

the time being the aforesaid decision dated 07.09.2020, in the matter of

Punjab National Bank Vs. Mittal Corp Limited, is prevailing and there is no

other decision in his favour to the contrary.

Since, the application filed under Section 7 of the Code by the present

Applicant/Appellant was dismissed solely on the ground that it was based

upon the RBI Circular dated 12.02.2018 which has been set aside as non-

est by the Hon'ble Supreme Court in the case of Dharani Sugars And

Chemicals Ltd (Supra), but in view of the decision of this Appellate Tribunal

in Punjab National Bank (Supra) the RBI Circular is not applicable to the

facts of the present case, therefore, the decision rendered by the Adjudicating Authority is patently erroneous and illegal and the same is,

thus, hereby set aside and the matter is remanded back to the Adjudicating

Authority to consider the application filed under Section 7 of the Code and

decide the same in accordance with law. Since, we have not touched the

merits of the case, therefore, both the parties may raise all the issues

available to them before the Adjudicating Authority pertaining to the merits

of this case and the Adjudicating Authority shall make all endeavours to

decide the lis between the parties as early as possible but not beyond the

period of three months from the date of appearance of the parties before it.

The parties are directed to appear before the Adjudicating Authority

on 22nd July, 2022.

The Registry is directed to send a copy of this order to the concerned

Adjudicating Authority forthwith.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Dr. Alok Srivastava] Member (Technical)

Sheetal/rr