Axis Bank petitioned for CIRP against Khadkeshwar Hatcheries Limited for outstanding debt. The Tribunal admitted the petition, rejected limitation and Section 10A defenses, and appointed an Insolvency Professional.
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IN THE NATIONAL COMPANY LAW TRIBUNAL, COURT-III, MUMBAI BENCH
C.P.(IB) 387/MB/2022
Under Section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudication Authority) Rule 2016)
In the matter of Axis Bank Limited having its head office at “Sakar” Building Adalat Road, Near Kranti Chowk, Aurangabad 431001
……Financial Creditor/Petitioner V/s
M/s Khadkeshwar Hatcheries Limited having its registered office at Office no 106, Siddharth Arcade, Opp. MTDC Resort, Station Road, Aurangabad 431005.
.…..Corporate Debtor/Respondent
Order Reserved On: 15.05.2023 Order Pronounced On: 20.06.2023
Coram:
Hon’ble Shri H.V. Subba Rao, Member (Judicial) Hon’ble Smt. Madhu Sinha, Member (Technical)
Appearances (via video conferencing)
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For the Petitioner : Ms. Abha Patel i/b MDP and Partners, Advocate. For the Respondent : Mr. Annirudh Purusothaman, Advocate.
Per: Madhu Sinha, Member (Technical)
ORDER
The above Company Petition is filed by Axis bank Limited (hereinafter called as “ Petitioner/Financial Creditor ”) seeking to initiate Corporate Insolvency Resolution Process ( CIRP ) against M/s Khadkeshwar Hatcheries Limited (hereinafter called as “ Corporate Debtor ”) by invoking the provisions of Section 7 of Insolvency and Bankruptcy Code, 2016 (hereinafter called “ Code ” read with Rule 4 of Insolvency & Bankruptcy (Application to Adjudication Authority) Rules, 2016 for a resolution of an unresolved financial debt of Rs . 16,41,70,796/- (together with Principal and Interest Amount as on 21.12.2021).
A. Brief Submissions on behalf of the Financial Creditor:
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C.P.(IB) 387/MB/2022 30th June 2016 for Rs 7,00,00,000/- (Rupees Seven Crore only) to the Corporate Debtor/Respondent.
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Lakh Eighty Seven Thousand Six Hundred Forty Three and Twenty One Paise only) as on 13th December 2014.
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schedule with a modified OTS of Rs. 5 crores which would be payable by 31st December 2020. The modified OTS was approved by the Financial Creditor vide its email dated 24th March 2020. However, shortly after, the Corporate Debtor failed to honor the same and the underpaid the installments for April, May and June. The aggregate amount paid by the Corporate Debtor under the first three installments (for April, may and June) was Rs.20,00,000/- out of the total Rs. Rs. 60,00,000/- payable towards the first three installments of the said modified OTS and basis which the outstanding balance under the said modified OTS stood reduced to Rs. 4,80,00,000/-
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paid till March 2022 and further requested for a revised proposal for one time settlement with the Financial Creditor.
B. Brief Submissions on behalf of the Corporate Debtor:
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thus the default is clearly within the period covered under Section 10A of the Code.)
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ii. DEFECTIVE DOCUMENTS ANNEXED BY THE FINANCIAL
CREDITOR
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payment schedule proposed vide letter dated 13th March 2020 sent by the financial creditor.
FINDINGS AND OBSERVATIONS (DRAFT)
1. Heard the Ld. Counsel appearing for the Financial Creditor and the Ld. Counsel appearing for the Corporate Debtor at length. The
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C.P.(IB) 387/MB/2022 Bench has gone through the evidence and the materials placed on record via Additional Affidavit and Written Submission by both the parties. The Corporate Debtor has raised the contention challenging the maintainability of the present Company Petition on the grounds of Limitation and Section 10 A of the Code.
2. The first issue involved in the present case with regards to Limitation Act. the Corporate Debtor contended that the date of default as per Information Utility’s record is 26.09.2019 and the Corporate Debtor’s account was classified as NPA on 23.11.2016. Further, the present Petition is filed on 07.01.2022 which is 6 years after the date of the NPA classification. Advancing the argument, the Corporate Debtor stated that even if the loan recall notice dated 28.02.2017 issued by the Financial Creditor under section 13(2) of the SARFAESI Act is taken into consideration the limitation would stand expired on 26.02.2020.
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Consequently, the amicable settlement could not attain finality due to the continuous defaults by the Corporate Debtor. In order to deal with the issue of the Limitation, it is worthwhile to mention Section 18 of the Limitation Act which is reproduced as follows:
18. Effect of acknowledgment in writing.—
(1) Where, before the expiration of the prescribed period
for a suit of application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.
(2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received. Explanation.—For the purposes of this section,—
(a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a
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refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set-off, or is addressed to a person other than a person entitled to the property or right;
Company (India) Ltd. Vs. Bishal Jaiswal & Anr. [Civil Appeal No.
323 of 2021 with other appeals] held that, the date of default is extendable within the ambit of Section 18 of the Limitation Act, 1963 based on an acknowledgement in writing made by the Corporate Debtor before expiry of period of limitation.
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barred by limitation, on the ground that it had been filed beyond a period of three years from the date of declaration of the loan account of the Corporate Debtor as NPA, if there were an acknowledgment of the debt by the Corporate Debtor before expiry of the period of limitation of three years, in which case the period of limitation would get extended by a further period of three years.
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Industries Ltd. Vs. ICICI Bank & Anr. [Civil Appeal Nos. 83378338 of 2017] wherein the Hon’ble Supreme Court held that; it is relevant to note that ‘default’ is defined under Section 3 (12) of the Code, in very wide terms as non-payment of a ‘debt’ once it becomes due and payable, which includes non-payment of even part thereof or an instalment amount. Therefore, there is an undeniable and apparent existence of a debt and default of the Corporate Debtor which has been admitted vide the various letters of acknowledgment issued by the Corporate Debtor and vide the letter dated 25th January 2021 annexed at Exhibit 58 @ Pg No. 496-498 wherein the Corporate Debtor had admitted its inability to pay the outstanding amounts/ balance OTS amount and expressed its inability to honour the OTS.
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C.P.(IB) 387/MB/2022 Therefore the contention raised on the ground of 10 A period cannot be availed by the Corporate Debtor as the original date of default does not change owing to a continued default or owing to a continued subsequent default.
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its debt and default by further exploring the option of Settlement and was unable to pay its debts due to severe financial crunch. Thus, looking from any angle, we do not find any substance in the argument of Counsel for Corporate Debtor on the issue of the Limitation or on Section 10 A period. Therefore, there is a clear ‘debt’ and ‘default’ of non-payment of monies. As a consequence, keeping the aforesaid facts in mind, it is found that the Financial Creditor has not received the outstanding Debt from the Corporate Debtor and that the formalities as prescribed under the Code have been completed by the Financial Creditor, we are of the conscientious view that this Petition deserves ‘ Admission’ by passing the following:
ORDER
Hatcheries Limited.
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Professional Insolvency Professional. The IRP proposed by the Petitioner, is hereby appointed as Interim Resolution Professional to carry out the functions as mentioned under the Insolvency & Bankruptcy Code, 2016.
d. That this Bench hereby prohibits the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; the recovery of any
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property by an owner or lessor where such property is occupied by or in the possession of the Corporate Debtor.
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possession and furnish every information in their knowledge to the IRP/RP.
both the parties and to IRP immediately.
SD/- SD/-
MADHU SINHA H.V. SUBBA RAO MEMBER (TECHNICAL) MEMBER (JUDICIAL)
//Renuka//LRA//
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2 issues framed by the court
text
Whether defective stamp duty on loan documents affects the maintainability of the petition.
Colour shows how this judgement treated each authority
Asset Reconstruction Company (India) Ltd. Vs. Bishal Jaiswal & Anr.Referred¶96
Asset Reconstruction Company (India) Ltd. Vs. Bishal Jaiswal & Anr, Civil Appeal No. 323 of 2021
Dena Bank (now Bank of Baroda) Vs. C. Shivakumar Reddy and Anr.Referred¶98
Dena Bank (now Bank of Baroda) Vs. C. Shivakumar Reddy and Anr, Civil Appeal No. 1650 of 2020
Innoventive Industries Ltd. Vs. ICICI Bank & Anr.Referred¶107
Innoventive Industries Ltd. Vs. ICICI Bank & Anr, Civil Appeal Nos. 83378338 of 2017
Syndicate Bank Vs. Bothra Metals and Alloys Ltd.Referred¶103
Syndicate Bank Vs. Bothra Metals and Alloys Ltd, CP (IB) No. 2579/MB.IV/ 2019
5 provisions across 2 enactments
Axis Bank Limited
M/s Khadkeshwar Hatcheries Limited
H.V. Subba Rao
Madhu Sinha
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
