Jumbo Chemical And Allied Industries Private Limited vs Arjun Industries Limited

ORDER

“Learned counsel for the petitioner submits that the relief sought in this case has become infructuous. Therefore, he seeks liberty to withdraw the writ petition and urge the grounds to the extent they are available in W.P. 6557/2008. Liberty granted. The writ petition and the accompanying application are dismissed as withdrawn.”

“11.

The appeal is accordingly disposed of declaring that the observations made by the learned Single Judge in the impugned order are set aside. The writ petition filed by the appellant is dismissed, but not on the reasoning of the Single Judge but on the reasoning that the same was not maintainable in view of the consent recorded on behalf of the appellants in para 7 of the order dated 23.05.2007 disposing of the W.P. (C) No. 3535/2007.

12.

Needless to state the Debt Recovery Tribunal would take the necessary decision with reasonable dispatch.

13.

No costs.”

“17.

On perusal of the dates and events referred to supra, we observe that it is not the case of the Applicant that the Applicant has filed this application after the disposal of the first application filed by the IDBI being O.A. No. 445 of 1998 before the Debt Recovery Tribunal as that application is still pending. The claim of the Applicant is that it had entered into a settlement agreement with the Corporate Debtor on 27.08.2019 and that settlement agreement was cancelled by the Corporate Debtor vide email dated 26.07.2021 and therefore, the cause of action arose on the date, when the settlement agreement was cancelled by the Corporate Debtor.

18.

Before considering these submissions, we would like to refer to another date as referred the Applicant by filling additional affidavit. On perusal of that, we observe that on 23.12.2010, the Petitioner had issued a statutory notice under Section 434 (1)(a) of the Companies Act 1956 and according to the Petitioner, the Respondent Company vide its reply dated 14.01.2011 had admitted its liability, therefore, a cause of action for this Applicant, who stepped into the shoes of the IDBI on the basis of assignment, arose on 23.12.2010 or 14.01.2011, when the liability was admitted by the Corporate Debtor.

19.

We further observe that after 14.01.2011 and before the date of settlement arrival between the parties on 27.08.2019, there was no acknowledgement of debt on the part of the Corporate Debtor, therefore, the settlement agreement was made much after the expiry of period of 3 years, when the acknowledgement of debt was made by the Respondent. Therefore, we are unable to accept the contention of the Applicant that cause of action arose only when the deed of settlement was cancelled on 25.07.2021 because that deed of settlement was made much after the period of expiry of the limitation.

20.

Apart, from that, we also notice that the loan was recalled by the IDBI on 26.08.1998, whereas the deed of assignment was executed on 31.03.2006, much after the period of limitation, therefore, we are unable to accept the contention of the Applicant that cause of action arose on 26.07.2021. Hence, we are of the considered view the present application is barred by limitation.”

“2.

Brief facts of the case giving rise to this Appeal are as follows:

•

The Corporate Debtor-Arjun Industries Limited was sanctioned a Rupee Term Loan by the Industrial Development Bank of India (IDBI in short) on 11.09.1996. IDBI disbursed an amount of Rs. 367 Lakhs. IDBI also entered into another Foreign Currency Loan Agreement with Corporate Debtor sanctioning Rs. 183 Lakhs.

•

After availing the above credit facilities from IDBI, the Respondent Company failed and neglected to make the payment. A legal notice dated 10th June, 1998 was given by the IDBI.

•

IDBI filed Original Application being O.A. No. 445/1998 before the Debt Recovery Tribunal, Delhi (DRT in short) for recovery of amount of Rs. 6,19,93,815/- together with pendente lite and future interest.

•

During pendency of the O.A. before the DRT, the Corporate Debtor approached the IDBI offering a One-Time Settlement for a sum of Rs. 225 Lakhs. IDBI asked the Corporate Debtor to increase the amount to Rs. 250 Lakhs out of which Rs. 225 Lakhs was to be paid by a particular date in June, 2006.

•

The amount being not paid by the Corporate Debtor, the OTS was not implemented.

•

IDBI assigned the debt to Kotak Mahindra Bank Limited on 31^st March, 2006. After assignment, Kotak Mahindra Bank Limited was substituted in O.A. No. 445 of 1998 filed by the IDBI as an Applicant. On 16.04.2008, Kotak Mahindra Bank Limited assigned the debt in favour of the Appellant-Company -Jumbo Chemicals and Allied Industries Pvt. Ltd. by registered deed on assignment.

•

The Corporate Debtor filed a writ petition in the High Court restraining the assignment which was dismissed.

•

Appellant issued a statutory notice under Section 433 and 434 of the Companies Act, 1956 to the Corporate Debtor to pay a sum of Rs. 28,99,00,000/- as on 31st December, 2005. Respondent Company sent a Reply dated 14.01.2011 opposing the claim of the Appellant.

•

The Appellant filed Company Petition 221/2012 before the Delhi High Court for winding up of the Respondent Company. Before the Learned Single Judge, the Respondent Company made an offer to deposit amount of Rs. 2.5 Crores, the Appellant company claimed before the Company Judge that amount payable is much more than Rs. 250 Lakhs. Learned Company Judge vide its Judgment dated 22nd May, 2014 dismissed the company petition against which an Appeal being CO. APPL No. 41/2014 was filed by the Appellant which too was dismissed by the Judgment and Order dated 2nd March, 2016 by Division Bench of Delhi High Court.

•

A meeting was held on 12.10.2018 between Appellant and Respondent Company where an agreement was arrived for disinvestment of the mortgaged property of the Respondent Company. Appellant and Respondent Company entered into a Settlement Agreement dated 27th August, 2019 whereby it was agreed between the parties to sell the mortgaged property and distribute the realised value as per settlement agreement between the parties.

•

Respondent Company vide Email dated 26th July, 2021 cancelled the settlement agreement. On 01.10.2021, the Appellant Company filed Section 7 Application against the Respondent Company claiming an amount of Rs. 1438.95 Crores till 30^th June, 2021. Date of Default mentioned in Section 7 Application was 26^th July, 2021 which was a date when Settlement Agreement was cancelled by the Respondent Company.

•

In Section 7 Application, Appellant has given the details beginning from sanctioning the said loans by the IDBI on 11.09.1996 and details of proceedings before the DRT and Delhi High Court, Detail of Company Petition filed by the Appellant and other litigations. The Adjudicating Authority by the Impugned Order dismissed the Section 7 Application as barred by time. The Adjudicating Authority in the Impugned Order held that after notice of winding up petition was given by the Appellant, Reply was given by the Respondent Company on 14.01.2011 and the Settlement Agreement between the parties was entered on 27^th August, 2019, limitation of 3 years expired before entering into settlement agreement and there was no acknowledgement after14.01.2011 hence the case of the Appellant that the date of default is 26th July, 2021 cannot be accepted and Section 7 Application was dismissed as barred by time.

•

The Order was passed by the Adjudicating Authority without issuing notice to the Corporate Debtor.

X X X

20.

The acknowledgement of debt in the balance sheets from 1998-99 is continuous. Notes to the account and the Director's Report/Statement at best can be treated to be account of litigation emanating from such date. We have noticed that in the notes to the account and the Director's Statement/Report, it has been categorically mentioned that Company failed to repay the loan. In the Financial Year 2020-21, there is reiteration of credit facility availed by the Company from the IDB. The assignment in favour of Appellant has also been noticed in the notes to the account and director's statement. The notes to the account and director's report has repeatedly referred to that liability is limited to Rs. 250 Lakhs which is on the strength of Order passed in the Company Petition filed by the Appellant where Company Court directed the Respondent to deposit amount of Rs. 250 Lakhs in the Court which amount was deposited. We need to notice the Judgment of Learned Single Judge dated 22.05.2015 by which Company Petition filed by the Appellant was ultimately dismissed. It is useful to refer to last paragraph 18 of the Judgment which is to the following effect:

“18.

In view of the above, the present petition is dismissed. The Registry is directed to refund a sum of Rs.250 lacs along with interest, if any, to the respondent. The title documents deposited by the petitioner be also returned to the petitioner. It is further clarified that neither this order nor anything stated during the present proceedings should be construed to mean that the petitioner has confined its claim only to a sum of Rs. 250 lacs and interest thereon. Similarly, neither this order nor the present proceedings should be construed to mean that the respondent has given up its counter claims against IDBI.”

21.

When the Company Petition was dismissed with the observation as observed, we fail to see that how the Respondent can contend that claim of the Appellant is limited to only Rs. 250 Lakhs.

22.

Be that as it may, in the present Appeal, we are only concerned with the question as to whether the Application was barred by limitation.

23.

After perusing the relevant balance sheets and director's report, we are satisfied that balance sheets contain an acknowledgement of debt and the mere fact that details of litigation emanating from the loan and subsequent events are mentioned in the notes to the account and the director's report does not denude the value of the balance sheets for purposes of Section 18 of the Limitation Act.

24.

We also refer to Judgment of this Tribunal in C.A. (AT) Ins. No. 991 of 2020, Asset Reconstruction Company India Limited Vs. Uniworth Textiles Limited, decided on 10th July, 2023 where this Tribunal had occasion to consider the balance sheets for purposes of finding out acknowledgement under Section 18 of the Limitation Act. This Tribunal also looked into the Director's Report. This Tribunal in the said Judgment has after noticing the Directors Report and certain disputes claimed by Corporate Debtor, made following observations:

“Therefore, it may be inferred that only during the financial Year 2014-15 the Directors clearly disputed the debt of the Appellant, however in prior Balance Sheets no dispute was raised. In subsequent to Balance Sheets, the mention regarding their intent for resolution with dispute was indicated and in the Balance Sheet of 2018-19 по apparent dispute was recorded regarding the debt. From the entire series of record of such financial balance sheets from 2007-2008 to 2017-18 it can be presumed that the Corporate Debtor intended from time to time to acknowledge the debt in the Balance Sheet, however we cannot ignore the fact that in 2014-15, 2015-16 and 2016-17, the Corporate Debtor has disputed claims. On overall basis out of 13 Balance Sheets from 2006-07 to 2018-19, apparently in the three Balance Sheets, disputes were recorded as noted above and based on this, in balanced manner and keeping commercial/judicial fairness, such denial of acknowledgment cannot be taken as stout dispute regarding debt which would tantamount to absolute and continued denial of acknowledgments of debt by the Corporate Debtor. Keeping in view the ratio decidendi of Bishal Jaiswal (Supra), therefore, in light of this detailed analysis, this Appellate Tribunal has to consider that there were acknowledgements of due in the Balance Sheets and the acknowledgement letter of the Corporate Debtor which would extend the limitation period, in terms of Section 18 of Limitation Act, 1963.”

X X X

29.

In view of the foregoing discussions and conclusions, we are of the view that the Adjudicating Authority committed error in rejecting Section 7 Application filed by the Appellant as barred by time. The Application filed by the Appellant was not barred by time there being continuous acknowledgment in their respective balance sheets of the Corporate Debtor which acknowledgment was within the meaning of Section 18 of the Limitation Act extending the period of limitation by fresh period of limitation by each acknowledgment. In result, we allow the Appeal, set aside the Order of the Adjudicating Authority dated 06.06.2022. We revive the Section 7 Application before the Adjudicating Authority to be heard afresh and decided in accordance with law. We further grant three weeks' time to the Corporate Debtor to file its Reply to Section 7 Application. The instant Appeal is allowed to the above extent. Parties shall bear their own costs.”

“RA-188/2023: In the wake of the order dated 18.09.2023 passed by the Hon'ble NCLAT in Company Appeal (AT) (Ins) No. 948/2022, the present application is allowed. Let the CP-IB-79/ND/2022 be listed for consideration on admission. Three weeks' time granted by the Hon'ble NCLAT in terms of the order dated 18.09.2023 (ibid) has already expired. Still, by way of sheer indulgence, a further one week's time is granted to the CD to file its reply, if any.”

“RA-188/2023: As can be seen from the order dated 22.11.2023, the RA188/2023 could be allowed and the Company Petition (IB)-79/ND/2022 was restored to its original position. In the wake, the Court Officer and the Registry are directed to ensure that the application is not displayed as pending in any future cause list. IB-79/ND/2022: As prayed by Mr. Abhishek Anand, Ld. Counsel appearing for the Applicant, last opportunity is granted to file rejoinder within one week.”

“It is quite unfortunate that Counsels for both the parties are not prepared with their submissions to be put forth in the matter. At their request and in the interest of justice the hearing is deferred to 08.02.2024.”

“On 06.02.2024, when both the parties were not prepared to put forth their submission in the matter, we reluctantly deferred the hearing for today. The order passed on 06.02.2024 reads thus:-

“It is quite unfortunate that Counsels for both the parties are not prepared with their submissions to be put forth in the matter. At their request and in the interest of justice the hearing is deferred to 08.02.2024.” We are not inclined to give adjournments in the petitions under Section 7 & 9 of IBC 2016 for the reason that the statute i.e. the IBC stipulate that this Tribunal should decide viz., either to admit or reject a petition filed under Section 7 of IBC, 2016 within 14 days. Today, when the petition was listed for hearing, Mr. Rahul Chauhan Advocate submitted that the Ld. Counsel for the CD was having shoulder pain for 3 months, thus he got hospitalised on 07.02.2024. The document which he could produce before the Tribunal is receipt of deposit of Rs. 50,000/- i.e. an advance amount with Aakash Healthcare Super Speciality Hospital. The plea raised by the Ld. Counsel for the corporate debtor was opposed by Mr. Sumant Batra the Ld. Counsel for the Financial Creditor. He could draw our attention to pages 31, 33, 34, 35 and 106 of the Rejoinder to espouse that the signatory of the reply viz., Ms. Mausami Bhattacharjee has been indulging in forgery, as her signatures on the documents available on record at aforementioned pages differ from each other. He could also refer to AnnexureR4 to Rejoinder which is the order passed by Hon’ble Uttarakhand High Court in Criminal Writ No. 1253/2013 in Santosh Kumar Bagla vs. The Senior Superintendent of Police & Others. According to him the order reflect that Ms. Mausami Bhattacharjee was involved in the activities of forging the Court orders. Para 3, 4 & 65 of the order read out by him reads thus:-

“3.

Brief genesis of the proceedings of the present writ petition, emanates from a letter dated 07.09.2013, which was addressed to the Registry of this Court; by one Mr. Santosh Kumar Bagla, who claimed himself to be one of the Director, of one of the construction company, namely Anghaila Housing Pvt. Ltd. (hereinafter to be called as Housing Company), who in his correspondence dated 07.09.2013, made to the Registrar General of this Court, had intimated that in a proceedings, which were then being conducted before the Company Law Board, Principal Bench, New Delhi; by way of Company Petition No.70 of 2003, three judgments/orders allegedly said to have been rendered by this High Court, were placed on record of the proceedings before Company Law Board, on which reliance was placed by his adversaries, which were said to be fraudulently manufactured judgments, as they were not even available on the original records of the respective writ petitions. The judgments, which have been referred thereto in the complaint, are detailed hereunder:-

A. Judgement dated 14.10.2004, as alleged, that it was rendered in Writ Petition (M/B) No.507 of 2003 M/s Anghaila Housing (Pvt.) Ltd. & Another vs. State of Uttaranchal & others.

B. Judgment dated 27.08.2004 as allegedly rendered in Writ Petition (M/B) No.1224 of 2003 M/s Anghaila Housing (Pvt.) Ltd. & Another vs. State of Uttarakhand & Ors.

C. Judgment of 26.07.2005, as allegedly rendered in Writ Petition (M/S) No.847 of 2004 State of Uttaranchal & Another vs. Anghaila Housing Pvt. Ltd. & Ors.

4.

In the complaint thus submitted by the complainant, before the Registrar General of this Court, he had raised an allegation that these judgments, which were non-existent judgments, on the original records of the respective writ petitions and they were manufactured fraudulently in connivance with, the following persons, named in the complaint; namely:- i. Mausumi Bhattacharjee, ii. Dharam Pal Yadav, iii. Kali Ram Yadav, iv. Naresh Kumar, V. Awdhesh Kumar, and with some of the staff of the Registry of this Court, the possibility of which cannot be completely ruled out.

65.

In view of what has been dispelled by this Court in the aforesaid judgment based upon the wider principle laid down by the Hon'ble Apex Court, this Court is of a considered view that after scrutinizing the respective order sheets of the three writ petitions referred to hereinabove, as well as the correspondences made by office of the Registrar General of this Court, do not leave an iota of doubts that the judgment which has been complaint of to be relied, are non-existing judgments on record and since the police investigation which was initiated at the hands of the office of Registrar General of this Court, had not diligently pursued the cause by filing a protest petition, upon intimated submission of charge sheet and when apparently a cognizable offence is said to be made out from the records, which has been already discussed above, this Court is of the view that be it whatsoever, whosoever, may be involved upto what higher ranking he possesses, he cannot be spared at all, at any cost to malign the prestige of the institution by preparation of a fraudulent judgments, which may have a very wide social bearing of dispelling the confidence of the public at large, if such an illegal and inacceptable act is permitted to be persuaded by the officials of the Registry or by anyone else who is involvement in it and particularly when a non existing judgments of the three writ petitions of which the certified copy has been issued and had been relied with before the Company Law Board.” With reference to the aforementioned documents, Mr. Sumant Batra argued that the stand taken on behalf of the corporate debtor does not inspire any confidence and once Mr. Tandon was present before this Tribunal on 06.02.2024 and according to the Ld. Counsel for the corporate debtor, his shoulder was paining for 3 months and he was still appearing before the Courts, it is not understood that when the present petition was kept for hearing today, how Mr. Tandon got admitted in hospital only on 07.02.2024. He opposed the adjournment sought on behalf of the CD with vehemence. We are really dismayed and appalled with the development in the matter. It is quite unfortunate that our concern to adhere to the statutory time limit mentioned in the Code to decide the applications filed under Section 7 & 9 of IBC 2016 are not appreciated at all. The corporate debtor, instead of arguing the case on merit is simply interested to delay the process. Though the Ld. Counsel appearing for the corporate debtor could submit that the matter is received on being remanded by Hon’ble Appellate Tribunal, but we see that even the order passed by Hon’ble Appellate Tribunal is dated 18.09.2023. In such proceedings, where the total period available to the Tribunal to take a decision regarding admission or rejection of an application is 14 days, the period from 18.09.2023 to 07.02.2024 is too long. Though the receipt of deposit of Rs. 50,000 with the Aakash Healthcare Super Speciality Hospital is produced before us, but same is no ground for adjournment, Mr. Karunesh Tandon, who as per stand taken by counsel for CD was having shoulder pain for 3 months chose to get admitted in Hospital only on 07.02.2024, when on 06.02.2024 we had fixed the present matter for hearing today, thus the plea regarding his ailment hardly inspire any confidence. Nevertheless, only in the interest of justice we defer the hearing to 22.02.2024. The corporate debtor would also explain the stand of Ms. Mausami Bhattacharjee regarding the submissions made by Mr. Sumant Batra on the next date of hearing. Ms. Mausami Bhattacharjee is directed to participate in the proceedings either physically or virtually. It is for the corporate debtor to arrange the counsel to represent its stand on the next date of hearing and no request for adjournment would be entertained at any cost.”

“Section 250. Effect of company notified as dissolved.— Where a company stands dissolved under section 248, it shall on and from the date mentioned in the notice under sub-section (5) of that section cease to operate as a company and the Certificate of Incorporation issued to it shall be deemed to have been cancelled from such date except for the purpose of realising the amount due to the company and for the payment or discharge of the liabilities or obligations of the company.”

“(5)

Where the Adjudicating Authority is satisfied that –

(a)

a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or

(b)

default has not occurred or the application under sub-section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application:

Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-section (5), give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority.”

“8.

Claims by Financial Creditor.—(1) A person claiming to be a financial creditor, other than a financial creditor belonging to a class of creditors, shall submit claim with proof] to the interim resolution professional in electronic form in Form C of the [Schedule-I ]:

Provided that such person may submit supplementary documents or clarifications in support of the claim before the constitution of the committee.

(2)

The existence of debt due to the financial creditor may be proved on the basis of –

(a)

the records available with an information utility, if any; or

(b)

other relevant documents, including –

(i)

a financial contract supported by financial statements as evidence of the debt;

(ii)

a record evidencing that the amounts committed by the financial creditor to the corporate debtor under a facility has been drawn by the corporate debtor;

(iii)

financial statements showing that the debt has not been [paid]; or

(iv)

an order of a court or tribunal that has adjudicated upon the non-payment of a debt, if any.”

“10.

Thus, once NCLT is satisfied that the default has occurred, there is hardly a discretion left with NCLT to refuse admission of the application under Section-7. Default is defined under sub-section 12 of Section 3 of the IB Code which read thus:

“3.

Definitions: - In this Code, unless the context otherwise requires,-.. .. .. .. .. .. .. .. (12) “default” means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not [paid] by the debtor or the corporate debtor, as the case may be;” Thus, even the non-payment of a part of debt when it becomes due and payable will amount to default on the part of a Corporate Debtor. In such a case, an order of admission under Section 7 of the IB Code must follow. If the NCLT finds that there is a debt, but it has not become due and payable, the application under section 7 can be rejected. Otherwise, there is no ground available to reject the application.”