Atharva Auto Logistics Pvt. Ltd. Vs Intec Capital Ltd. & Anr. (NCLAT Delhi)
NCLAT Delhi dismissed the appeal filed by Atharva Auto Logistics Pvt. Ltd. challenging the order dated 18.02.2022 passed by NCLT, Court-5, Mumbai Bench in CP No. 1258/MB/I&B/2020, whereby the Section 7 application filed by Intec Capital Ltd. as Financial Creditor was admitted. The principal issue before the Appellate Tribunal was whether the Section 7 application filed on 28.08.2020 was barred by limitation because Part-IV of the application mentioned 25.08.2017 as the date of default.
The Appellant contended that limitation had to be computed from the expressly stated date of default, namely 25.08.2017. According to it, since the Section 7 application was filed on 28.08.2020, it was beyond the prescribed three-year limitation period. The Appellant further argued that although the Adjudicating Authority had noticed the relevant facts, it had failed to properly address the consequence of the date of default specifically mentioned in Part-IV of the application.
NCLAT examined the record and noted that the Financial Creditor had filed the record of default maintained by the Information Utility, NESL, as well as the statement of account. These documents disclosed that the Corporate Debtor had made its last repayment of Rs. 2 lakh on 31.07.2018. The Adjudicating Authority had specifically recorded this fact while considering the Section 7 application.
The Appellate Tribunal held that once the last payment was made on 31.07.2018, the Section 7 application filed on 28.08.2020 was well within three years from that payment. The details of payment were already part of the Section 7 application and had been brought on record along with it. Therefore, the application could not be treated as barred merely by considering 25.08.2017, the date of default stated in Part-IV, in isolation from the accompanying documents evidencing the subsequent payment.
NCLAT further observed that the debt and default had been proved and the Section 7 application had been admitted on that basis. It consequently rejected the Appellant’s contention that the insolvency application was barred by limitation.
The Appellant relied upon the Supreme Court judgment in Babulal Vardharji Gurjar Vs Veer Gurjar Aluminium Industries Pvt. Ltd. & Anr., (2020) 15 SCC 1, arguing that the date of default for limitation purposes must be ascertained from the pleadings contained in the Section 7 application. NCLAT acknowledged that Part-IV of the application recorded 25.08.2017 as the date of default. However, it distinguished the Appellant’s reliance on the judgment because the application was accompanied by relevant documents, including the ledger account, which recorded the Corporate Debtor’s last payment on 31.07.2018.
The Tribunal held that the Financial Creditor was entitled to the benefit of a three-year limitation period calculated from the date of the last payment on 31.07.2018. Accordingly, the Supreme Court decision relied upon by the Appellant did not assist it on the facts of the present case. Finding no merit in the limitation objection or the appeal, NCLAT dismissed the appeal and sustained admission of the Section 7 application.
Cases Discussed
- Babulal Vardharji Gurjar Vs Veer Gurjar Aluminium Industries Pvt. Ltd. & Anr., (2020) 15 SCC 1 (Supreme Court) — The Appellant relied upon the decision to contend that the date of default has to be ascertained on the basis of the pleadings in the Section 7 application. NCLAT distinguished its application to the present facts because the Section 7 application was accompanied by the ledger/payment records showing the Corporate Debtor’s last payment on 31.07.2018, making the application filed on 28.08.2020 within limitation.
FULL TEXT OF THE NCLAT JUDGMENT/ORDER
Heard Learned Counsel for the Appellant. Learned Counsel for the Respondent No. 1 and Respondent No. 2 are also present.
2. This Appeal has been filed against the Order dated 18th February, 2022 passed by the Adjudicating Authority (National Company Law Tribunal, Court- 5, Mumbai Bench) in CP No. 1258/MB/I&B/2020. By which Order, Application being CP No. 1258/MB/I&B/2020 filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC in short) by the Respondent No. 1 has been admitted as well within time.
3. Learned Counsel for the Appellant submitted that in Part-IV of the Section 7 Application, the ‘Date of Default’ was mentioned as 25th August, 2017 and from 25th August, 2017, the Application was barred by time since it was filed on 28th August, 2020. He further submitted that Adjudicating Authority even after noticing the aforesaid fact has not adverted to and held that Application is not barred by time.
4. We have considered the submissions of Learned Counsel for the Parties and perused the record.
5. The Adjudicating Authority in Paragraph 6 of the Order has made following observations:
“6. The Petitioner has also filed record of default by the information utility (NESL). The statement of account produced by the Petitioner shows that the last repayment of Rs. 2 Lakhs was made by the Corporate Debtor on 31.07.2018.”
6. When the last payment was made on 31st July, 2018, the Application filed on 28th August, 2020 was well within three years from the last payment. The submission of the Appellant that Application was barred by time cannot be accepted. The payment details regarding the payment was already the part of the Application which has been brought on record along with the Application and from such details regarding the payment when the Adjudicating Authority has noticed the submissions that last payment was made on 31st July, 2018, the Application cannot be said to be barred by time. The default and debt were proved, on that basis the Application was admitted. We do not agree with the submissions of the Learned Counsel for the Appellant that Application was barred by time.
7. Learned Counsel for the Appellant has placed reliance on a Judgment of Hon’ble Supreme Court reported in 2020 (15) SCC 1 in the matter of ‘Babulal Vardharji Gurjar Vs. Veer Gurjar Aluminium Industries Pvt. Ltd. & Anr.’ and submitted that Hon’ble Apex Court has held that the date of default has to be ascertained on the basis of pleadings in Section 7 Application of the IBC. In the present case, Part-IV of the Section 7 Application of the IBC, ‘Date of Default’ is dated 25th August, 2017 there is no dispute regarding that but along with the Application the relevant documents including ledger account of the payment were also brought on record where the last payment made by the Corporate Debtor has been mentioned on 31.07.2018 and the same has been noticed by the Adjudicating Authority. In view of the last payment made on 31.07.2018 as noted above, the Application was well within time and the Financial Creditor entitled for taking benefit of 3 years period of limitation from the date of last payment. The Judgment relied on by the Learned Counsel for the Appellant does not come to any aid to the Appellant in the present case.
In view of the aforesaid, we do not find any merit in the Appeal, the Appeal is dismissed.
