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2024 Supreme(Online)(NCLAT) 1183
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Jatindranath Swain, Member (Technical)
Virigineni Anjaiah – Appellant
Versus
Pridhvi Asset Reconstruction and Securitization Company Ltd. – Respondent
Company Appeal (AT) (CH) (Ins) No.224/2022 | CP (IB) No. 153/7/HDB/2021
Important Points
Subject
Insolvency - Corporate Insolvency Resolution Process
Act Referred
Limitation Act, 1963: Article 137
SARFAESI Act, 2002
Companies Act, 1956
Headnote
(B) Limitation - Timeliness of the application under section 7 of IBC - The Supreme Court confirms that acknowledgment of debt extends limitation, and the absence of acknowledgment during the limitation period justifies the Respondent's position. (Paras 16-18)
Facts of the case:
The Appellant, Suspended Director of the Corporate Debtor, challenged the NCLT's admission order based on alleged issues of limitation and status of the Financial Creditor under IBC, citing historical judgment precedents.
Findings of Court:
The NCLT rightly held that the Recovery Certificate constitutes financial debt, allowing the appeal from the FC for CIRP initiation.
Issues: Whether the Respondent holds the status of a Financial Creditor and if the application was barred by limitation.
Ratio Decidendi: The court established that a Recovery Certificate constitutes valid grounds for classification as a Financial Creditor under IBC; acknowledgment of debt plays a crucial role in the limitation analysis.
Result: Appeal dismissed.
For the Appellant:Mr. E. Om Prakash, Senior Advocate
For the Respondents:Mr. Srinath Sridevan, Senior Advocate
| Table of Content |
|---|
| 1. the grounds for appeal are grounded in the facts and procedural context set forth. (Para 1 , 2) |
| 2. appellant contends applications filed by the financial creditor under the ibc are barred by limitation and questions their status as a financial creditor. (Para 3 , 4 , 5 , 6 , 8) |
| 3. court reinforces the legitimacy of the respondent's claims under the ibc, clarifying the definitions and implications. (Para 15 , 16 , 17 , 18) |
| 4. court's ruling affirmed the nclt's admission of cirp underlined by well-established legal precedents. (Para 19) |
JUDGMENT
(Hybrid Mode)
[Per : Jatindranath Swain, Member (Technical)]
1. The present Appeal has been filed under section 61 of the Insolvency and Bankruptcy Code, 2016 against the Order passed by the Adjudicating Authority (AA) / (National Company Law Tribunal (NCLT), Hyderabad) on 11.04.2022 in Company Petition CP(IB)153/7/HDB/2021 under section 61 of . In its order the Adjudicating Authority held that the Financial Creditor (FC) in the present case, M/s. Prithvi Asset Reconstruction and Securitization Company Pvt. Ltd. comes within the definition of ‘Financial Creditor’, for the purpose of the Code and that the application made by the said Financial Creditor is not barred by limitation laid down in section 238A of the r/w
2. The brief facts of the case and the sequence of events necessary to be noted for the purpose of deciding the case are narrated below:
i) The Appellant Mr. Virigineni Anjaiah is the Suspended Director of the Corporate Debtor (CD), namely, M/s. Sri Pavana Keerthi Hotels India Pvt. Ltd. The said Corporate Debtor is a corporate body registered under the Provisions of the Companies Act, 1956 and is mainly into the business of hospitality. It was granted a term loan of Rs.19.28 crore from the erstwhile Andhra Bank, payable in 94 instalments commencing from June 2015 to March 2023. The said was secured by personal guarantee of the Directors and other collateral securities. The Corporate Debtor (CD) and the guarantors executed necessary loan documents and mortgaged various properties as security for the said term loan.
ii) The Corporate Debtor allegedly could not complete the project and as a result, defaulted on repayment of loan and on servicing of the interest and instalments. Consequently, the loan was classified as NPA on 31.10.2015.
iii) The original Financial Creditor (FC), the Andhra Bank filed OA No.403 of 2017 before the Debt Recovery Tribunal (DRT), Hyderabad-I on 06.06.2017 for an amount of Rs.32,19,88,213.00 being the principal and the interest thereon against the Corporate Debtor and the Guarantors. DRT, Hyderabad-I in its order dated 19.02.2019 allowed the application of applicant bank for recovery of Rs.25,71,79,268.00 and interest thereon @ 12% simple interest with cost against the Corporate Debtor and the guarantors and issued the Debt Recovery Certificate on 09.07.2019. Consequent to this order, the Recovery officer of DRT-I, Hyderabad issued the Demand Notice dated 22.07.2020 to the Corporate Debtor for payment of the said sum.
iv) While the case was going on before Debt Recovery Tribunal-I, Hyderabad, Andhra Bank assigned debt portfolio of Corporate Debtor in favour of M/s. Pridhvi Asset Reconstruction and Securitisation Company Limited (PARAS) (Respondent No.1 in the present case) vide a Registered Assignment Agreement dated 27.09.2017. Based on such, M/s. PARAS took over the role of applicant in the above OA before DRT, Hyderabad-I and consequently became the decree holder.
v) Subsequently, M/s. PARAS, being the Financial Creditor filed an application under section 7 of Inso
