A Recovery Certificate gives rise to a fresh cause of action, qualifying the holder as a Financial Creditor under the Insolvency and Bankruptcy Code, permitting initiation of CIRP.

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 Article 137 of the Limitation Act, 1963 and accordingly admitted the Corporate Debtor (CD) into Corporate Resolution Process (CIRP) under section 7 of the said code and declared moratorium for the purpose referred to in section 14 of the said Code Aggrieved by the order of AA, the Appellant has filed this Appeal before this Tribunal, praying that the orders of AA be set aside.

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