The proceedings under Section 7 of the Insolvency and Bankruptcy Code cannot be barred by the pendency of separate proceedings under the Debts Recovery Tribunal, given the overriding effect of IBC provisions.

JUDGMENT

ASHOK BHUSHAN, J.

This Appeal by the State Bank of India (“SBI”) has been filed challenging the order dated 21.03.2023 passed by National Company Law Tribunal, Cuttack Bench, Cuttack, by which Section 7 Application filed by the SBI to initiate CIRP against the Corporate Debtor, Abhijeet Ferrotech Ltd. has been rejected. Aggrieved by the order rejecting Application, this Appeal has been filed by the Financial Creditor.

2. Brief facts of the case necessary to be noticed for deciding the Appeal are:

(i) The State Bank of Travancore has sanctioned loan to the tune of Rs.99 crores on 17.03.2012 to the Corporate Debtor. On 08.04.2013, the working capital limit of Rs.99 crores was renewed for a further period of 12 months.

(ii) On 31.03.2013, the accounts of the Corporate Debtor was declared as Non-Performing Assets (“NPA”). The SBI along with other consortium lenders entered into Master Restructuring Agreement with the Corporate Debtor on 28.09.2013. Various documents were executed by the Corporate Debtor in support of Master Restructuring Agreement on 30.09.2013. On 14.02.2014, the erstwhile State Bank of Travancore restructured the credit facilities in favour of the Corporate Debtor and an amount of Rs.89,46,00,000/- was sanctioned. On 26.03.2014, Deed of Accession and Modification on Master Restructuring Agreement was executed. On23.12.2015, the State Bank of Travancore additionally sanctioned the limit of Rs.36,74,00,000/-. Various documents thereafter were executed. On 28.12.2015, State Bank of Travancore sanctioned the limit of Rs.1,26,20,00,000/- in favour of the Corporate Debtor.

(iii) On 30.09.2016, the loan account of the Corporate Debtor slipped into NPA category w.e.f. 31.03.2013 owing to the default in payment for more than 90 days. On 25.11.2016, the SBI recalled the entire loan and granted 07 days’ time to close the accounts.

(iv) The Respondent - Corporate Debtor having failed to make the payment, proceedings under Section 13 (2) of the SARFAESI Act, 2002 were initiated by the Bank. On 11.09.2018, the SBI filed an application under Section 19 of the Recovery of Debts Due to the Banks and Financial Institutions Act, 1993 (“1993 Act”). On 07.07.2021, the Corporate Debtor submitted an OTS proposal, acknowledging the outstanding amount and proposing to make the payment.

(v) On 01.08.2021, the Appellant filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the “IBC”) for initiation of Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor for default of the amount of Rs.144,70,88,690/-.

(vi) On 17.06.2022, the DRT-II, Kolkata had dismissed the Application filed by the SBI under Section 19 . Order of the DRT- II, was challenged by the Appellant before the Debts Recovery Appellate Tribunal (“DRAT”). The DRAT vide its order dated 19.03.2024 allowed the Appeal of the SBI and set aside the order passed by DRT_II dated 17.06.2022. The Corporate Debtor filed C.O. No.1180 of 2024 before the Calcutta High Court, challenging the order of DRAT and Calcutta High Court vide its order dated 30.04.2024 granted an interim order, staying the order dated 19.03.2024, till September 30, 2024 or until further order, whichever is earlier.

(vii) Section 7 Application filed by the Appellant was rejected by the Adjudicating Authority vide order dated 21.03.2023. The Adjudicating Authority framed following question for consideration:

“1. Whether the proceeding of this petition is barred in view of the order passed by DRT-II, Kolkata in T.A. No.179 of 2020 dated 17.06.2022 and liable to be rejected?”

(viii) The Adjudicating Authority answered the above question in favour of the Corporate Debtor and held that point for consideration involves in Section 7 petition as well as in Appeal, which was pending before DRAT is directly and substantially same, the Adjudicating Authority is not inclined to invoke discretion. The reasons given by the Adjudicating Authority for rej