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NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Mohd. Faiz Alam Khan, Judicial Member
Encore Asset Reconstruction Company Pvt. Ltd. – Appellant
Versus
Pandhe Constructions Pvt. Ltd. – Respondent
Company Appeal (AT) (Ins) No. 2372 of 2024 | Company Petition (IB) No. 995/MB/2023
| Table of Content |
|---|
| 1. factual background of guarantee, defaults, notices, and assignment. (Para 1 , 2 , 3 , 4 , 5 , 6 , 18 , 20) |
| 2. appellant argues exclusion of covid period for limitation. (Para 7 , 8 , 9 , 10) |
| 3. respondent contends petition time-barred post-covid extension. (Para 11 , 12 , 13 , 14 , 15 , 16) |
| 4. full exclusion of 15.03.2020-28.02.2022 from limitation period. (Para 19 , 22 , 23 , 30 , 31 , 32 , 33 , 34) |
| 5. guarantor default triggers on demand notice per guarantee terms. (Para 21 , 24 , 25 , 26 , 27) |
| 6. unchallenged nclt findings on default date bind parties. (Para 28 , 29 , 37 , 39 , 40 , 41) |
| 7. invocation of guarantee depends on notice terms and facts. (Para 35 , 36 , 38 , 42) |
| 8. remand for fresh consideration of limitation and evidence. (Para 43 , 44 , 45) |
JUDGMENT
(Hybrid Mode)
[Per: Justice Mohd. Faiz Alam Khan, Member (Judicial)]
The instant appeal has been preferred by the Appellant under Section 61 of the Insolvency and Bankruptcy Code, 2016 (in short ‘Code’) against the order dated 11.10.2024 (in short ‘impugned order’) passed by the NCLT, Mumbai Bench (in short ‘Adjudicating Authority’) in CP (IB) No. 995/MB/2023 filed under Section 7 of the Code by the Appellant whereby the Adjudicating Authority has dismissed the petition as being time barred and not filed within the period of limitation.
2. The brief facts necessary for the disposal of the appeal are that the Respondent No. 1 executed a corporate guarantee on 22.03.2014 agreeing to repay the DNS Bank Ltd. all outstanding amounts granted to Pandhe Infracons Pvt. Ltd. through a Flexi Overdraft Facility of Rs. 15,00,00,000/- and due to failure of the CD and the Borrower to repay the outstanding amounts under the facility, a demand notice was sent by the Financial Creditor of date 18.02.2022 invoking the deed of guarantee requiring the CD to pay an amount of Rs. 28,22,36,755/- as on 15.02.2022 along with future interest until the date of actual payment within the period of 7 days after receiving the notice.
3. It is further reflected that in part iv of the application, the total amount in default as on 19.07.2023 has been shown as Rs. 35,38,03,129/- and the date of default has been specified as 19.11.2019.
4. It is also reflected that the aforementioned facility account, agreements and all security documents executed by the parties were assigned and transferred by the DNS Bank to the Appellant-Encore Asset Reconstruction Company Pvt. Ltd. in its capacity as a trustee of EARC Bank as per the assignment agreement dated 15.05.2019.
5. It is further reflected that the facility granted to the principal borrower was declared as a Non-Performing Asset (NPA) by the DNS Bank on 30.06.2018 due to continuous defaults committed by the Borrower and thereafter, a demand notice dated 04.09.2018 was issued under Section 13(2) of the SARFAESI Act for repayment of an amount of Rs. 15,99,70,693.75/- as of 31.08.2018 along with future interest and other charges within 60 days from the date of the demand notice.
6. It is further reflected that the CD as well as the borrower failed in paying outstanding amount and another demand notice dated 04.11.2019 was issued by the financial creditor to the borrower, CD/Guarantor and personal guarantors invoking the guarantees and demanding an amount of Rs. 19,27,90,856/- as on 29.10.2019 together with further interest up to the date of realisation within 15 days of receipt of the demand notice. The CD failed to make the desired payment of the outstanding dues and in consequence of the same the application under Section 7 has been moved by the Appellant for initiation of the Corporate Insolvency Resolution Process (CIRP) against the Respondent No. 1, however, the same has been dismissed by the Adjudicating Authority.
7. Ld. Counsel for the Appellant submits that the Adjudicating Authority has committed manifest illegality in dismissing the application moved by the Appellant on the issue of being barred by limitation and the Adjudicating Authority failed
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