Vipul Ganda is an Independent Litigation Counsel with over 14 years of experience and a proven track record in Litigation and Dispute Resolution.
Girish Baduni Versus Punjab National Bank and Ors.
Court / Forum : National Company Law Appellate Tribunal Citation : Company Appeal (AT) (Insolvency) No. 290 of 2020 Coram : Justice Jarat Kumar Jain, Member (Judicial), Mr. Balvinder Singh, Member (Technical) and Mr. V.P. Singh, Member (Technical) Subject : Section 7 of the Insolvency and Bankruptcy Code, 2016 Date of Decision : August 27, 2020
M/s Atlas Alloy (India) Pvt. Ltd. (“Corporate Debtor”) had availed various credit facilities from Respondent No. 1 in the form of cash credit facility, bills discounting, term loan in the year 2005. The said facilities were renewed, and limits were increased from time to time as per the request of the Corporate Debtor.
The account of the Corporate Debtor was classified as Non-Performing Asset by the Respondent No. 1 on September 30, 2017 and thereafter a recall notice dated October 3, 2017 was issued to the Corporate Debtor and Guarantors under the SARFAESI Act, 2002. But the Corporate Debtor did not pay the outstanding amount.
Respondent No. 1 had filed application under section 7 of the Insolvency and Bankruptcy Code, 2016 (“Code”) against the Corporate Debtor. But the Corporate Debtor failed to appear before the Hon’ble Adjudicating Authority which constrained the Hon’ble Adjudicating Authority to pass ex parted admission order dated September 20, 2019 (“Impugned Order”)./li>
The Corporate Debtor and the Suspended Directors were served by the IRP on the email id given on the MCA Portal as well as the personal email ids. The Respondent No. 2 had, on several occasions, mailed the Statutory Auditors seeking information related to books of accounts and other records of the Corporate Debtor. The Statutory Auditors had vide email dated November 4, 2019, sent ITR IV, computation income audit report and audit report to the Respondent No. 2. The Respondent No. 2 had also initiated proceedings under section 19(2) of the Code. The Appellant had attended 3rd, 4th, and 5th CoC meetings.
Aggrieved by the Impugned Order, the Appellant preferred Appeal before Hon’ble National Company Law Appellate Tribunal (“NCLAT”).
Whether the application under section 7 of the Code was properly served on the Corporate Debtor?
The Hon’ble NCLAT held that it is undisputed that the Corporate Debtor had taken credit facilities and thereafter was unable to maintain financial discipline. Consequently, litigation started between the parties and the Corporate Debtor had made an admission of giving One Time Settlement proposal to the Respondent No. 1. All these facts prove that there is ‘debt’ and ‘default’.
The Hon’ble NCLAT observed that email id email@example.com is printed on the letter head of the Corporate Debtor, therefore, it cannot be said that the aforesaid email id is used by staff of Corporate Debtor. This argument is merely an afterthought. It is duty of the Corporate Debtor to access mails and one cannot take an excuse that the email id was not in use.
In addition to aforesaid email id, notice dated August 25, 2019 was also sent to email id firstname.lastname@example.org which is the email id of erstwhile director of Grand Batteries Private Limited (“GBPL”) Also, notices were pasted in the premises of GBPL in which the Appellant is the director. Further, notice under section 13(2) of the SARFAESI Act, 2002 was served on both the Corporate Debtor and its sister concern at a common address. The Appellant was also aware about the publication dated August 26, 2019 regarding theft at the registered address of the Corporate Debtor. Therefore, the Appellant was aware about filing of application under section 7 of the Code.
As per regulation 6 of the IBBI (Insolvency Resolution Process for the Corporate Persons), 2016, the public announcement was made for the public at large and is made known to every citizen of India. Therefore, the Appellant should have filed appeal within 45 days of public announcement which has not been done in the present matter.
The Hon’ble NCLAT held that all the facts establish that the Corporate Debtor was duly served. The Corporate Debtor had filed this belated appeal after a period of 110 days for delaying the corporate insolvency resolution process.