RAJENDRA NAROTTAMDAS SHETH Vs. CHANDRA PRAKASH JAIN

JUDGEMENT

(1.) Respondent No. 2 filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the 'Code ') which was admitted by the National Company Law Tribunal, Ahmedabad bench (hereinafter referred to as the 'NCLT ' or 'Adjudicating Authority ') on 01.06.2020. The Appellants, who are the suspended directors of the board of R.K. Infratel Ltd. (hereinafter referred to as the 'Corporate Debtor '), filed an appeal which was rejected by the National Company Law Appellate Tribunal, Delhi (hereinafter referred to as the 'NCLAT '). Therefore, this Appeal.

(2.) The Corporate Debtor is in the business of setting up underground fiber network in the cities of Surat, Ahmedabad, Vapi, Silvasa, Ankleswar and in South Gujarat, and providing dedicated dark fiber, broadband, internet leased line, VPN, point-to-point, wi-fi and wiMAX connections and CCTV surveillance services to corporate entities, financial institutions and other organisations. Respondent No. 2, Union Bank of India (hereinafter referred to as the 'Bank ' or 'Financial Creditor '), sanctioned a loan of Rs. 4.5 crore which was cleared by the Corporate Debtor on 08.12.2012. Another loan was granted by the Financial Creditor for Rs. 3.5 crore which was also repaid on 28.05.2018. Thereafter, loans were granted by the Financial Creditor to the Corporate Debtor but the Corporate Debtor was unable to settle the dues of the Financial Creditor in time. On 30.09.2014, the account of the Corporate Debtor was declared as nonperforming asset (NPA). The Financial Creditor issued notice for recovery of all dues payable by the Corporate Debtor on 01.10.2014. Pursuant to the notice, the Financial Creditor filed an application before the Ahmedabad bench of the Debt Recovery Tribunal under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 for recovery of the dues, which is still pending consideration.

(3.) On 25.04.2019, the Financial Creditor filed an application under Section 7 of the Code, which was admitted on 01.06.2020. The Financial Creditor averred, in the application filed under Section 7 of the Code, that the Corporate Debtor owed an amount of Rs. 24.62 crore as on 31.03.2019. The Financial Creditor submitted documents in support of its claim, including a debit balance confirmation letter dated 07.04.2016 signed by the Corporate Debtor. On the other hand, the Corporate Debtor contended that the application was time-barred. It was further contended by the Corporate Debtor that the application under Section 7 filed by the Financial Creditor was legally untenable, as proceedings before the Debt Recovery Tribunal, including a counter claim by the Corporate Debtor, were still pending consideration. After examining the material on record, the Adjudicating Authority held, by an order dated 01.06.2020, that the application under Section 7 was not barred by limitation. The Adjudicating Authority referred to the debit balance confirmation letter dated 07.04.2016 and regular credit entries made after 07.04.2016 till May, 2018 to come to the said conclusion. A letter by the Corporate Debtor dated 17.11.2018 giving details of the amount repaid till 30.09.2018 and acknowledging the outstanding amount as on 30.09.2018 was also referred to by the NCLT. In addition, the reply of the Corporate Debtor was relied upon wherein payment of an amount of Rs. 16.17 lakh during the financial year 2019-20 was admitted. The Adjudicating Authority rejected the contention of the Corporate Debtor that the application filed by the power of attorney holder on behalf of the Financial Creditor was not maintainable.