The Corporate Guarantee was given by the Managing Director of the Corporate Debtor against the provisions of Section 185 of the Companies Act, 2013 and no Board or Special Resolution was passed. However, it is not in dispute that the Corporate Guarantee was executed on 2nd September, 2014 and since then the matter was not challenged by any of the Shareholder / Director of the Corporate Debtor before any competent authority or Court of Law. In such circumstance, it is not open to any Shareholder/ Director/ Managing Director to raise such issue in petition under Section 7 of the I&B Code, as the Adjudicating Authority has no jurisdiction to decide the question of legality and propriety of the Corporate Guarantee executed by the Corporate Debtor.
In view of specific prohibition under Section 11 of the Code. As clause (d) of Section 11, a ‘Corporate Debtor’ in respect of whom a liquidation order has been made is not entitled to make application to initiate ‘CIRP’ under Chapter II. That means, it cannot file any application under Sections 7 or 9 of the Code. Therefore, no application under Chapter II can be filed by the ‘Corporate Debtor’, which is under Liquidation of which the Appellant is Liquidator. In so far as, sub-section (5) of Section 33 is concerned, it is subject to Section 52. Section 52 relates to right of secured creditor in liquidation proceedings. However, in case where matter does not relate to any secured asset and recovery of any money by the ‘Corporate Debtor’, which is not under Liquidation, a suit or other legal proceedings may be instituted by the Liquidator on behalf of the ‘Corporate Debtor’, but not an application under Section 9 of the Code.
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NCLAT held that it is clear that once the Adjudicating Authority is satisfied on the basis of records that the debt is payable and there is default, the Adjudicating Authority is required to admit the application. The Respondent – M/s Pashupati Jewellers having enclosed the copy of the ‘Corporate Guarantee and Undertaking’ Agreement dated 7th April, 2017 instituted on e-Stamp, issued by Government of National Capital Territory of Delhi, it was not open to the Adjudicating Authority to deliberate on the issue whether e-Stamp is a forged document or not. Merely because a suit has been filed by the Appellant and pending, cannot be a ground to reject the application under Section 7 of the I&B Code. Pre-existing dispute cannot be a subject matter of Section 7, though it may be relevant under Section 9 of the I&B Code.
On ground, whether the application under Section 7 of the Code was barred by limitation and, if not, whether the claim of the Banks was barred by limitation to hold that there is no debt payable in the eyes of law? NCLAT held that for computing the period of limitation of an application under Section 7, one should refer to Article 137 of Part II of Third Division of the Schedule of Limitation Act, 1963.
The right to apply under Section 7 of the Code, accrued to the Bank only since 1st December, 2016, i.e., when I&B Code came into force. From the aforesaid provision, we find that the application under Section 7 is not barred by limitation.
To find out, as to whether the claim is barred by limitation or not, one should refer to Articles 61 & 62 of Part-V of First Division. It relates to mortgage of property (Article 61) and enforcement of payment of money secured by a mortgage (Article 62).
NCLAT held that it clear that the CoC have no role to play as the agreement reached between the ‘Dutch Administrator’ and the Resolution Professional of India is on the basis of the direction of this Appellate Tribunal. In spite of the same, unfortunately the CoC interfered with the matter and put its view to the Resolution Professional resulting into difference of the suggestions. ‘The Dutch Trustee’ is equivalent to the Resolution Professional of India, therefore, as per law he has a right to attend the meeting of the CoC. However, as we do not want to overlap the power between one and other, we are of the view that the suggestion given by the ‘Dutch Trustee’ (Administrator) as shown in its ‘Clause 6.1.2’ should be part of the Agreement – ‘Cross Border Insolvency Protocol’.