Aditya Kumar Tibrewal, RP of Sri Balaji Forest Products Pvt. Ltd. Vs. Om Prakash Pandey & Ors. – NCLT Kolkata Bench
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Whether criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881, would also remain stayed in terms of Section 96 of the Code, even where the cheque in question was not issued to discharge a corporate debt, though issued by a personal guarantor qua a corporate debtor. The Hon’ble High Court held that personal guarantors to corporate debtors are to be treated differently from other categories of individuals who would be covered by Part III of the Code, with it to be again observed that personal guarantors have however only been defined in Section 5(22) falling in Part II thereof and not in Part III. Though in the opinion of this court otherwise a proceeding under Section 138 of the Act, qua a debt as is wholly incurred qua an individual who is not in any manner connected to the corporate debtor that the petitioner stood a personal guarantor for, nor to the corporate debt itself, would need to proceed independently so as not to make the complainant in such proceedings under Section 138 suffer further delays, especially when in the present case he has already suffered a delay of about 10 years since his complaint was initially filed, however, in the light of the aforesaid observations as also the fact that Section 96 of the Code does not specifically carve out any exception qua such a debt as is subject matter of an instrument in the context of which a complaint under Section 138 of the Act has been filed, this court would have to interpret the terms “all the debts” and “any legal action or proceedings pending in respect of any debt” as occur in Section 96 of the Code, to mean that it would cover all such debts including any debt not pertaining to a corporate debtor for whom the accused in such a complaint under Section 138 stood as a personal guarantor to, even in his capacity as a Director of such corporate debtor.
NCLAT held that to be noted, Section 62 of the Companies Act, 2013, relates to an increase of Share Capital, of course, within the Authorised Capital. It is for the Directors to determine how may Shares and of what Value, they will issue the Shares. The enhancement of Capital is purely a matter of an internal Administration of the Company and the Courts do not interfere in such matter in normal course. In terms of the ingredients of Section 62 of the Companies Act, 2013, the Directors have to offer further Shares issued, to the Shareholders who are on the Register of Companies and not to anyone else, and in fact, the Offer must be in the same proportion to all the Shareholders. It is to be remembered that there shall be no discrimination among them. An Issue of Shares on Rights basis cannot ordinarily be subject of a complaint, as an act of Oppression.
The NCLAT held that the date on which classification is declared is relevant or the date with effect from such classification is made to be effective is relevant for the purpose of 29A(c), is the straight question to be answered. The purpose of date of “such classification” is that from the date of such classification, within grace period, that is, one year, if one year period has expired and NPA still continues, the Resolution Applicant is ineligible. From reverting to the facts of the present case, the NPA classification was declared on 21.05.2018 with effect from 01.04.2009. So, 01.04.2009 is the backdate which has been given by Canara Bank, but actual date of classification is 21.05.2018. If we take the backdate as the date of classification, the purpose and object for giving the grace period will not be fulfilled. If date of classification is declared as a date which is nine years ago, there is no question of a Resolution Applicant to take any benefit of the grace period of one year. The purpose for statutory requirement that at least one year has elapsed from the date of such classification is to see that within a period of one year from classification, if the Resolution Applicant did not get away from NPA, it should be declared as NPA. But in case where the Resolution Applicant does not actually get the grace period whether by a backdate, which is of nine years ago, it can be denied the benefit of the expression statutory requirement of “at least period of one year has elapsed from the date of such classification”.
NCLAT held that the primary object of the IBC is to revive the Corporate Debtor and to ensure that it starts running. The Hon’ble Supreme Court in ES Krishnamurthy & Ors. vs. M/s. Bharath Hi Tech Builders Pvt. Ltd. (2021) ibclaw.in 173 SC has observed that the settlements have to be encouraged because the ultimate purpose of the IBC is to facilitate the continuance and rehabilitation of a Corporate Debtor. The law has been clearly laid down by the Hon’ble Supreme Court that although settlement has to be encouraged in the IBC but no direction can be issued to the Financial Creditor to positively grant the benefit of OTS to a borrower. The debt and default having been found by the Adjudicating Authority by admitting Application which debt and default having not been questioned before us, we see no error in the order of the Adjudicating Authority admitting Section 7 Application. The statutory scheme under the IBC delineated under Section 12A of the Code as well as Regulation 30 A of the CIRP Regulations, 2016 which has been brought in the statute w.e.f. 06.06.2018 is a clear recognition of provisions and procedures for settlement in the IBC proceedings.
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