Skip to main content

Date of decree cannot be brought forward/substituted with date of default

Cause Title : Venus Buildtech India Private Limited vs Senbo Engineering Limited, C.P. (IB) No. 60/KB/2021, National Company Law Tribunal Kolkata Bench

Date of Judgment/Order : 4/8/2023

Corum : Smt. Bidisha Banerjee, Member (Judicial), Shri Balraj Joshi, Member (Technical)

Citied: 

  1. Jignesh Shah and Another v. Union of India and Another, (2019) 10 SCC 750
  2. Asset Reconstruction Company (India) Limited vs. Bishal Jaiswal and Another, (2021) 6 SCC 366
  3. V. Padamkumar Vs. Stressed Asset Stabilization Fund (SASF) & Anr., C.A.(AT) (Ins) No. 57 of 2020
  4. SLB Welfare Assn. v. PSA IMPEX (P) Ltd., Company Appeal (AT) (Insolvency) Nos. 905 and 642 of 2022, decided on 04-11-2022
  5. Sri Subhankar Bhowmik v. Union of India and Anr., WP(C)(PIL) No.04/2022 decided on 14 March, 2022

Background

Venus Buildtech had originally filed a suit under order 37 CPC in the month of November, 2010 before the ADJ, Delhi which was decided and decree and as per the said order/judgement dated 12 September, 2017, Venus Buildtech is entitled to recover the Principal Suit amount of Rs.77,10,967/- (Rupees Seventy Seven Lac Ten Thousand Nine Hundred Sixty Seven only) along with interest @ 9% per annum on the money decree from the Senbo Engineering. The same is still outstanding and payable by Senbo Engineering to Venus Buildtech despite repeated follow ups, communications for several months.

Subsequently, Venus Buildtech  filed application as an 'Operational Creditor' before the NCLT on 17 February, 2021 and the date of default is stated to be as on 06 March, 2020 i.e., the date of execution order of the decree.

The Corporate Debtor raised objections stating that the review petition filed by the Corporate Debtor has been registered as Misc. DJ No.66 of 2021 and the same is pending for hearing before the Hon’ble Court  and therefore the debt is not undisputed and has not attained finality, thus, there exists ‘pre-existing disputes’ between the parties.

Judgment

The NCLT observed that two questions need to be answered :-

1) Can the date of default be shifted forward to the date of decree?
2) Can a decree holder file an application under section 9 of the Code?

On the first question, the Ld. NCLT quoting the above judgments, held that a suit for recovery of money can be filed only when there is a default of dues. Even if the decree is passed, the date of default cannot be shift forward to the date of decree or date of payment for execution as a decree can be executed within specified period i.e. 12 years. If it is executable within the period of limitation, one cannot allege that there is a default of decree or payment of dues. Therefore, a Judgment or a decree passed by a Court for recovery of money by Civil Court/ Debt Recovery Tribunal cannot shift forward the date of default for the purpose of computing the period for filing an application under Section 7 of the ‘I&B Code’.

As for the second question, again referring to the judgments the NCLT held that the IBC treats decree holders as a separate class, recognized by virtue of the decree held. The IBC does not provide for any malleability or overlap of classes of creditors to enable decree holders to be classified as financial or operational creditors. 

Comments

Post a Comment

Most viewed this month

One Sided Clauses In Builder-Buyer Agreements Is An Unfair Trade Practice

In CIVIL APPEAL NO. 12238 OF 2018, Pioneer Urban Land & Infrastructure Ltd. vs Govindan Raghavan, an appeal was filed before the Supreme Court  by the builder against the order of the National Consumer Forum. The builder had relied upon various clauses of the Apartment Buyer’s Agreement to refute the claim of the respondent but was rejected by the commission which found the said clauses as wholly one-sided, unfair and unreasonable, and could not be relied upon. The Supreme Court on perusal of the Apartment Buyer’s Agreement found stark incongruities between the remedies available to both the parties. For example, Clause 6.4 (ii) of the Agreement entitles the Appellant – Builder to charge Interest @18% p.a. on account of any delay in payment of installments from the Respondent – Flat Purchaser. Clause 6.4 (iii) of the Agreement entitles the Appellant – Builder to cancel the allotment and terminate the Agreement, if any installment remains in arrears for more than 30 da...
Post a Comment
Read more

Inherited property of childless hindu woman devolve onto heirs of her parents

In Tarabai Dagdu Nitanware vs Narayan Keru Nitanware, quashing an order passed by a joint civil judge junior division, Pune, the Bombay High Court has held that under Section 15 of the Hindu Succession Act, any property inherited by a female Hindu from her father or mother, will devolve upon the heirs of her father/mother, if she dies without any children of her own, and not upon her husband. Justice Shalini Phansalkar Joshi was hearing a writ petition filed by relatives of one Sundarabai, who died issueless more than 45 years ago on June 18, 1962. Article referred:http://www.livelaw.in/property-inherited-female-hindu-parents-shall-devolve-upon-heirs-father-not-husband-dies-childless-bombay-hc-read-judgment/
Post a Comment
Read more

Court approached in the early stages of arbitration will prevail in all other subsequent proceedings

In National Highway Authority of India v. Hindustan Steelworks Construction Limited, the Hon'ble Delhi High Court opined that once the parties have approached a certain court for relief under Act at earlier stages of disputes then it is same court that, parties must return to for all other subsequent proceedings. Language of Section 42 of Act is categorical and brooks no exception. In fact, the language used has the effect of jurisdiction of all courts since it states that once an application has been made in Part I of the Act then ―that Court alone shall have jurisdiction over arbitral proceedings and all subsequent applications arising out of that agreement and arbitral proceedings shall be made in that Court and in no other Court. Court holds that NHAI in present case cannot take advantage of Section 14 of the Limitation Act, 1963 for explaining inordinate delay in filing present petition under Section 34 of this Act in this Court.
Post a Comment
Read more