Asset Reconstruction Company India Ltd vs M/S. Manoharamma Hotel Investments Pvt Ltd

Court: National Company Law Appellate Tribunal
Case type: Company Appeal(AT)(Ins)
Decided on: 06-04-2026

<div> NATIONAL COMPANY LAW APPELLATE TRIBUNAL AT CHENNAI (APPELLATE JURISDICTION) Company Appeal (AT) (CH) (Ins) No.270/2021 In the matter of: M/s. Asset Reconstruction Company (India) Ltd. The Ruby, 10th Floor, 29, Senapati Bapat Marg, Dadar (West), Mumbai - 400 028, Represented by its Chief Manager, Mr. Nishith Doshi. … Appellant V M/s. Manoharamma Hotel Investments Pvt. Ltd. No. 601, Anna Salai, Chennai - 600 006. ...Respondent WITH Company Appeal (AT) (CH) (Ins) No.271/2021 In the matter of: M/s. Asset Reconstruction Company (India) Ltd. The Ruby, 10th Floor, 29, Senapati Bapat Marg, Dadar (West), Mumbai - 400 028, Represented by its Chief Manager, Mr. Nishith Doshi. … Appellant V M/s. Bharani Properties and Developers Pvt. Ltd. No. B.60-63, PIPDIC Industrial Estate, Mettupalayam, Pondicherry - 605009, India. ...Respondent Present : For Appellant : Mr. P. Elayarajkumar, Adovcate For Respondent : Mr. M. Dwarakanath, Advocate For Ms. Shubharanjani Ananth, Advocate JUDGMENT (Hybrid Mode) Per: Justice Sharad Kumar Sharma, Member (Judicial) These two Company Appeals dwell upon almost identical facts and circumstances, including the subjects concerning question of law, that, have to be Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 Page 1 of 18 determined for the purpose of deciding the controversy as against the rejection of the applications preferred by the Appellant under Section 7 of the I & B Code, 2016, praying for commencement of CIRP against the Respondents in respective Appeals. Hence, they are being taken up together. 2. In Comp App (AT) (CH) (Ins) No.270/2021 the Appellant, M/s. Asset Reconstruction Company (India) Limited (ARCIL) is a financial company, having been incorporated as a financial company under the provisions of the Companies Act, 1956 and registered as a securitization and asset reconstruction company pursuant to section 3 of the SARFAESI Act. It claims to be the “Financial Creditor” as per the provisions contemplated under Section 5(7) of the I & B Code, by virtue of the assignment, done in its favour, of loans given to M/s Anandram Developers Pvt. Ltd., the Principal Borrower, by Indian Overseas Bank (IOB) and Oriental Bank of Commerce (OBC). M/s. Manoharamma Hotel Investments Pvt. Ltd., the Respondent herein, is the Corporate Debtor, which is falling within the definition of the Corporate Debtor as contained under Section 3(8) of the I & B Code, being a Corporate Guarantor to the Principal Borrower who failed to repay the loans taken from the aforesaid Banks. 3. In the connected Company Appeal, Comp App (AT) (CH) (Ins) No.271/2021, the Appellant remains the same, that is, ARCIL. However, the Respondent in this Company Appeal is M/s. Bharani Properties and Developers Pvt. Ltd. who is also the Corporate Guarantor for the loans that have been taken by the Principal Borrower, M/s. Anandram Developers Pvt. Ltd. (ADPL). Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 Page 2 of 18 4. The facts of the case are that Principal Borrower had availed loan of Rs.30 Crore from IOB on 28.11.2005. For the said loan, both the Respondents herein stood as the guarantors by executing the Guarantee Agreement on 30.06.2006 for repayment of loan. Due to non-repayment of the loan thus disbursed, IOB had filed the application OA no. 430/2024 (old OA no. 106/2012) section 19(1) of RDDBFI Act, 1993 on 04.06.2012 against 6 defendants, that is, Anandram Developers (Principal Borrower), Manoharamma Hotel Investments & Bharani Properties and Developers (corporate guarantors) and 3 other individuals (personal guarantors) for recovery of a sum of Rs. 22.78 crore together with interest @ 12% per annum from 04.06.2012 till the date of realization. During the pendency of the said proceedings, IOB assigned its debt to the Appellant (ARCIL) by virtue of a Registered Assignment Deed No. 2914/2015 dated 10.02.2015. The Appellant, upon the execution of the said Assignment Deed, substituted itself in the proceedings of OA no. 430/2014 being carried before Ld. DRT-II, Chennai and pursued the proceedings. The said proceedings before DRT-II attained finality, with passing of the order dated 31.10.2016 allowing the application & permitting the Appellant to recover Rs.22.78 crore with interest @12% per annum from the date of institution of the OA till realization along with the costs of the OA from the defendants 1 to 6 jointly and severally and in case of default, by sale of the properties mentioned in the schedule to the OA, and with issue of the Recovery Certificate being DRC No.684/2016 dated 03.12.2016. Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 Page 3 of 18 5. Similarly Oriental Bank of Commerce (OBC) had sanctioned, to M/s Anandram Developers, a loan of Rs, 30 crore on 10.10.2006 and a FITL loan of Rs. 2.06 crore on 30.06.2009 and had also executed guarantee agreement with the Respondents herein for the said loans. The principal borrower failed to repay the loan as per the repayment schedule. Meanwhile, OBC assigned the said debts to the Appellant (ARCIL) by virtue of an Assignment Deed dated 28.03.2014. ARCIL with the assignment of the debt in its favour, stepped into the shoes of the financial creditor and initiated recovery proceedings against the same 6 defendants, namely, Anandram Developers (Principal Borrower), the corporate guarantors being Manoharamma Hotel Investments & Bharani Properties and Developers and 3 others (personal guarantors) by filing OA no. 29/2016 on 06.11.2015 before DRT-I, Chennai under section 19(1) of RDDBFI Act, 1993 for recovery of a sum of ₹56.50 crore 19.10.2015, together with interest @ 16% per annum till the date of realisation in full with costs, from the defendants jointly and severally, and also for sale of the schedule property mentioned in the schedule. The said application stood allowed on 13.03.2018, by virtue of which the appellant become entitled to recover a sum of ₹56.50,00,00,000 together with future interest @ 16% per annum from 20.10.2015, till its realisation from the defendant, jointly and severally and also to recover the same by sale of the properties mentioned in the schedule to the OA in case of default. 6. Consequent to the final orders passed by Ld. DRT dated 31.10.2016 and 13.03.2018, ARCIL instituted the proceedings under Section 7 of the I & B Code Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 Page 4 of 18 as against the principal borrower, M/s. Anandram Developers Private Limited, by filing the Company Petition No.603/IB/2017, which was allowed by an order passed on 06.06.2018 and M/s Anandram Developers was admitted into CIRP. Further, during the course of CIRP proceedings, the Resolution Professional filed an application MA/463/ 2019 in the said proceedings of CP/603/IB/2017, praying for liquidation of M/s Anandram Developers. The said application stood allowed by Learned NCLT on 11.02.2020 and M/s Anandram Developers was admitted into liquidation. 7. Further, pending the CIRP proceedings against M/s Anandram Developers, the Appellant filed application under section 7 of the I&B Code against each of the Respondents separately, who stood as the corporate guarantor to the loans availed by the Principal Borrower and which were ordered to be recovered from them by the orders of Ld. DRT as described above. However, Ld. NCLT, Chennai dismissed the said the applications by passing two separate orders, each dated 01.06.2021 holding thereof that the debt is time-barred because the Appellant has not placed any record or document recognized under the law to substantiate that the debt falls well within the period of limitation and therefore, the said application is liable to be dismissed. The said orders of dismissal are being challenged by the Appellant ARCIL in the instant company appeals. 8. The case of the Appellant is that, as a consequences of the assignment of the debt made in their favour by way of the Registered Assignment Deeds and the subsequent substitution allowed in their favour, they had contested the Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 Page 5 of 18 proceedings before the DRT and obtained the final orders in OA No. 430/2014 and OA No. 29/2016 in their favour, and therefore, they were well within their rights to pursue the proceedings under Section 7 of the Code, against the Corporate Guarantors / Respondents herein, based on the orders rendered by Ld. DRT. 9. The Appellant contends that as a consequence of the final orders dated 31.10.2016 and 13.03.2018 passed by the DRT, they had filed applications under Section 7 of the I & B Code as against the principal borrower and the Corporate Guarantors, the Respondent here in because the said entities failed to repay the amount as ordered by DRT. The proceedings under Section 7 of the Code as against the Principal Borrower has been allowed and it has resulted in admitting the Principal Borrower first into CIRP proceedings and thereafter, into liquidation. The application under section 7 of the Code as against the present Respondents, who stood as the Corporate Guarantors to the credit facilities availed by the Principal Borrower, also relied on the same documents and satisfied all the prescribed conditions, that were contained and required to be satisfied in Form-I, as stipulated under Rule 4(1) of the I&B (Application to Adjudicating Authority), Rules, 2016. He has submitted that the Section 7 Applications in Form-I, as against the Respondents / corporate guarantors, were preferred on 07.12.2018 and they were carrying all the necessary facts as were required to be revealed in the said applications, including the description of the financial debt as detailed in its part IV. Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 Page 6 of 18 10. The contents of part IV of the application that was preferred under Section 7 by the Appellant, would be a bone of contention in the instant Company Appeal for the purposes of determining whether the debt and default were barred by limitation, which has been taken as to be the basis by the Tribunal for rejecting the applications. Therefore, it becomes inevitable for us to precisely deal with the contents of the said section 7 applications in the context of its Part IV of the same. The said contents are detailed below. 11. It is seen that the Appellant had filed following documents along with the Applications to establish the debt and the default. (i) the assignment deeds executed in favour of the Appellant dated 28.03.2014 and 10.02.2015 by OBC and IOB respectively, (ii) copy of the sanction advice of IOB (the assignor of the Financial Creditor) dated 28.11.2005, for a term loan of Rs.30 Crores on 28.11.2005 sanctioned to Anandram Developers, the Principal Borrower, (iii) copies of the Guarantee Agreement dated 30.06.2006, executed between IOB and the Respondents being the corporate guarantor to the said term loan, (iv) Copies of the term loan agreements dated 10.10.2006 and 30.06.2009 between OBC and M/s. Anandram Developers Private Limited, (v) copies of the Guarantee Agreements dated 10.10.2006 and 30.06.2009 which were executed by the Respondent in favour of OBC, for the loans sanctioned to Anandram Developers for the said loans, Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 Page 7 of 18 (vi) copies of the final orders passed by Ld. DRT-II dated 31.10.2016 and 13.03.2018 in respect of OA/430/2014 and OA/29/2016, (vii) copy of the recovery certificate issued by Ld. DRT-II being DRC No. 684/2016. 12. The Appellant has further shown that he is entitled for recovery of the said amounts decreed by Ld. DRT by filing the application under section 7 of the Code and that the said application has been filed within 3 years of the date of issue of the respective final orders of Ld. DRT, by giving the detailed tabulation with regard to the amount of default and the date on which default has occurred. The precise details pertaining of date on which the default occurred as given in the application under Section 7 of the Code, are extracted hereunder: - </div><table><thead><tr><th>2.</th><th>Amount claimed to be in default and the date on which the default occurred (Attach the Workings for Computation of amount and dates of default in tabular form)</th><th>Indian Overseas Bank (Assignor of the Financial Creditor) filed O.A. No.430/2014 before DRT-II, Chennai (Old O.A. No.106 of 2012 before DRT- I Chennai) in respect of claims from the ADPL and the Guarantors for a total sum of Rs.22,77,65,247/- with further interest at the rate of 12% per annum which came to be allowed in and by a final order dated 31.10.2016 and Recovery Certificate came to be issued by the DRT, in D.R.C. No.684 of 2016. Annexures-12 & 13 are the Final order in the O.A and Recovery Certificate. Arcil has filed O.A. No.29 of 2016 on the file of DRT-I, Chennai, filed in respect of claims from the Corporate Debtor and the Guarantors, for a total sum of Rs.56,49,97,828/- as on 19.10.2015 with further interest at the rate of 16% per annum, monthly rest, which came to be allowed in and by a final order dated 13.03.2018.</th></tr></thead><tbody></tbody></table><div> Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 Page 8 of 18 </div><table><thead><tr><th></th><th></th><th>Annexure 14 is the Final order in the O.A. As per the above said orders/decree amount defaulted by the Corporate Debtor is Rs.88,83,26,278/- Crore as on 31.10.2018 with further interest and other charges, less recoveries if any towards OBC dues and Rs.37,80,63,403/- Crore as on 31.10.2018 with further interest and other charges, less recoveries if any towards IOB dues. Annexure-15 is the tabular form of calculation of entire dues.</th></tr></thead><tbody></tbody></table><div> 13. It is seen from the above that as per the Appellant, default has commenced from the date of issue of the final orders of DRT in the two proceedings before it, being OA/430/2014 and OA/29/2016. This would require consideration as to whether the contents and context of the same could be taken as to be the contents, which would be establishing the “default” as contemplated under Section 3(12) of the I & B Code, which is to be read with the “debt” as defined under the 3(11) of the I & B Code which are extracted hereunder: - “(11) “debt” means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt; (12) “default” means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not 1 [paid] by the debtor or the corporate debtor, as the case may be;” 14. The Respondents, Manoharamma Hotel Investments Pvt. Ltd. And Bharani Property Developers, the Corporate Guarantors contested the proceedings before the Learned Adjudicating Authority by filing counter on Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 Page 9 of 18 23.03.2019, as against the Application preferred under Section 7 by the Appellant, stating that the application is silent about the date of default and therefore it is not in conformity with the requirements of the Code. They had stated that IOB had classified the accounts of the principal borrower as NPA as back as on 31.12.2007 and therefore the default has happened in the year 2007 and therefore, the debt has to be taken as time barred for the purpose of initiating CIRP proceedings as the applications under section 7 of the Code have been filed on 07.12.2018, well after expiry of three years from the said date. 15. The Learned Adjudicating Authority, while making its determination about the aspect of debt and default, as against the Corporate Guarantor, has held that the assignor of the Appellant, had filed the OA before the DRT only on 04.06.2012, after the expiry of almost five years from the date of NPA i.e., 31.12.2007 and therefore, the entire CIRP proceedings will be barred by limitation. It has further observed that the Appellant has not mentioned date of default in the section 7 application which is a mandatory requirement and that it has not shown any document such as entries in the balance sheet and acknowledgement of the Principal Borrower company with respect to the debt which can extend the limitation period and accordingly the debt as claimed by the Financial Creditor (ARCIL) will have to considered as time-barred. 16. In light of the conclusion drawn by Ld. Adjudicating Authority as above, the question that would arise will be that, when IOB (the assignor of the Appellant), had filed the OA/430/2014 on 04.06.2012, and the same was being Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 Page 10 of 18 contested by the Principal Borrower and the Respondents here in as well, as defendant 2 & 4 therein, and did not make any plea of “belated drawing of the proceedings”, under Section 19(1) of RDDBFI Act, 1993, will the respondents be entitled to raise it before Ld. NCLT in section 7 proceedings. Further, the issue that would now be falling for consideration is that when the said issue of limitation was not raised by the principal borrower or the Respondents in their capacity as defendant 2 & 4, at the first available opportunity in the proceedings of OA No.430/2014, which was allowed on 31.10.2016 and a Recovery Certificate thereafter was issued on 03.12.2016, whether at all, the same Respondents here in can take a stand in a subsequent proceedings of CIRP based on the orders of DRT, that the debt was barred by limitation, after the liability has been fastened on them by a judicial order? The answer will be that they cannot, having not raised the same issue earlier, as per the settled principles of law. 17. If the contents of entire sub-part 2 of part IV of the application preferred under Section 7 of the Code, is taken into consideration, it can be seen that the Appellant became entitled for initiation of the proceedings under Section 7 of the Code, only after the issue of the two final orders by Ld. DRT and the issue of the Recovery Certificate by it. Therefore, the cause of action for the purposes of institution of the proceedings under Section 7 of the I & B Code will arise from the date of issue of the Recovery Certificate i.e., 03.12.2016. Accordingly, the application preferred on 07.12.2018 under section 7 of the Code by the Appellant cannot be said to be barred by limitation for the reason being that the aspect of Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 Page 11 of 18 limitation has to be construed to commence from the date of the issuance of the Recovery Certificate i.e., on 3.12.2016 or at the most, from the date when the Judgment had been rendered by the DRT i.e., on 31.10.2016 in the proceedings which was contested by the principal borrower and there was no issue raised on the aspect of limitation. This issue has been fully settled by the ratio laid down by the Hon’ble Apex Court in the matter of ‘Kotak Mahindra Bank Ltd.’ Vs. ‘A. Balakrishnan’ reported in [(2022) 9 SCC 186]. The relevant paragraph is extracted below: “71. We have already hereinabove, done the exercise of considering the relevant provisions of IBC afresh and come to a conclusion that a liability in respect of a claim arising out of a recovery certificate would be a “financial debt” within the meaning of clause (8) of Section 5 IBC and a holder of the recovery certificate would be a “financial creditor” within the meaning of clause (7) of Section 5 IBC. We have also held that a person would be entitled to initiate CIRP within a Comp. App. (AT) (Ins.) No. 991 & 992 of 2025 7 of 12 period of three years from the date on which the recovery certificate is issued. We are of the considered view that the view taken by the twoJudge Bench of this Court in Dena Bank [Dena Bank v. C. Shivakumar Reddy, (2021) 10 SCC 330] is correct in law and we affirm the same. 86. To conclude, we hold that a liability in respect of a claim arising out of a recovery certificate would be a “financial debt” within the meaning of clause (8) of Section 5 IBC. Consequently, the holder of the recovery certificate would be a financial creditor within the meaning of clause (7) of Section 5 IBC. As such, the holder of such certificate would be entitled to initiate CIRP, if initiated within Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 Page 12 of 18 a period of three years from the date of issuance of the recovery certificate.” 18. Besides that, another issue which would be required to be considered is, as to when the principal borrower, based on same facts and circumstances, has already been determined to have defaulted on the same set of debt, in an independent Company Petition proceedings, being CP No.603/IB/2017, and has been first placed under CIRP and subsequently, put under liquidation proceedings, will it be different for the corporate guarantors, who, along with the Principal Borrower were jointly held responsible for the default by Ld. DRT? On a plain reading of the principles of law, it will be deemed that, when the principal borrower is facing the liquidation proceedings of whom the Respondent is the Corporate Guarantor, the existence of the debt and default has already been established beyond doubt and in that circumstances, the same set of debt and default sought to be pressed upon against the Corporate Guarantors by filing the application under Section 7 of the I & B Code, would not be barred by limitation. 19. This would be said because the entire proceedings, either as against the Principal Borrower or for that matter as against the Corporate Guarantors is as against the admitted fact of default, based upon the same set of facts and documents which are the Orders of Ld. DRT and the Recovery Certificate issued by it. Further, the admission made by the principal borrower with regard to the debt and default in the CIRP Process as initiated against them, will bind the Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 Page 13 of 18 Corporate Guarantors also, in terms of the Guarantee Deed as executed between them. 20. The facts which could be revealed from the application preferred under Section 7 of the Code, by filing the same before the Learned Adjudicating Authority in the shape of Form I under Rule 4(1) of the I & B (Application to the Adjudicating Authority), Rules, 2016, is that, it shows that the Appellant has preferred the application in its status of being the Financial Creditor, having been incorporated on 11.02.2002 and on the basis of the rights having been conferred to the Appellant on account of the Assignment Deed that had executed on 28.03.2014. 21. We have heard the Learned Counsel for the parties to both the Company Appeals at length. If we go through the findings which have been recorded by the Learned Tribunal, particularly that has contained in para 17 of the impugned order, the solitary ground which has been derived by the Learned Tribunal, for rejecting the application is on the ground that, in sub part 2 of part IV, of the application under Section 7 of the I & B Code, it did not contain a reference of the “date of default” and it was observed by the Tribunal that, part IV of the Application, did not contain any pleading in support of their claim and hence in the absence of the such pleading and in the absence of the date of the default or an acknowledgement made in pursuance to it, the proceedings would be barred by limitation and its based upon this ground, the application has been rejected. Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 Page 14 of 18 22. In the case at hand, the conclusion drawn by Ld. Adjudicating Authority may not be correct since the Corporate Debtor has already been determined, as to be in default of the debt in the proceedings of the Company Petition CP/603/IB/2017, resulting into its admission into CIRP and subsequently into liquidation of the Corporate Debtor. This will lead to the inference that Ld. NCLT has already determined that the debt is not time-barred because the debt and default was acknowledged and CIRP proceedings were commenced on 06.06.2018 at that time, the said question of the debt being barred by limitation was never raised by the Principal Borrower. Apart from it, the observations, that had been made by the Learned Tribunal that, there happens to be no document on record despite an opportunity having been provided to prove the debt and default, is absolutely contrary to the records, for the reason being that, the orders of Ld. DRT were there on record and as per the law settled by Hon’ble Apex Court in the matters of Kotak Mahindra Bank Ltd.’ Vs. ‘A. Balakrishnan’ reported in [(2022) 9 SCC 186 (supra) , these are sufficient to prove the debt and default. 23. The other observation of Ld. NCLT that in the section 7 application, the date of default was not mentioned, and therefore it will vitiate the entire proceedings is also not correct. In the column (2) of part IV of the application, the appellant has already referred to the two orders of learned DRT and had also specifically mentioned the date of such orders. As per the judgement of Hon’ble Apex Court, the date of order of DRT / issue of Recovery Certificate will have to be taken as the date of default because the holder of the recovery certificate would Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 Page 15 of 18 be a financial creditor within the meaning of section 5(7) of I&B Code and this will give a fresh cause of action. Thus, the reason assigned by the Tribunal contending thereof that there was no material to show the occurrence of an aspect of default is absolutely contrary to the contents of the Section 7 application itself. Further, in accordance with definition of default as extracted above, what we have to see is that, there has to be a determination of a liability or an obligation to pay in respect of a claim due to non-payment of a debt. The determination of the liability and an obligation herein is flowing for the Appellant from the orders passed by the DRT and subsequent issuance of the Recovery Certificate. The reference of the date of default as referred to in point-2 in part IV of the Application has not to be rigidly construed to be making a specific reference about the date of default, for the reason being that point-2 specifically observes that, the default would be construed on the basis of the determination made by the DRT based on its Judgment and the consequential issuance of the Recovery Certificate, which was further supported by a tabular form of calculation entries of the amount, which has fallen, due to be paid. In fact, the Learned Tribunal while rendering the Judgment, has not taken into account the entire contents of the application preferred under Section 7, particularly the contents of part IV, in its entirety and particularly. Further, since the principal borrower has been determined to be in default and CIRP process has been commenced by the order passed on 06.06.2018, in that eventuality, the initiation of Section 7 by the present Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 Page 16 of 18 Appellant against the Corporate Guarantor for the same debt and default cannot be said to be suffering from the bar of limitation. 24. The finding recorded by the Tribunal that, there is an absence of pleading and averment with regard to the specific date of default and acknowledgment and that, the Appellant has failed to place on record the documents despite of the opportunity granted, is per se erroneous and contrary to the records because in our view, the application under Section 7 of the I & B Code itself contained sufficient material to determine whether the debt was barred by limitation. Further when the aspect of limitation was not raised before DRT in the proceedings of OA/430/2014, when it was raised and negatived by DRT in the proceedings of OA/29/2016, when the section 7 application against the principal borrower arising out of same set of debt and default based on the Orders of DRT, it will have to be construed that the debt is not time-barred. 25. Hence owing to the fact: - (i) that the principal borrower for whom the Respondents herein stood as Corporate Guarantors has already been determined to be a defaulter by commencement of the CIRP against the principal borrower resulting into the liquidation order. (ii) because there happens to be a determined default and liability to pay on account of the orders passed by the DRT. (iii) because the liability arising out of the Recovery Certificate issued by the DRT upon its adjudication would be a financial debt within the meaning of Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 Page 17 of 18 Section 5(8) of the Code, and holder of such certificate would be entitled to initiate CIRP, if initiated within a period of three years from the date of issuance of the recovery certificate, (iv) because, the finding recorded by the Tribunal based upon an incorrect interpretation of the contents of the application preferred under Section 7 of the I & B Code, that the date of default has not been mentioned, is not correct, 26. We are of the view that the impugned Orders as rendered by the Ld. Tribunal in the two Company Appeals suffers from substantial and procedural error and that they cannot be sustained. Accordingly, the impugned orders are quashed and the matter is remitted back to the Adjudicating Authority to decide the applications under Section 7 of the Code against the two Respondents / corporate guarantors, on its own merit without being swayed by the aspect of bar of limitation or non-reference of a date of default in the applications preferred under Section 7 of the I & B Code. Owing to the finding which has been recorded by us, subject to the above, the Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 are allowed. Interlocutory applications, if any, would stand closed. [Justice Sharad Kumar Sharma] Member (Judicial) [Jatindranath Swain] Member (Technical) 06/04/2026 VG/MS/AK Comp App (AT) (CH) (Ins) Nos.270 & 271/2021 Page 18 of 18 </div>