Sunil Kumar Aggarwal vs. New Okhla Industrial Development Authority & Ors - Limitation & Verification of claims in CIRP

NCLAT (31.07.2019) in Sunil Kumar Aggarwal vs. New Okhla Industrial Development Authority & Ors. [Company Appeal (AT) (Insolvency) No. 775 of 2019] held that;

• ‘we find that the ‘Interim Resolution Professional’ is already directed to examine the claim of the NOIDA, who is the Applicant before the Adjudicating Authority and no final decision has been taken and the Adjudicating Authority has made it clear that the claim of the NOIDA cannot be rejected on the ground that it is time barred or the claim is by an entity other than the ‘financial Creditor’

 

Excerpts of the order;

31.07.2019 This appeal has been preferred by Mr. Sunil Kumar Aggarwal, Authorised Representative of Home Buyers (Allottees) of ‘M/s. Granite Gate Properties Pvt. Ltd.’ (Corporate Debtor) against the impugned order dated 10th June, 2019 passed by the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi, which reads :

• “The applicant - New Okhla Industrial Development Authority (for brevity ‘NOIDA’) has filed its claim before the Interim Resolution Professional who is supposed to have collated the claim without adopting an attitude of adversarial litigant. However, in an unwarranted manner the IRP has refused to consider the claim of the applicant- NOIDA. There is no room for argument that the limitation period of three years applies because it could not be disputed that the piece of land allotted by the applicant- NOIDA is under the first charge. Therefore, the provisions of Article 137 of the schedule of the Limitation Act, 1963 would not apply. On the contrary the provisions of Article 62 of the schedule of the Limitation Act, 1963 would apply which provides for 12 years period of limitation. It was then sought to be argued that the nature of lease given by the applicant- NOIDA is not a financial lease within the meaning of Indian Accounting Standards and therefore, it cannot be regarded as a ‘Financial Creditor’.

• On the contrary learned counsel for the applicant-NOIDA has argued that it has to be regarded as ‘Financial Creditor’ within the meaning of Section 5 (8) (d) of the Code in as much as the amount of any liability in respect of lease/hire purchase agreement and the same is regarded as a finance of capital lease under the Indian Accounting Standards. According to the applicant- NOIDA clause 62 of AS- 19 covers its case which is similar to clause 8 of AS-17.

• Having heard the learned counsel for the parties we direct the IRP to examine the claim of the applicant- NOIDA and shall not reject it on the ground that it is time barred or that it is a claim by an entity other than the ‘Financial Creditor’.”

 

Learned Senior Counsel appearing on behalf of the Appellant submitted that the “New Okhla Industrial Development Authority” (NOIDA) has already been considered as a ‘Financial Creditor’ and the ‘Resolution Professional’ has already submitted the report. Now it is not open to any of the Authority to change the status of NOIDA from the ‘Financial Creditor’ to any other type of ‘Creditors’. However, we find that the ‘Interim Resolution Professional’ is already directed to examine the claim of the NOIDA, who is the Applicant before the Adjudicating Authority and no final decision has been taken and the Adjudicating Authority has made it clear that the claim of the NOIDA cannot be rejected on the ground that it is time barred or the claim is by an entity other than the ‘financial Creditor’. However, we are not inclined to express any opinion. In case, if any contrary decision is taken by the Adjudicating Authority, it will be open to the aggrieved person including NOIDA or the Appellant to move before the appropriate Form / Appellate Tribunal.

 

The appeal stands disposed of.

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The Doctrine of Merger

The doctrine of merger is neither a doctrine of constitutional law nor a doctrine statutorily recognised. It is a common law doctrine founded on principles of propriety in the hierarchy of justice delivery system.

 

SCI (26.07.2010) in Pernod Ricard India(P) Ltd vs Commr. Of Customs, Icd Tughlakabad (Civil Appeal No. 5840 of 2008) held that;

• The logic underlying the doctrine of merger is that there cannot be more than one decree or operative orders governing the same subject-matter at a given point of time. 

• Once the superior court has disposed of the lis before it either way - whether the decree or order under appeal is set aside or modified or simply confirmed, it is the decree or order of the superior court, tribunal or authority which is the final, binding and operative decree or order wherein merges the decree or order passed by the court, tribunal or the authority below. 

• Once a special leave petition has been granted, the doors for the exercise of appellate jurisdiction of this Court have been let open. 

• It would not make a difference whether the order is one of reversal or of modification or of dismissal affirming the order appealed against. It would also not make any difference if the order is a speaking or non-speaking one.

 

Excerpts of the order; 

# 23. The nature, concept and logic of doctrine of merger was explained elaborately in Kunhayammed & Ors. Vs. State of Kerala & Anr.2. Speaking for a bench of three learned Judges, R.C. Lahoti, J. (as His Lordship then was) observed: (SCC p. 370, para 12)

• “12. The logic underlying the doctrine of merger is that there cannot be more than one decree or operative orders governing the same subject-matter at a given point of time. When a decree or order passed by an inferior court, tribunal or authority was subjected to a remedy available under the law before a superior forum then, though the decree or order under challenge continues to be effective and binding, nevertheless its finality is put in jeopardy. Once the superior court has disposed of the lis before it either way — whether the decree or order under appeal is set aside or modified or simply confirmed, it is the decree or order of the superior court, tribunal or authority which is the final, binding and operative decree or order wherein merges the decree or order passed by the court, tribunal or the authority below. However, the doctrine is not of universal or unlimited application. The nature of jurisdiction exercised by the superior forum and the content or subject matter of challenge laid or which could have been laid shall have to be kept in view.” 

• “41. Once a special leave petition has been granted, the doors for the exercise of appellate jurisdiction of this Court have been let open. The order impugned before the Supreme Court becomes an order appealed against. Any order passed thereafter would be an appellate order and would attract the applicability of doctrine of merger. It would not make a difference whether the order is one of reversal or of modification or of dismissal affirming the order appealed against. It would also not make any difference if the order is a speaking or non-speaking one. Whenever this Court has felt inclined to apply its mind to the merits of the order put in issue before it though it may be inclined to affirm the same, it is customary with this Court to grant leave to appeal and thereafter dismiss the appeal itself (and not merely the petition for special leave) though at times the orders granting leave to appeal and dismissing the appeal are contained in the same order and at times the orders are quite brief. Nevertheless, the order shows the exercise of appellate jurisdiction and therein the merits of the order impugned having been subjected to judicial scrutiny of this Court.”

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