NDLI: Kotak Mahindra Bank Limited Vs. A. Balakrishnan & Anr.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	2016 : ss. 3 insolvency and Bankruptcy Code 7 and 14 – Corporate Insolvency Resolution Process (CIRP) 5 6
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4 Referred Case 5 Referred Case 6 Referred Case 7 Referred Case 8 Referred Case 9 Referred Case 10 Referred Case 11 Referred Case 12 Referred Case 13 Referred Case 14 Referred Case 15 Referred Case 16
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Insolvency and Bankruptcy Code, 2016 : ss. 3, 5, 6, 7 and 14 – Corporate Insolvency Resolution Process (CIRP) – Initiation of – Issuance of Recovery Certificate, if would trigger the right to sue – On facts, respondent No.2-corporate debtor stood as the corporate guarantor in respect of credit facilities sanctioned to the borrower entities by the appellant Bank – Default in payment of dues by the borrower entities – Compromise between the parties that the corporate debtor liable to pay the amount due from the borrower entities to the Bank, however failure to make payment – In terms of the compromise entered into between the parties, issuance of Recovery Certificates by the Debt Recovery Tribunal against the borrower entities and the corporate debtor – On basis of the Recovery Certificates, the Bank filed application u/s. 7 before NCLT seeking initiation of CIRP against the Corporate Debtor – Application admitted – However, the NCLAT held the application to betime-barred and issuance of Recovery Certificates did not trigger right to sue – On appeal, held : Once a claim fructifies into a final judgment and order/decree, upon adjudication and a certificate of recovery is also issued authorizing the creditor to realize its decretal dues, a fresh right accrues to the creditor to recover the amount of the final judgment and/or order/decree and/or the amount specified in the Recovery Certificate – Issuance of a certificate of recovery in favour of the financial creditor would give rise to a fresh cause of action to the the financial creditor, to initiate proceedings u/s 7 for initiation of the CIRP, within three years from the date of the judgment and/or decree – Liability in respect of a claim arising out of a Recovery Certificate would be a “financial debt” within the meaning of clause (8) of s. 5 and a holder of the Recovery Certificate would be a “financial creditor” within the meaning of clause (7) of s. 5 – A person would be entitled to initiate CIRP within a period of three years from the date on which the Recovery Certificate is issued – On facts, the application u/s. 7 was filed within a period of three years from the date on which the Recovery Certificate was issued – Application u/s. 7 was within limitation – Thus, the judgment and order passed by NCLAT is quashed and set aside – Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – s.13(2) – Companies Act, 1956 – ss. 433, 434 – Recovery of Debts Due to Banks and Financial Institutions Act, 1993 – s.31A – Recovery of Debts and Bankruptcy Act, 1993 – s.19(22A). Scheme of Insolvency and Bankruptcy Code, 2016– Discussed. Interpretation of Statutes: Purposive Interpretation – Held: Provisions of a statue ought to be interpreted in such a manner which would advance the object and purpose of the enactment – All the provisions in the Statute should be construed in context with each other and no provision can be read in isolation. Literal rule of Interpretation – Held: When the language of a statutory provision is plain and unambiguous, it is not permissible for the Court to add or subtract words to a statute or read something into it which is not there – Court cannot rewrite or recast legislation. Judgment/order: Per incuriam, when – Held: ‘Incuria’ literally means ‘carelessness’ – A decision or judgment can be per incuriam any provision in a statute, rule or regulation, which was not brought to the notice of the Court – It can also be per incuriam if it is not possible to reconcile its ratio with that of a previously pronounced judgment of a co-equal or larger Bench. Words and Phrases: ‘Include’ – Meaning of – Held: Word ‘include’ is used in interpretation clauses to enlarge the meaning of the words or phrases occurring in the body of the statute.
Judge	Hon'ble Mr. Justice Bhushan Ramkrishna Gavai
Neutral Citation	2022 INSC 630
Petitioner	Kotak Mahindra Bank Limited
Respondent	A. Balakrishnan & Anr.
SCR	[2022] 5 S.C.R. 1072
Judgement Date	2022-05-30
Case Number	689

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