NCLT Chandigarh Validates Undated Bankers Book Evidence Act Certificate Under IBC
NCLT Chandigarh Validates Undated Bankers Book Evidence Act Certificate Under IBC
The National Company Law Tribunal (NCLT), Chandigarh Bench, consisting of Mr. Harnam Singh Thakur (Judicial Member) and Mr. L.N. Gupta (Technical Member), has determined that an undated certificate under the Bankers Book Evidence Act, 1891 (Act) qualifies as a valid certificate for Regulation 2A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (IBBI Regulations).
Canara Bank (Applicant) provided debt to Laggar Industries Limited (Respondent) amounting to Rs. 23.5 crores through the approval of an open cash credit facility, bank guarantee, and overdraft facility against bill discounting.
Following the non-payment of dues, Canara Bank classified Laggar Industries Limited's account as a non-performing asset (NPA) on April 1, 2018. Subsequently, the bank issued a default recall notice for the invocation of guarantees, demanding payment of the defaulted amount from Laggar Industries Limited and other obligors. Additionally, it served a notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
Subsequently, Canara Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (Code) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 to commence the Corporate Insolvency Resolution Process (CIRP) against the Respondent.
The respondent opposed the application by arguing that the statement of account lacked certification by a valid certificate under the Act. It contended that the attached certificate could not be considered valid due to the absence of a date on it.
The NCLT acknowledged the respondent's arguments regarding the validity of an undated certificate issued under the Act and referred to the contents of the submitted certificate.
After reviewing the contents of the certificate, the NCLT dismissed the respondent's argument and affirmed that the certificate issued under the Act was properly signed. The Tribunal concluded that the absence of a date would not render the certificate invalid under Regulation 2A of the IBBI Regulations.
In conclusion, the NCLT determined that an undated certificate issued under the Bankers Book Evidence Act, 1891, is valid for the purposes of Section 7(3)(a) of the Code, in conjunction with Regulation 2A of the IBBI Regulations. Consequently, the Tribunal initiated CIRP proceedings against the respondent.
