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2021 (12) TMI 434 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHIMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The Ld. Adjudicating Authority has failed to appreciate that there is no promise to pay within the meaning of Section 25 (3) of the Indian Contract Act, 1872, which will be evident from the letter dated 14th December 2017. On perusal of the impugned order, it is clear that the Adjudicating Authority relying on the judgement of the Hon'ble Bombay High Court in the case of South Eastern Roadways [1992 (11) TMI 293 - BOMBAY HIGH COURT], has considered the letter issued by Corporate Debtor dated 14th December 2017 as an acknowledgement of debt in the form of a promise to pay the debt amount and given a finding that the Application filed by the Operational Creditor is beyond the given period of limitation. Section 25 of the Indian contract act provides that agreement without consideration is void unless it is in writing and registered or is a promise to compensate for something done or is a promise to pay a debt barred by limitation law - based on the statutory provision of Section 25(3) of the Contract Act, it is clear that there could be a valid contract to pay wholly or in part a time-barred debt. This can be treated as an exceptional general principle of the Contract Act, which provides that agreement without consideration is void. Illustration (e) of Section 25 of the Contract Act provides that "if A owes B ₹ 1,000, but the debt is barred by the Limitation Act. A signs a written promise to pay B ₹ 500 on account of the debt. This is a contract. The learned Adjudicating Authority has taken an erroneous view of the matter and on evaluating the letter of the Managing Director of the Corporate Debtor as an acknowledgement of the debt - the said letter was not within limits so that the operational Creditor could claim the benefit of Section 18 of the Limitation Act. Appeal allowed.
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