Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + AT Insolvency and Bankruptcy - 2023 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (9) TMI 1259 - AT - Insolvency and BankruptcyAdmissibility of Section 7 application - Application is within the period of Limitation or not - extension of OTS proposals - acknowledgement of Debt as defined under Section 18 of the Limitation Act, 1961 - HELD THAT:- Section 22 (1) SICA makes it clear that there is a bar for realisation of a right referred to in this Section against the Corporate Debtor when once an enquiry under Section 16 SICA is pending against it or any scheme referred to under Section 17 thereof, is being considered or an Appeal under Section 25 is pending, an exception being with the consent of the Board or that of the Appellate authority. The Hon’ble Apex Court in the matter of Sabarmathi Gas Limited Vs. Shah Alloys Ltd. reported in [2023 (1) TMI 195 - SUPREME COURT] referred to a three judge Bench Judgment in the matter of KSL & INDUSTRIES LTD. VERSUS ARIHANT THREADS LTD. [2014 (12) TMI 1023 - SUPREME COURT] in which the issue whether a Recovery Application under the RDDB Act, 1963 would lie or be proceeded with against a sick company in view of the bar contained in Section 22 (1) of SICA, was addressed to. The facts are distinguishable as in Invent Assets [2021 (11) TMI 731 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH, NEW DELHI], there was no acknowledgment of liability under Section 18 of the Limitation Act, 1963 and further the dismissal of the BIFR reference was also dated beyond 3 years from the date of default. The other Judgments relied upon by the Appellant in support of his case that this period spent before the BIFR / AIFR cannot be excluded in the facts of the attendant case, cannot be accepted for the reason that the ratio in Sabarmathi Gas Limited Vs. Shah Alloys Ltd. under the IBC Code, 2016 is squarely applicable to the case on hand. OTS proposals being conditional cannot be taken into consideration? - extension of period of limitation as they were given beyond three years from the date of default - HELD THAT:- The question of applicability of Section 8 of the Limitation Act, 1963 under IBC, 2016 is to be examined on the touch stone of the ratio laid down by the Hon’ble Apex Court in the matter of DENA BANK (NOW BANK OF BARODA) VERSUS C. SHIVAKUMAR REDDY AND ANR. [2021 (8) TMI 315 - SUPREME COURT] wherein it was held that issuance of a Recovery Certificate in favour of a Financial Creditor would rise to a fresh cause of action to initiate proceedings under Section 7 of the Code. Whether subsequent to the issuance of the Debt Recovery Certificate on 19/11/2009, there was any acknowledgement which falls within the scope and ambit of Section 18 of the Limitation Act, 1961, by the Corporate Debtor within 3 years of 19/11/2009? - HELD THAT:- It is seen from the record that several letters of OTS Proposals even prior to 19/11/2009, were exchanged between the Corporate Debtor Company and the Financial Creditor on 04/11/2008, 22/11/2008, 17/12/2008, 25/12/2008, 26/12/2008 and 27/12/2008 - From the letter, it is clear that there is a clear acknowledgement of the Debt together with the terms of payment. Even on 16/02/2010 an amount of Rs. 37,50,000/- was remitted to the bank in pursuance of the OTS settlement proposal. Only those OTS letters are being reproduced here where there is a ‘promise’ to pay and there is also a reference to a part payment made. The next letter dated 15/11/2012 refers in paragraph 2, the earlier OTS letters dated 27/06/2007, 31/08/2007, 02/01/2008 and 19/03/2008, thereby establishing that even prior to the issuance of Debt Recovery Certificate there were several attempts made to discharge the loan, thereby acknowledging the Debt - The letter dated 27/10/2017 addressed by the Corporate Debtor shows the part payments of Rs. 20 lakhs made vide cheque dated 30/10/2017 and the said letter refers to OTS proposals and approvals from 21/09/2012 onwards. A letter dated 17/02/2018 (PG. 473) evidences the continued discussions with the bank and acknowledgment of payment to be made vis a vis the OTS proposals. The entire correspondence and the OTS proposals between the parties from 2008 to 2022, i.e. even after the filing of the Section 7 Application, the contention of the Appellant that there was no ‘acknowledgement of debt’ within 3 years of the date of the Debt Recovery Certificate pales into insignificance. The period from 21/04/2013 to 02/07/2017 is also covered in this correspondence. Whether the Appellant / Party-in-Person that a ‘conditional promise to pay’ and ‘part payments made’ do not fall within the ambit of definition of acknowledgement of Debt as defined under Section 18 of the Limitation Act, 1961? - HELD THAT:- In the instant case, there is a continuous ‘promise to pay’ in the OTS proposals made by the Corporate Debtor Company and this communication clearly evidences a jural relationship between the Corporate Debtor and the Financial Creditor - This Tribunal is of the considered and earnest view that an OTS proposal with a promise to pay and part payments being made thereafter, positively construes an ‘acknowledgment of Debt’ as defined under Section 18 of the Limitation Act, 1963. The admitted OTS Proposals between the Corporate Debtor Company and the Financial Creditor substantiate that a ‘reasonable inference’ can be made regarding the subsisting liability. Appeal dismissed.
|