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2019 (9) TMI 468

..... egard to the fact that the Corporate Debtor had taken credit facilities from UCO Bank on 19.01.2005, 22.02.2008, 31.03.2009, 06.11.2009 and 18th May, 2012. There is no dispute regarding the fact that Corporate Debtor had secured the credit facilities taken by equitable mortgage of immovable property and by executing other securities. The filing of proceedings before DRT in 2014 and invoking of Section 13(2) of SARFAESI in 2016 are also not disputed. Amount more than ₹ 1 Lakh is in default, is apparent from record. The proceeding in DRT is still pending. It is clear that the question of limitation has to be looked into from the angle whether the debt is payable in law or in fact. Although the proceeding under IBC is an Application, question for consideration is whether the debt is payable in law. The yardstick is to see whether there is continuous cause of action for the debt claimed. The limitation for enforcing payment of money secured by a mortgage or otherwise charged by the immovable property is twelve years at the time when money sued for becomes due. Thus for 12 years after becoming due, the debt would be payable in law. In the present matter, the sanction letters are b .....

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..... 8th May, 2012 of a total amount of ₹ 29,96,00,000/-. Necessary documents were executed. Later, the Appellants claim that the Corporate Debtor entered into Master Restructuring Agreement (MRA - in short) dated 31st March, 2012 with the Assignor on 22nd June, 2012. Mortgage of properties was created under the Master Restructuring Agreement and other ancillary documents. It is claimed that the account of the Corporate Debtor was classified as non-performing asset (NPA) on 31st March, 2013 and the bank had moved the Debt Recovery Tribunal. The Assignor on 8th July, 2014 assigned debt to Edelweiss Asset Reconstruction Company Limited (Edelweiss - in short) - Financial Creditor vide deed of assignment and MRA and its addendum was executed between Respondent Nos.1 and 2. Financial Creditor - Edelweiss issued Notice under Section 13(2) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act - in short) on 5th August, 2016 calling upon the Corporate Debtor to pay ₹ 50,44,37,258/- and on 15th March, 2018 sent recall Notice demanding repayment of ₹ 69,70,15,694/- from the Corporate Debtor. The Corporate Debtor had .....

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..... e would not affect limitation as the provisions relating to mortgaged property are with regard to Suit and the present proceeding is an Application under IBC. It is also argued that the Corporate Debtor is a Micro Small and Medium Enterprises (MSME - in short) (UAM No.MH18C0141075) and made efforts to compromise with the Financial Creditor but the Financial Creditor did not give positive response. 5. Against this, for Respondent No.1 - Financial Creditor, it is argued that as on 02.07.2019, there was ₹ 93,93,16,689/- outstanding against the Corporate Debtor by way of principal amount and interest as the financial debt. It is argued that there was charge created on the immovable property by way of Memorandum of Entry in respect of extension of charge dated 26th February, 2010, Affidavit-cum-Declaration executed by Corporate Debtor dated 19th April, 2010, second supplemental Memorandum of Entry dated 13th, April, 2010, additional and third supplementary Memorandum of Entry dated 22.06.2012, letter of conformation of extension of charge on the immovable property dated 9th June, 2012 and declaration in the matter of mortgage by deposit of title deeds dated 4th July, 2012. Relianc .....

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..... the meaning of claim , we have to go back to Section 3(6) which defines claim to mean a right to payment even if it is disputed. The Code gets triggered the moment default is of rupees one lakh or more (Section 4). The corporate insolvency resolution process may be triggered by the corporate debtor itself or a financial creditor or operational creditor. A distinction is made by the Code between debts owed to financial creditors and operational creditors. A financial creditor has been defined under Section 5(7) as a person to whom a financial debt is owed and a financial debt is defined in Section 5(8) to mean a debt which is disbursed against consideration for the time value of money. As opposed to this, an operational creditor means a person to whom an operational debt is owed and an operational debt under Section 5 (21) means a claim in respect of provision of goods or services. 28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor - it need not be a debt owed to the applicant financial creditor. Under S .....

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..... bring to the notice of the operational creditor the existence of a dispute or the record of the pendency of a suit or arbitration proceedings, which is pre-existing - i.e. before such notice or invoice was received by the corporate debtor. The moment there is existence of such a dispute, the operational creditor gets out of the clutches of the Code. It is clear that the question of limitation has to be looked into from the angle whether the debt is payable in law or in fact. Although the proceeding under IBC is an Application, question for consideration is whether the debt is payable in law. The yardstick is to see whether there is continuous cause of action for the debt claimed. 8. In the present matter where creation of equitable mortgage of immovable property is not in dispute, it would be appropriate to refer to The Limitation Act, 1963 where in Schedule, period of limitation prescribed in the First Division relating to Suits, Part V Article 62 reads as follows:- PART V-SUITS RELATING TO IMMOVABLE PROPERTY Description of Suit Period of limitation Time from which period begins to run 62. To enforce payment of money secured by a mortgage or otherwise charged upon immovable proper .....

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