TMI Blog2019 (9) TMI 468X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 between 19th January, 2005 to 18th May, 2012 and there were Master Restructuring Agreements executed in 2012. Apart from proceeding filed in DRT in May, 2014, which is pending, the loan was secured by equitable mortgage and as such, it cannot be said that the debt was barred by limitation, when Section 7 Application was filed on 07.08.2018. There is no substance in the arguments raised with regard to limitation. As such, there is no substance in the Appeal. Whether Corporate Debtor is MSME? - HELD THAT:- The question was raised only at the time of arguments and the Financial Creditor is raising dispute on the basis that the Application for status of MSME was sought only after the CIRP process started. We need not decide this issue at present as we are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted (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 offered one-time settlement of ₹ 10 Crores and later, revised the same to ₹ 11 Crores within 90 days or ₹ 18 Crores over 9 years. However, the Financial Creditor filed Section 7 proceedings. The Appellants claim that the proceeding has been filed after a delay of 5 years from the date of the account of the Corporate Debtor being classified as NPA. 3. The Appellants claim that the debt is clearly barred by law of limitation and proceedings before DRT would not save the limitation. The Company Petition has been filed in 2018 for loan facility availed in 2012 which was classified as NPA on 31st March, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Reliance is also placed on the proceedings filed by way of OA 215/2014 before DRT. The Financial Creditor is also relying on the various one-time settlements offered right up to 2018 by the Corporate Debtor to say that claim is not time barred. As regards the contention of the Appellants that Corporate Debtor is MSME, it is the argument that no proof of such status was given and it is claimed that according to the Resolution Professional, an Application was filed by Corporate Debtor without his concurrence before concerned Ministry on 5th July, 2019, after the commencement of CIRP on 2nd July, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 Section 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 property. Twelve years When the money sued for becomes due. The limitation for enforcing payment of money secured by a mortgage or otherwise charged by the immovable property is twelve years at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X
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