TMI Blog2020 (2) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... deriving conclusion under Section 18 of the Limitation Act. Admittedly, the Corporate Debtor the defaulted in making payments on 20th September, 2013 and the Dena Bank declared the account as NPA on 31st December, 2013. Therefore, the application filed under Section 7 of the I B Code by the Bank is barred by limitation. The matter is remitted to the Adjudicating Authority (National Company Law Tribunal), Bengaluru Bench to decide the fee and cost of the Corporate Insolvency Resolution Process as incurred by the Resolution Professional, which is to be borne and paid by the Dena Bank (Financial Creditor) - appeal allowed by way of remand. - Company Appeal (AT) (Insolvency) No. 407 of 2019 - - - Dated:- 18-12-2019 - Justice S. J. Mukhopadhaya Chairperson And Justice Venugopal M Member (Judicial) For the Appellant : Mr. Goutham Shivshankar, Advocate For the Respondents : Mr. Divyanshu Sahay, Advocate JUDGMENT SUDHANSU JYOTI MUKHOPADHAYA, J. Dena Bank ( Financial Creditor ) preferred application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the I B Code ) to initiate Corporate Insolvency Resolution P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. (2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received. Explanation.-For the purposes of this section,- (a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set-off, or is addressed to a person other than a person entitled to the property or right; (b) the word signed means signed either personally or by an agent duly authorised in this behalf; and (c) an application for the execution of a decree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-barred. It is settled law that when a debt is barred by time, the right to a remedy is time-barred. This requires being read with the definition of debt and claim in the Code. Further, debts in winding up proceedings cannot be timebarred, 3 and there appears to be no rationale to exclude the extension of this principle of law to the Code. 28.2 Further, non-application of the law on limitation creates the following problems: first, it re-opens the right of financial and operational creditors holding time-barred debts under the Limitation Act to file for CIRP, the trigger for which is default on a debt above INR one lakh. The purpose of the law of limitation is to prevent disturbance or deprivation of what may have been acquired in equity and justice by long enjoyment or what may have been lost by a party's own inaction, negligence or latches 4. Though the Code is not a debt recovery law, the trigger being default in payment of debt renders the exclusion of the law of limitation counter-intuitive. Second, it re-opens the right of claimants (pursuant to issuance of a public notice) to file time-barred claims with the IRP/RP, which may potentially be a part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pending but it does not give the party a legal right to institute any other proceedings on that basis. It is well settled law that the limitation is extended only in certain limited situations and that the existence of a suit is not necessarily one of them. In this view of the matter, the second point will have to be answered in favour of the respondents and it will have to be held that there was no enforceable claim in the year 1995, when the present petition was instituted. 14. Likewise, a Single Judge of the Patna High Court in Ferro Alloys Corporation Ltd. v. Rajhans Steel Ltd., (2000) Comp Cas 426 also held: 12 . In my opinion, the contention lacks merit. Simply because a suit for realisation of the debt of the petitioner-company against opposite party No. 1 was instituted in the Calcutta High Court on its original side, such institution of the suit and the pendency thereof in that court cannot ensure for the benefit of the present winding up proceeding. The debt having become time-barred when this petition was presented in this court, the same could not be legally recoverable through this court by resorting to winding up proceedings because the same ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This choice of the secured creditor to invoke the Act of 2002 is independent of and despite the pendency of the proceedings under the Act of 1993, has to be looked at from the perspective of whether or not such an action meets the requirement of Section 36 of the Act of 2002, when the secured creditor is proposing to take a measure under Section 13(4) of the Act of 2002. Although, a secured creditor, as held in Transcore (supra), is entitled to take a remedy or a measure as available in the Act of 2002, despite the pendency of other proceedings, including a proceeding under Section 19 of the Act of 1993, in respect of the self-same cause of action, in my view, the invocation of such independent right under the Act of 2002, has to be done within the period of limitation prescribed under the Limitation Act, Company Appeal (AT) (Insolvency) No. 407 of 2019 Page 11 of 14 1963 in terms of Section 36 of the Act of 2002. The Act of 2002 gives an independent right to a secured creditor to proceed against its financial assets and in respect of which such asset the secured creditor has security interest. The right to proceed, however, is subject to the adherence to the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia) Limited on 28th March, 2014, the Debts Recovery Tribunal vide judgment dated 10th June 2016 held that the waiver was not maintainable. In the said case, this Appellate Tribunal by its judgment held that the limitation for application under Section 7 will be counted only from 1st December, 2016, which is the date on which the I B Code brought into force. The Appellate Tribunal noted the NCLT Decision that the limitation period for suit was 12 years, their being a mortgage. However, Hon ble Supreme Court taking into consideration the judgment in B.K. Education Services Private Limited vs. Parag Gupta and Associates - 2018 SCC OnLine SC 1921 held that the limitation started from the date of default, i.e., 21st July, 2011 when the account was declared NPA. 11. Admittedly, the Corporate Debtor the defaulted in making payments on 20th September, 2013 and the Dena Bank declared the account as NPA on 31st December, 2013. Therefore, we hold that the application filed under Section 7 of the I B Code by the Bank is barred by limitation. 12. From the record, we find that the Respondent Bank ( Financial Creditor ) has already filed one OA No.16 of 2015 before the Debts Recove ..... X X X X Extracts X X X X X X X X Extracts X X X X
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