TMI Blog2020 (8) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... other than a person entitled to the right - Hon ble Supreme Court has relied on its earlier judgment passed in KHAN BAHADUR SHAPOOR FREDOOM MAZDA VERSUS DURGA PROSAD CHAMARIA AND ORS. [ 1961 (3) TMI 113 - SUPREME COURT] . In the said case, Hon ble Supreme Court has clarified that acknowledgement as prescribed by Section 19 merely renews debt; it does not create any new right. It is a mere acknowledgement of the liability in respect of the right in question; it need not be accompanied by a promise to pay either expressly or either by implication. The statement of which the plea of acknowledgement is based must relate to the present subsisting liability, though the exact nature of the specific character of the said liability may not be indicated in words. Thus in the case mentioned above, the Hon ble Supreme Court has held that the limitation can only be extended in the manner provided U/S 18 of the Limitation Act. For example, an acknowledgement of liability under Section 18 of the Limitation Act would certainly extend the limitation period - In this case, admittedly the account of the Corporate Debtor was classified of NPA on 29th January 2013. Therefore, as per the law laid do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight crores only). The Corporate Debtor defaulted in repayment of dues of the applicant bank. The Financial Creditor classified the account of the Corporate Debtor as NPA on 29th January 2013 under the guidelines issued by RBI, and the total amount claimed to be in default is ₹ 40,33,04,620/- (Rupees forty crore thirty-three lacs four thousand six hundred twenty only) but after that, the Corporate Debtor had executed the document dated 13th April 2015 and thereby acknowledge the debt. 4. In reply to the petition, the Corporate Debtor submitted that the petition filed by the Financial Creditor is not maintainable and is barred by Limitation. It is stated that on the advice of the Financial Creditor, the Corporate Debtor had already submitted One Time Settlement proposal dated 05th October 2018 for an amount of ₹ 1,60,00,000/- and deposited ₹ 1,60,00,000/- vide demand draft and the same has been duly realised, and it had been informed to the Corporate Debtor that his proposal is under consideration. It is further submitted by the Corporate Debtor that the present application under Section 7 of the I B Code is barred by limitation under Section 238A of I B Code. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distinct remedies under the law, and their continuation in a separate forum, cannot be allowed to serve as a ground to defeat the intention of the law of limitation. 12. It is further emphasised by the Appellant Counsel that each of the alleged events of acknowledgement relied upon by the bank in the counter affidavit are beyond the prescribed three years period of limitation, that ended on 29th January 2016, or in alternative 13th April 2018. 13. The Learned Counsel for the Appellant further emphasised that the balance sheet of the Corporate Debtor cannot be treated as a document of acknowledgement in terms of Section 18 of the Limitation Act. The Learned Counsel has placed reliance on the judgment of this Tribunal in Company Appeal No.407 of 2019 C. Shivkumar Reddy Vs. Dena Bank, decided on 21st March 2019. In this case this Tribunal held that: In the present case, there is nothing on record to suggest that the Corporate Debtor acknowledged the debt within three years and agreed to pay the debt. The application moved by Corporate Debtor to restructure the debt or payment of the interest, does not amount to acknowledgement of debt. There is nothing on record to sug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ix ARC (2019) 10 SCC 353 has laid down the law that for an Application under Section 7 or 9 of the Insolvency and Bankruptcy Code, 2016 Article 137 of the Limitation Act shall apply from the time of coming into force of the Code. 18. Hon ble Supreme Court in case of B.K. Educational Services Vs. Parag Gupta (2018) SCC OnLine SC 1921 has held that Article 137 of the Limitation Act, 1963 applies to Applications filed under Section 7 or 9 of the Code. 19. Hon ble Supreme Court in case of J.C. Budhraja v. Chairman, Orissa Mining Corpn. Ltd., (2008) 2 SCC 444: (2008) 1 SCC (Civ) 582 on page 456 has held that: 20. Section 18 of the Limitation Act, 1963 deals with effect of acknowledgment in writing. Sub-section (1) thereof provides that where, before the expiration of the prescribed period for a suit or application in respect of any right, an acknowledgment of liability in respect of such right has been made in writing signed by the party against whom such right is claimed, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. The explanation to the section provides that an acknowledgment may be sufficient though it omits to specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditioned by the tenor of the said document . 21. It is now well settled that a writing to be an acknowledgment of liability must involve an admission of a subsisting jural relationship between the parties and a conscious affirmation of an intention of continuing such relationship in regard to an existing liability. The admission need not be in regard to any precise amount nor by expressed words. If a defendant writes to the plaintiff requesting him to send his claim for verification and payment, it amounts to an acknowledgment. But if the defendant merely says, without admitting liability, it would like to examine the claim or the accounts, it may not amount to acknowledgment. In other words, a writing, to be treated as an acknowledgment of liability should consciously admit his liability to pay or admit his intention to pay the debt. Let us illustrate. If a creditor sends a demand notice demanding payment of ₹ 1 lakh due under a promissory note executed by the debtor and the debtor sends a reply stating that he would pay the amount due, without mentioning the amount, it will still be an acknowledgment of liability. If a writing is relied on as an acknowledgment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty or right has been made in writing then fresh periods of limitation shall be computed from the time when acknowledgement was so signed. In the case of J.C. Budhraja (supra) Hon ble Supreme Court has specified that explanation to Section 18 provides that an acknowledgement may be sufficient though it omits to specify the exact nature of the right are avers that the time for payment has not yet come or is accompanied by a refusal to pay, or is coupled with a claim to set off or address to a person other than a person entitled to the right. 21. In the case mentioned above, Hon ble Supreme Court has relied on its earlier judgment passed in Shapoor Freedom Mazda Vs. Durga Prasad Chamaria AIR 1961 SC 1236. In the said case, Hon ble Supreme Court has clarified that acknowledgement as prescribed by Section 19 merely renews debt; it does not create any new right. It is a mere acknowledgement of the liability in respect of the right in question; it need not be accompanied by a promise to pay either expressly or either by implication. The statement of which the plea of acknowledgement is based must relate to the present subsisting liability, though the exact nature of the specific chara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation Act would certainly extend the limitation period, but a suit for recovery, which is a separate and independent proceeding distinct from the remedy of winding up would, in no manner, impact the limitation within which the winding-up proceeding is to be filed, by somehow keeping the debt alive for the purpose of the winding-up proceeding. 23. Thus in the case mentioned above, the Hon ble Supreme Court has held that the limitation can only be extended in the manner provided U/S 18 of the Limitation Act. For example, an acknowledgement of liability under Section 18 of the Limitation Act would certainly extend the limitation period. 24. In this case, admittedly the account of the Corporate Debtor was classified of NPA on 29th January 2013. Therefore, as per the law laid down by the Supreme Court case of Gaurav Hargovindbhai Dave (supra), the date of default shall be computed from the date when the account was classified as NPA, i.e.29th January 2013. 25. Given the law laid down by the Hon ble Supreme Court in case of B.K. Educational Services (supra) Article 137 of the Limitation Act shall be applicable for an Application filed under Sections 7, 9 or 10 of the I B Cod ..... X X X X Extracts X X X X X X X X Extracts X X X X
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