TMI Blog2020 (10) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- and tendered an amount of ₹ 11,25,00,000/-. The Ld. Sr. Counsel for the Corporate Debtor further would submit that ₹ 38,85,00,000/-also paid thereafter and balance payable is ₹ 23, 90, 00,000/- and showed its readiness to pay the balance in compliance of the part of the obligation on the side of the Financial Creditor 50% of the agreed amount the Financial Creditor shall release the charge of assets of the Corporate Debtor acquired by the Financial Creditor and since the charge was not released as per the understanding the balance payable as per the settlement has not been paid. According to him, suppressing the said payment towards the debt payable as agreed the Financial Creditor filed this application and, therefore, this application is liable to be dismissed. One another objection raised on the side of the Corporate Debtor is that O.A. No. 162/2014 filed by the ARCIL has been decreed on 06.02.2019 during the pendency of the present proceedings and Review Petition challenging the said decree has been filed before the DRT, Nagpur and it is pending for consideration. Therefore, recourse to be taken by the Financial Creditor would be to execute the decree g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion process. 3. To prove that the Corporate Debtor had availed loan as alleged annexed various documents and the particulars of the documents are shown in Form-1 Part-V which include loan agreement dated 09.03.1995 and various other hypothecation deeds, Guarantee agreement, corporate loan etc. As a proof to prove the default what is relied upon is demand notice issued under section 13(2) of SARFAESI Act dated 20.11.2007 as Annexure-C and financial statement of the Corporate Debtor for the period starting from 2006 to 2019. The Financial Creditor further submits that subsequent to the assignment of debt in favour of the ARCIL, the Corporate Debtor has acknowledged the debts of the Financial Creditor vide its letter dated 11th November, 2016, a Copy of which is annexed as Annexure-P in supplementary affidavit at page no. 246. The Corporate Debtor agreed upon the very same terms as agreed to the original lenders and that the lenders filed an application before the Debt Recovery Tribunal, Nagpur as O.A. No. 162/2014 and it is pending for consideration before Tribunal. Upon the said contentions, the Financial Creditor prays for passing an order of an admission for initiating corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt from all the banks and thus breached the Contract. The Applicant failed to comply with this term of the Settlement as well. Uniworth group was to make payment of balance settlement amount pursuant to Applicant complying with the terms of settlement set forth in the letter dated 18.08.2016 and 29.09.2016. The bankers of the Respondent despite agreeing to settle their dues by freezing the principal debt as on 31.03.2001 which was taken over and discounted at 23% in 36 quarterly instalments over a period of 9 years assigned the debt in favour of the Applicant. 6. Since the Bankers/Financial Creditors committed breach of terms in the settlement, the respondent/Corporate debtor filed C.S. No. 244/2018 in Calcutta High Court on 06.12.2018 for specific performance of the agreement. Thereafter, the Corporate debtor filed an application G.A. No. 753/2019 to and hand over 36 cheques drawn in favour of the Applicant as per the terms of settlement. The application is not maintainable being infructuous. The Respondent has always been ready and willing to repay the settlement amount as per the terms of the first settlement. 7. The Corporate debtor also narrated in details about filing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditor. 12. The facts regarding availing loan from IFCL Ltd. and ICICI Bank Ltd. by executing various documents of which particulars are given in Form-1 Part-V is not disputed at the time of the argument. The only one objection raised on the side of the Corporate Debtor at the time of hearing is that the application filed is not in time and it is barred by limitation. 13. It is now well settled law that Article 137 of Limitation Act is applicable to the applications filed under the provisions of the Code. In B.K. Educational Services Pvt. Ltd. v. Parag Gupta and Associates, MANU/SC/1160/2018 : , the Hon'ble Supreme Court has held that: 27. The Limitation Act is applicable to applications filed Under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted. The right to sue , therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred Under Article 137 of the Limitation Act... 14. Here in this case the default had admittedly occurred on 20.11.2007 and the present application has been filed on 27.11.2018. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Creditor in a court without jurisdiction to attract Section 14 of the Limitation Act. 19. In order to attract section 14(1) of the Limitation Act, 1963, the Financial Creditor has to prove that with due diligence the FC prosecuted the same subject matter before a wrong forum. A reference to BIFR by the Corporate Debtor before the right forum while Sick Industrial Companies Act, 1985 (SICA) was in force, does not at all fall under section 14(1) of the Limitation Act. Therefore, the submission on the side of the Financial Creditor that time taken before BIFR is to be excluded for computing the period of limitation is unsustainable under law. 20. Under Section 14(2), the Financial Creditor has to establish that the proceedings initiated in the court without jurisdiction must be for the same relief. The relief sought for in the case in hand is for resolution of the stressed assets of the Corporate Debtor and not for restructuring under the provisions of the SICA and not for recovery under the provisions of SARFACI Act. In view of the above said none of the ingredients to be satisfied under Section 14(1) and 14(2) of the Limitation Act, 1963 is not at all satisfied in the instant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod, 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 application of limitation in a case of this nature is settled. When the time begins to run, the extension can be claimed only in the manner as provided in the Limitation Act. The time has begun in the case in hand from 20.11.2007. Time taken before BIFFR and before DRT would never stop the time to run in this case. 24. It is at this juncture the Ld. Counsel for the Financial Creditor relying upon the balance sheets of the Corporate Debtor attempted to convince us that the balance sheets are to be relied upon as a proof of acknowledgment. He submits that disclosure of loan availed by the Corporate Debtor in the balance sheet amounts to acknowledgement of debt as per section 18 of the Limitation Act. He relied upon an order of our Bench in CP (IB) No. 23/KB/2019 (ARCIL) Vs. Corporate Power Limited and attempted to convince us that the Corporate Debtor having admitted the default ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on current assets subject to prior charge created and/or to be created thereon to secure borrowings for Working Capital in the ordinary course of business. The first mortgage and charge referred to above shall rank pari passu inter se. iv. The outstanding balance of borrowings from the banks and Financial Institutions for Term Loans are subject to receipt of confirmation/statements which could not be obtained due to restructuring being in progress. 27. Referring to the above said entries in the balance sheet for the year ending March, 2015. Learned Counsel for the Financial Creditor attempted to convince us that it is an admission about the loan amount repayable by the Corporate Debtor and referred to various other balance sheets and submits that all balance sheets prepared for every financial year subsequent to 2007 and subsequent to the loan advanced by the financial institutions as shown the amount of loan availed by the Corporate Debtor and its liability to pay the said amount to the financial institutions and ARCIL and therefore, the same is an acknowledgment within the period of limitation, and therefore the filing of this application is with in time. 28. That ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Balance Sheet which is being relied on, what is seen in the statement and if the same could be read as acknowledgement. Copy of the Balance Sheet of 2016 relied on by the Adjudicating Authority is at Page-412 of the Paper Book of Appeal. Page-412 is the Directors' Report which presented the Annual Report and audited Financial Statements for the Financial Year ended 31st March, 2016. The relevant portion pointed out to us by the parties is at Page- 421. It is Annexure-A to the Auditor's Report and what Auditor's Report stated in Sub-Para-(viii), is as under:- (viii) In our opinion and according to the information and explanations given to us, that Company has not defaulted in the repayment of loans or borrowings to financial institution. The Company did not have any dues outstanding to Government as at the beginning of the year nor did it obtain any such loans during the year. However, the Company has failed to repay its dues owing to bank and has been declared as NPA by bank and the matter is lying with Debts Recovery Tribunal and subjudice (Note No. 29). Amount overdue is as under:- United bank of India Lohapatty Branch, Kolkata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to us that the entry in the balance sheet disputing the liability towards the Financial Creditor cannot be read as an acknowledgment. Accordingly, we are of the considered opinion that the balance sheets relied on by the Ld. Counsel for the Financial Creditor cannot constitute acknowledgment. As such, there is no acknowledgement at all covered under the purview of Section 18 of the Limitation Act and therefore, we are of the considered opinion that the claim preferred by the applicant is barred by limitation. 31. Ld. Counsel for the Financial Creditor also has had a failed attempt to show that letter dated 11th November, 2016 sent by the Corporate Debtor constitutes acknowledgment. According to him the Corporate Debtor has acknowledged its liability vide letter dated 11th November, 2016 and accordingly, the period of limitation would start from 11th November, 2016 and, therefore, filing of this application is within the period of limitation. The above said submission is also found not at all sustainable under Section 18 of the Limitation Act, because even according to the Financial Creditor the period of limitation would start from the date of default i.e. 20.11.2007. The limita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Financial Creditor 50% of the agreed amount the Financial Creditor shall release the charge of assets of the Corporate Debtor acquired by the Financial Creditor and since the charge was not released as per the understanding the balance payable as per the settlement has not been paid. According to him, suppressing the said payment towards the debt payable as agreed the Financial Creditor filed this application and, therefore, this application is liable to be dismissed. However, the Ld. Counsel for the Financial Creditor, submits that the above said settlement was revoked since Uniworth group has failed to abide by the terms. In a case of this nature, we do not wish to go deep into the settlement. The submission on the side of the Ld. Sr. Counsel for the Corporate Debtor that in total ₹ 50,10,00,000/- (Fifty Crore Ten Lakhs only) had been paid in terms of the settlement is not at all disputed on the side of the Financial Creditor. The above said circumstances on the other hand show that the Financial Creditor has come with the application ignoring the settlement evidently accepted by the Financial Creditor by receiving more than 50% of the agreed debt. 35. One anothe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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