TMI Blog2021 (1) TMI 1105X X X X Extracts X X X X X X X X Extracts X X X X ..... te Debtor is not barred by limitation. The right to sue accrued on 1st April 1993 when the amount of the Corporate Debtor with the Assignor Bank was declared NPA. In Part IV of its application under Section 7 of the IBC, the Appellant declared the date of default as 1st April, 1993. The claim is apparently barred by limitation - Under Section 18 of the Limitation Act, 1963, the acknowledgement of liability in writing, signed by a party in respect of any right or property claimed by such party within the prescribed period of limitation to file a suit and/or application, leads to computation of the period of limitation afresh, from the time when the acknowledgement is so signed. It is reiterated that in its application under Section 7 of the IBC, the Appellant declared the date of default as 1st April, 1993. At the highest, limitation started running from 27th March, 2003, when the Recovery Certificate was issued by the DRT in favour of the Assignor. The NCLAT has rightly held that the application of the Appellant under Section 7 of the IBC barred by limitation - In any case, there are pending proceedings in the DRT, in respect of the dues of the Corporate Debtor. The Appellant ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the loan as aforesaid, availed by the Corporate Debtor. 5. By a pari pasu agreement executed by and between the Assignor Bank, Corporation Bank, and the Corporate Debtor on 23rd November 1987, a pari pasu charge was created on the movable and immovable properties of the Corporate Debtor, in favour of the two banks. 6. The Corporate Debtor failed to repay the loan obtained from the Assignor Bank. The Assignor Bank, therefore, declared the account of the Corporate Debtor as a Non Performing Asset (NPA) on 1st April 1993. 7. On or about 18th May 1998, the Assignor Bank filed an Original Application No. 547 of 1998 under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 before the Debt Recovery Tribunal (DRT), Andhra Pradesh and Karnataka at Bangalore for recovery of its dues aggregating ₹ 2,61,88,403.05/- odd from the Corporate Debtor. 8. It is the case of the Appellant that during the pendency of the said original application, the Corporate Debtor acknowledged and admitted its debt to the Assignor Bank and approached the Assignor Bank for a settlement, subject to payment of a consolidated amount of ₹ 1 Crore, less ₹ 25 Lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of the Corporate Debtor to the Petitioner/Financial Creditor herein vide Assignment Agreement dated 3rd May, 2011. Consequently, an amended recovery certificate dated 13th May, 2011 was issued by the DRT, Bangalore recognizing the assignment to the petitioner/Financial Creditor and vesting rights of recovery with it. 13. Being aggrieved by the judgment and order of NCLT, Bengaluru dismissing the application of the Appellant under Section 7 of the IBC, the Appellant filed an appeal therefrom, being Company Appeal (AT) (INS.) No.1011 of 2019, before the NCLAT. The Appeal has been dismissed by the judgment and order impugned. 14. The NCLAT also found that the application filed by the Appellant under Section 7 of the IBC was barred by limitation. The NCLAT, however, made it clear that the dismissal of the application under Section 7 of the IBC, would not preclude the appellant from availing the appropriate remedy for redressal of its grievances, in accordance with law, before the competent forum. 15. The application of the Appellant in Statutory Form 1 under Section 7 of the IBC read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, 1993, that is, over 15 years before the application under Section 5 was filed in the NCLT. 19. It is well settled by a catena of decisions of this Court, that Article 137 of the Limitation Act gets attracted to applications filed under Sections 7 and 9 of the IBC. The right to sue accrues when a default occurs, and if that default has occurred over three years prior to the date of filing of an application under Section 7 of the IBC, the application would be barred under Article 137 of the Limitation Act. At the highest, limitation started ticking on 27th March 2003, when a Recovery Certificate was issued by the DRT. The appellant has not disclosed any material in its application under Section 7 of the IBC to demonstrate that the application is not barred by limitation. 20. In B.K. Educational Services Private Limited v. Parag Gupta and Associates reported in (2019) 11 SCC 633, this Court held: 42. It is thus clear that since 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 defa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edgement is so signed. 25. In this case, the Corporate Debtor has not signed any acknowledgement in writing after the settlement of 30th June 2001, on the basis of which, a Recovery Certificate was issued by the DRT on 27th March 2003. An arrangement between the Assignor Bank and the Appellant and the consequential substitution of the Appellant as party to the Execution/Recovery proceedings in the DRT does not save limitation to initiate proceedings under Section 7 of IBC. In any case, even the amended Recovery Certificate, relied upon by the Appellant, is dated 13th December, 2012. The application under Section 7 of the IBC was filed almost 6 years after issuance of the amended Recovery Certificate. 26. In Vashdeo R. Bhojwani v. Abhyudaya Cooperative Bank Ltd. Anr., reported in (2019) 9 SCC 158, this Court had set aside the orders of the NCLT and the NCLAT, holding that the application under Section 7 of the IBC was time barred, as the loan account had been declared Non Performing Asset on 23rd December 1999 and thereafter the Debt Recovery Tribunal had issued a Recovery Certificate dated 24th December 2001. Insolvency proceedings before the NCLT were admitted on 5th March ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chamaria and Others, reported in AIR 1961 SC 1236, this Court held :- 6. It is thus clear that acknowledgment as prescribed by Section 19 merely renews debt; it does not create a new right of action. It is a mere acknowledgment of the liability in respect of the right in question; it need not be accompanied by a promise to pay either expressly or even by implication. The statement on which a plea of acknowledgment is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words. Words used in the acknowledgment must, however, indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the intention to admit such jural relationship. Such intention can be inferred by implication from the nature of the admission, and need not be expressed in words. If the statement is fairly clear then the intention to admit jural relationship may be implied from it. The admission in question need not be express but must be made in circumstances and in words from which the court can reasonably infer that the person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve decided that no interest be provided in the books of account for the year ended 31st March 2017. The Board is also of the opinion based on legal advice obtained by it in the matter that no interest be provided in the books till the matter acquires clarity and the entire amount demanded by Reliance except for a sum of ₹ 40.00 lakhs be treated as contingent liability not provided for . The Board is also of the opinion that developments subsequent to the decree of the DRT Bangalore have not been considered by Reliance while demanding the amount of ₹ 97.12 crores. These developments have a substantial bearing on the case. Note No. 28 Claims against the Company under adjudication not acknowledged as debt: Commercial and other claims ₹ 113.85 crores Previous Year ₹ 72.92 crores 34. The letter dated 23rd April 2019 again is not an acknowledgment and admission of liability. The language and tone of the letter makes it absolutely clear that the liability was denied. The Corporate Debtor contended that it had paid more than the double the amount it had borrowed. Nevertheless, the Corporate Debtor offered a one-time settlement seeking opinion/concur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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