TMI Blog2022 (2) TMI 1129X X X X Extracts X X X X X X X X Extracts X X X X ..... made with Kotak Mahindra Bank from 01.04.2015 by the order of RBI - Section 7 of the Code is concerned with only two factors. There must be a debt and it must be due and payable in the law and there is a default . The Respondent is not refuting the Debt nor they are refusing that it was not due and payable in law except the Limitation issue and computation of default. It is amply clear that if Settlement offer or other way of acknowledgement of Debt has been done within the first period of limitation then Limitation gets extended again for the next three years - it is very much clear that the provisions of Limitation Act, 1963 which includes extension of limitation due to acknowledgment in writing, apply to the present case, the petition filed before the Adjudicating Authority is within the limitation period and both Debt and Defaults are not disputed and hence, provisions of Section 7 of the Code is applicable to the case and requires positive consideration towards its admission under the provision of the Code R/w the Limitation Act, 1963. The petition has been filed within the limitation period and hence Section 7 of the Code petition can be initiation agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sanction loans/security documents executed and accordingly the ING Vyasya Bank Limited (Bank) as per RBI Regulations declared Non-performing Asset (NPA) on 30.06.2014. it was also stated by him that as per the audited Balance Sheet as on 31.03.2014, the CD was referred to BIFR to seek declaration as sick unit and the same was registered on 15.07.2014. They have also stated that once a reference of filing before BIFR has been made under the provisions of Section 22 of SICA it gets into operation and all legal proceedings gets suspended as per the provisions of SICA. It is also revealed from the pleadings that the Bank has assigned the Debt of the CD to the present Appellant Company vide Assignment Agreement dated 19.09.2014 . The Bank subscribed 85% of the security receipt issued under the said assignment. It was also stated that through this assignment all the Debt of the CD alongwith underlying assets / securities mortgaged to the Assigner was assigned to the Appellant and the said Appellant was empowered to take all the measures prescribed under law for recovery of Debt from the CD. It was also mentioned that the Bank, as stated above, merged with the Kotak Mahin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Limitation Act, 1963. It is sated by the Ld. Sr. Counsel for the Appellant that the Appellant Company initiated the Corporate Insolvency Resolution Process (CIRP) process on 07.05.2019 which is within three years from last of such acknowledgment of liabilities i.e. 04.12.2018. 5. The Appellant while asserting that the present appeal is not barred by limitation has cited hon ble Supreme Court Judgment in case of Gaurav Hargovindbhai Dave Vs. Asset reconstruction Company (India) Limited Anr. (2019) 10 SCC 572 para 3 6 wherein it has been held period of limitation commences from the date of NPA . The Appellant has further cited the judgment as given below to amplify that the fresh period of limitation is computed from the Debt of acknowledgment of Debt by the borrower from time to time based on last communications: A. State Bank of India Vs. Kaushuv Ray Anr. (Civil Appeal No. 979/2021) Para 3 - Before this Court, the Appellant has relied upon certain material in the form of correspondences during the years 2014 to 2017 and balance sheets for the Financial Years ending 2015, 2016, 2017, 2018 and 2019 to show that the application filed under Section 7, IBC was w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y because in the document the Corporate Debtor mention that the proposal was given was without prejudice to the rights and contentions in pending Court proceedings, will not make any difference. In this view of the matter, when NPA was declared on 30.6.2009, the documents pointed out by the learned Counsel for the Appellant dated 24.04.2012 (page 277), 12.03.2014 (page-419) and 09.06.2016 (page-420) calculated from the date of NPA, give fresh periods of limitation and filing of Section 7 Application on 11.7.18 was not barred. 6. As far as issue of settlement proposals marked as without prejudice and the same constitute admission and acknowledgement of liabilities and are liable to be so considered by this Appellate Tribunal when both Debt and Default is admitted by the parties. They have citied the judgment of Hon ble Supreme Court ITC Limited Vs Blue Coast Hotels Limited (2018) 15 SCC 99 para 33) and Hon ble Bombay High Court in case of CG Power Industrial Solutions Limited Vs. Gactel Turnkey Products Limited at para 3 to 5. 7. The Ld. Sr. Counsel for the Respondent has submitted that the instant appeal is devoid of merit including on the ground of same being barred by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 with the DRT on 02.12.2016 alleging that the Respondent alongwith its Directors were liable to pay the dues. 9. The Ld. Sr. Counsel for the Respondent has also made a submission that on 02.03.2017 without prejudice offer for settlement was made. However, this offer was again rejected by the Appellant on 02.11.2017 and so further Settlement Proposal was made on March, 2018 which was also not accepted by the Appellant. The Appellant declined without prejudice settlement offer (dated 04.12.2018) made by the Respondent on 12.02.2019. Thereafter, on 07.05.2019, the Appellant filed the Petition under Section 7 of Code before the Adjudicating Authority seeking to initiate CIRP against the Respondent. The Respondent has categorically stated that the Debt is barred by limitation. It is a settled law that the provisions of the Limitation Act, 1963 are applicable to the proceedings under Section 7 of the Code. The Respondent has submitted that section 7 petition be filed within a period of three years from the Date of Default . Section 5 of the Limitation Act, 1963 may be applied to condone the delay till filing such application. It was stated by the Ld. Sr. Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aded in its Application that it is within limitation and/ or sought condonation of delay in any respect. The Company Petition which has been filed on 07.05.2019 mentions the date of NPA as 30.06.2014. In this regard the Financial Creditor has not pleaded in the Company Petition to exclude any period of time. In this regard the bench would like to refer to the case of Kattinokkula Murali Krishna V s. Veeramalla Koteshwara Rao (2010)1 SCC 466 wherein at paragraph 24, the Hon'ble Supreme Court has held that it is a settled principle of law that evidence beyond pleadings can never be permitted to be adduced nor can such evidence be taken into consideration . In view of this, since there is no averment or seeking condonation of delay in the Company Petition, therefore, this bench is of the view that since there is no averment or pleading by the Petitioner explaining the issue of limitation seeking condonation of delay, this Petition is barred by limitation and the bench is inclined to dismiss it. 11. We have carefully gone through the submissions made by the Ld. Sr. Counsels for the parties /pleadings available on record and the law laid down on the subject and are having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, or any other person on behalf of the financial creditor, as may be notified by the Central Government] may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred. [Provided that for the financial creditors, referred to in clauses (a) and (b) of sub-section (6A) of section 21, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such creditors in the same class or not less than ten per cent. of the total number of such creditors in the same class, whichever is less: Provided further that for financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such allottees under the same real estate project or not less than ten per cent. of the total number of such allottees under the same real estate project, whichever is less: Provided also that where an application for initiating the corporate insolvency resolution proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority. (6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5). (7) The Adjudicating Authority shall communicate- (a) the order under clause (a) of sub-section (5) to the financial creditor and the corporate debtor; (b) the order under clause (b) of sub-section (5) to the financial creditor, within seven days of admission or rejection of such application, as the case may be. f. In order to bring clarity on the limitation issue, we are also depicting the provisions of Section 18 of the Limitation Act, 1963 and Article 137 of the Limitation Act:- 18. Effect of acknowledgment in writing.- (1) Where, before the expiration of the prescribed period for a suit of application in respect of any property or right, 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords are to be understood in the sense in which they best harmonise with the subject matter of the legislation and the object which the Legislature has in view. The Courts would not give an interpretation to those words which would frustrate the purposes of making the Limitation Act applicable to proceedings in the NCLT/NCLAT as far as may be . xxx xxx xxx 94. The use of words as far as may be , occurring in Section 238A of the IBC tones down the rigour of the words shall in the aforesaid Section which is normally considered as mandatory. The expression as far as may be is indicative of the fact that all or any of the provisions of the Limitation Act may not apply to proceedings before the Adjudicating Authority (NCLT) or the Appellate authority (NCLAT) if they are patently inconsistent with some provisions of the IBC. At the same time, the words as far as may be cannot be construed as a total exclusion of the requirements of the basic principles of Section 14 of the Limitation Act, but permits a wider, more liberal, contextual and purposive interpretation by necessary modification, which is in harmony with the principles of the said Section. 99.There can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause of action for initiation of proceedings under Section 7 of the IBC. 110. It is not necessary for this Court to examine the relevance of all the documents filed by the Appellant Bank pursuant to its interim applications being I.A. No.27 of 2019 and I.A. No.131 of 2019. Suffice it to mention that the documents enclosed with the applications being I.A. No.27 of 2019 and I.A. No.131 of 2019 and the pleadings in the supporting affidavits, made out a case for computation of limitation afresh from the dates of the relevant documents. It would also be pertinent to note that the reasons for the execution of the documents are irrelevant. It is not the case of the Respondents, that any of those documents were extracted through coercion. 111. As per Section 18 of Limitation Act, an acknowledgement of present subsisting liability, made in writing in respect of any right claimed by the opposite party and signed by the party against whom the right is claimed, has the effect of commencing a fresh period of limitation from the date on which the acknowledgement is signed. Such acknowledgement need not be accompanied by a promise to pay expressly or even by implication. However, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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