TMI Blog2022 (3) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... that Bank of Baroda is a financial creditor and by a valid and legal deed of assignment Bank of Baroda assigns the debt to ARCIL. Hence, ARCIL is without doubt a financial creditor which is entitled to submit an application under section 7 of the IBC for relief - the Adjudicating Authority has committed no error in passing the Impugned Order. There are no reason to interfere with the Impugned Order - appeal dismissed. - Company Appeal (AT) (Insolvency) No. 1094 of 2021 - - - Dated:- 2-3-2022 - (Justice Ashok Bhushan) Chairperson (Dr. Alok Srivastava) Member (Technical) For the Appellant : Mr. Mohit Chaudhary, Mr. Paras Mittal and Mr. Kunal Sachdeva, Advocates. For the Respondents : Mr. Dinkar Singh, Mr. Gagan Garg, Mr. Rohit Singh, Advocates for R 1 Ms. Aditi Sharma, Advocate for RP JUDGMENT (Virtual Mode) { Per : Dr. Alok Srivastava , Member ( Technical ) } 1. The present appeal, filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as IBC ) arises out of order dated 15.11.2021 (hereafter called Impugned Order ) passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi) in CP (IB) N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in nine months by way of three quarterly installments, which the Corporate Debtor failed to pay within the specified time schedule. Thus, a final judgment and order/decree became binding on the judgment debtor/Corporate Debtor. The Corporate Debtor thereafter, filed review petition before DRT III at Delhi for reviewing/recalling its final order dated 29.4.2016, praying inter alia, among other things, that the Corporate Debtor be permitted to sell property at Shastri Park, Delhi in whole or in part, to enable him to start paying the dues of ARCIL and requesting for the nine months time for making payment to ARCIL. The DRT-III, Delhi vide its final order dated 27.7.2016, disposed of the review petition ordering, inter alia, that the Applicant (Corporate Debtor) be permitted to bring better buyer for sale, floor-wise, of the property in question, subject to the satisfaction of the Respondent/ARCIL. Also, the Corporate Debtor, aggrieved by the judgment dated 29.4.2016 passed by DRT-III, Delhi preferred an appeal - registered as Appeal No. 318/2016 - before the Debt Recovery Appellate Tribunal (DRAT) at Delhi, which was dismissed vide DRAT s judgment dated 29.1.2018. The Appellant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be relied upon by the opposite side for admission/acknowledgment of the debt and, therefore, for extension of limitation under Section 18 of the Limitation Act. The Ld. Counsel for Appellant has also argued that ARCIL is actually a partner of the corporate debtor and is not an investor who can prefer Section 7 application as financial debtor. 7. The Learned Counsel for Appellant has also cited the judgment of Hon ble Supreme Court in ITC Limited versus Blue Coast Hotels Limited and Ors. (2018 15 SCC 99) and a judgment of the NCLAT in Manesh Agarwal vs Bank of India and Anr. [Company Appeal (AT) (INS) No. 1182 of 2019) to claim that it is a settled law that any communication that does not contain the remark Without Prejudice may be taken to extend the period of limitation but in the instant case, since the communications were sent with the explicit note of Without Prejudice in them, they cannot be relied upon for the purpose of extension of limitation. 8. In reply, the Learned Counsel for Respondent/ARCIL has argued that it is an admitted fact that the Corporate Debtor availed two loans, namely Term Loan I and Term Loan II from Bank of Baroda/Financial Creditor of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of issuance of the Certificate of Recovery, if the dues of the Corporate Debtor to the Financial Creditor, under the judgment and/or decree and/or in terms of the Certificate of Recovery, or any part thereof remained unpaid. 10. Applying the principle settled by Hon ble Supreme Court in Asset Reconstruction Company (India) Limited vs Bishal Jaiswal and Anr. (Civil Appeal No. 323/2021)regarding extension in limitation as a result of acknowledgement in the corporate debtor s balance sheet in the instant case, the Ld. Counsel for Respondent No. 1has explained that after the Loan Account of Corporate Debtor was declared as NPA on 31.12.2011, the acknowledgment of the Corporate Debtor in its balance sheet for FY 2011 12, which was signed on 3.9.2012,would extend the period of limitation upto 2.9.2015. Relying on the same principle, the acknowledgment in the balance sheet for FY 2012-13,which was signed on 4.9.2013, would extend the limitation upto 3.9.2016 and the order of DRT-III dated 29.4.2016 would extend the limitation upto 28.4.2019. He has argued that in this manner the application under section 7 filed by the financial creditor/ARCIL comes within limitation as required by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble High Court, Delhi. Hon ble High Court s judgment is also placed on record. 6. There is a valid acknowledgment on the part of the Corporate Debtor in the form of Settlement Proposal and there is settled law as declared by Hon ble NCLAT in the matter of Manesh Agarwal vs. Bank of India Anr. (Company Appeal 1182/2019). 7. We are of the opinion that, the term Without Prejudice to the rights and contentions of the Corporate Debtor does not negates the admission of the liability of the debt. Acknowledgment of liability under section 18 of the Limitation Act, 1963 itself demands a broader interpretation to serve the ends of justice. That is why Section 18(2)(a) of the Limitation Act states that:- 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. 15. We shall, therefore, first look at the import of remark of Without Preju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgments referred to by the Learned Counsel for Appellant regarding the import of the words Without Prejudice in the two above-mentioned letters of the corporate debtor in the context of the present case. In the matter of ITC Limited vs Blue Coast Hotels Limited and Ors (supra), the letter of undertaking which was given Without Prejudice pertains to an undertaking given by the corporate debtor regarding payment/settlement. The mention of the words without prejudice in a letter of undertaking which is given in the process of settlement protects the legal rights of the sender in the event the settlement proposal does not fructify. Hence the words Without Prejudice have a very important implication in such cases. In the present case, the issue is not about protecting the right of sender vis-a-vis any legal remedy in case the settlement does not fructify, but is about the fact of the existence of the loan. Hence in our view the context in the case of ITC Limited (supra) is quite different and the ratio would not apply in the facts of the present case. The other judgment in Manesh Agarwal versus Bank of India and Anr. (supra) is distinguished by the Learned Counsel for Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even after the action was initiated under the Act and even after payment of a smaller sum, the debtor has consistently refused to pay up. 20. We tend to follow the view taken in the paragraph 35 of the judgment in ITC Limited case (supra) with regard to the words Without Prejudice and are of the opinion that this view corresponds to the context as contained in the two letters in the present appeal. 21. The Ld. Counsel for Appellant has also cited the judgment of Hon ble Apex Court in the case titled Peacock Plywood Private Limited vs. The Oriental Insurance Company Limited (2006 12 SCC 673) to claim that the said letters cannot be taken as evidence of the existence of debt, and consequently of its acknowledgement. The relevant portion of the judgment is reproduced below: Paragraph 22(c) (c ) When is correspondence treated as within rule? The first question is to determine what communications attract without prejudice privilege. The second stage is to consider when the court will, nevertheless admit such communications. Correspondence will only be protected by without prejudice privilege if it is return for the purpose of a genuine attempt to comprom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation would extend for three years, i.e. upto 30.12.2014. (ii) Bank of Baroda sends demand notice under section 13(2) of the SARFAESI Act on11.6.2012. (iii) While the period of limitation is running, Corporate Debtor s balance sheet for FY 2011-12 which was signed on 3.9.2012, is relied upon to extend limitation upto 3.9.2015. (iv) Again while the limitation is running, Corporate Debtor s balance sheet for FY 2012-13 which was signed by the Corporate Debtor on 4.9.2013,is relied upon to extend limitation upto 3.9.2016. (v) Judgment dated 29.4.2016 of DRT-III gives a fresh cause of action to the Respondent/ARCIL while the limitation period is running, helps to extend the limitation period from 29.4.2016 for another three years till 28.4.2019. (vi) The two letters dated 3.7.2018 and 11.8.2018 sent by the Corporate Debtor to Financial Creditor/ARCIL contain reference to settlement proposal submitted to the Financial Creditor which is in relation to the debt of the corporate debtor. The letter dated 11.8.2018contains admission of the Corporate Debtor about the quantum of dues (debt) payable by the Corporate Debtor to ARCIL by charging simple interest @ 11% ..... X X X X Extracts X X X X X X X X Extracts X X X X
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