TMI Blog2022 (3) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... he Respondent No. 2 before the Adjudicating Authority on the question of limitation, the Application under Section 7 filed by the Financial Creditor against the Corporate Debtor is filed as Annexure A-18 of the Appeal Paper Book. Under Part-IV of the Application in Item No. 2 the date of first occurrence of default is mentioned 13.03.1989 and under Part-V Particulars of an Order of a Court, Tribunal or Arbitral Panel Adjudicating on the default, if any (attach a copy of the order), reference to Order passed by Tribunal as Annexure 17 of the Appeal Paper Book has been made. It is clear that in the pleadings and submissions which was raised by Financial Creditor-Respondent No. 2 before the Adjudicating Authority regarding the question of limitation was claiming limitation of 12 years. The Adjudicating Authority did not return any finding or recorded any reason on the objection regarding limitation and without answering the objection and recording any findings, has admitted the Application. When objection was raised before the Adjudicating Authority that Application was barred by time it was incumbent on the Adjudicating Authority to consider and answer the question of limitation - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solvency and Bankruptcy Code, 2016 (hereinafter referred as the Code ). This Appeal has been filed by two Suspended Directors of the Corporate Debtor-M/s. Dugal Projects Development Company Private Limited. 2. Brief facts of the case necessary to be noted for deciding the Appeal are: M/s. Sima Hotels and Reports Ltd. (hereinafter referred as Principal Borrower ) obtained financial assistance in the year 1986 from Financial Institution namely IFCI/IDBI/ICICI to set up a Five-Star Hotel Projects in Goa at a piece of land at Agonda Beach owned by M/s. Dugal Projects Developemt Company Private Limited-Corporate Debtor. A Loan Agreement dated 04.11.1987 was executed by the Lenders in favour of the Principal Borrower. As per the Conditions of Loan Agreement dated 04.11.1987 the Principal Borrower was to procure Corporate Guarantee of the Corporate Debtor. Corporate Debtor i.e. M/s. Duggal Projects Development Private Limited executed a deed of personal guarantee dated 06.11.1987. Corporate Debtor leased the land to Principal Borrower for Hotel Projects. There was default of repayment and non-fulfilment of the terms and conditions under the Loan Agreement by Principal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019 before the Hon ble Supreme Court of India which came to be dismissed on 07.02.2020. Against the Order dated 08th May, 2019 passed by the Adjudicating Authority in CP 2527(IB)/MB/2018, this Appeal has been filed. Although both the Appeals i.e. Company Appeal (AT) Ins. No. 681 of 2019 as well as Company Appeal (AT) Ins. No. 650 of 2019 were listed together but vide Judgment dated 18th December, 2019, Company Appeal (AT) Ins. No. 650 of 2019 was dismissed. 3. This Appeal has been filed by two Suspended Directors of the Corporate Debtor challenging the Order dated 08th May, 2019 passed by the Adjudicating Authority admitting the Application filed by the Respondent No. 2 under Section 7 of the Code. We have heard Mr. Arun Bhardwaj, Sr. Advocate for the Appellant and Mr. Abhijeet Sinha, Advocate for Respondent No. 2. Mr. Ashu Kansal, Advocate appeared for Respondent No. 1. 4. Learned Sr. Counsel for the Appellant challenging the Order dated 08th May, 2019 submits that the Adjudicating Authority committed error in admitting the CP 2527(IB)/MB/2018 filed against the Corporate Guarantor (Corporate Debtor) whereas by the Order of same date rejected the Application CP-2528(MB)/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontend that Application filed under Section 7 against the Corporate Debtor was not barred by time; Firstly, he submits that after the Judgment/Decree dated 06.05.2011 the Corporate Debtor had submitted a proposal for One Time Settlement of dues of IDBI vide Letter dated 11.02.2014 which shall be treated as acknowledgment of debt both against the Principal Borrower as well as the Corporate Debtor granting extension of limitation. It is further submitted that Principal Borrower again on 04.03.2016 submitted a proposal for offer of settlement of dues of IDBI which shall again be ground for extension of limitation for filing the petition under Section 7 of the Code. He submits that in view of the acknowledgment of debt through One Time Settlement offer dated 11.02.2014 and 04.03.2016, the limitation for filing this Application shall be extended and Application filed on 10th July, 2018 was within time; Secondly, Mr. Sinha submits that against the Judgment and Decree dated 06.05.2011 the Corporate Debtor has filed an Appeal before the Debt Recovery Appellate Tribunal which came to be dismissed only on 14.02.2017. Hence the Limitation for filing Section 7 Application shall be counted from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st Asset Reconstruction Company Limited/Appellant(S) Versus Sima Hotels and Resorts Limited/Respondent(S) was filed which was dismissed by Hon ble Supreme Court vide Order dated 07.02.2020 which reads as under: ORDER 1. We find no ground to interfere with the impugned order passed by the Tribunal. The appeal is, accordingly, dismissed. 2. Pending application(s), if any, shall stand disposed of. 10. The Application under Section 7 filed by Respondent No. 2-Financial Creditor against the Principal Borrower thus stand dismissed on the ground of limitation. This Tribunal in the said Judgment noticed that decree was passed on 06.05.2011 by DRT and Application was filed on 10th July, 2018 hence was barred by time. Present is the case where on the same day Application under Section 7 was filed by the Financial Creditor both against the Principal Borrower and the Corporate Guarantor i.e. Corporate Debtor. The Application against the Principal Borrower now has been dismissed on the ground of limitation and present in the Appeal which has been filed against the Order of Adjudicating Authority dated 08.05.2019 admitting the Section 7 Application against the Corporate Guara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g coextensive with the principal borrower Under Section 128 of the Contract Act, it triggers the moment principal borrower commits default in paying the acknowledged debt. This is a legal fiction. Such liability of the guarantor would flow from the guarantee deed and memorandum of mortgage, unless it expressly provides to the contrary 13. Learned Counsel for the Respondent No. 2 has also referred and relied on the Judgment of the Hon ble Supreme Court in Asset Reconstruction Company India Limited Vs. Bishal Jaiswal and Ors . (2021) 6 SCC 366 where the Hon ble Supreme Court laid down that Section 18 of the Limitation Act gets attracted the moment acknowledgment in writing signed by the party is given. 14. Two submissions have been made by Mr. Sinha to support his submissions that Application filed by the Financial Creditor against the Corporate Debtor is not barred by time. We need to consider the above submissions to find out as to whether the Application which was filed by the Financial Creditor against the Corporate Debtor was within limitation or beyond limitation. 15. Now it is the settled law that Application under Section 7 of the IBC is covered by Article 137 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitation Act, 1963 provides that if any acknowledgment of the liability is made by the party then a fresh period of limitation shall be commuted from the time wen the acknowledgment was given. In the instant case, it is an admitted fact that the Borrower had deposited before the DRT the entire suit amount in 2009 with request to determine the interest pendente lite and thus acknowledged the debt of the Financial Creditor. Therefore, the fresh cause of action starts again from 2009 for 12 years, which is till 2021. That, another ground on which it can be proved that the instant application is within limitation as per the Limitation Act, 1963 is that the decree was passed on 06.05.2011 and therefore, the crystalized amount which became due and payable by the Corporate Debtor and the Borrower is from 06.05.2011 for which the limitation is again 12 years as per Article 136 of the Limitation Act, 1963 and hence, the period within which the Financial Creditor can sue/recover the debt against the Corporate Debtor is till 2023. That from the above, it is crystal clear that as on September, 2018 when the Financial Creditor had filed its Section 7 petition before this Hon ble Tribunal, the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t culminated in a decree in favour of the Petitioner dated 06.05.2011. The said decree is legally enforceable in terms of Section 5(7) and 5(8) read with Section 3(11) and 3(6) of I B Code as on the date of initiation of Section 7 petition and the debt due by the Corporate Debtor to the Petition is not barred by Limitation Act, 1963 as in the date of filing of the petition and thus the present case is a case wherein the right to sue/recover the debt clearly subsists in favour of the Applicant as on date. The Petitioner has submitted that the petition is within limitation and the decree crystallising its debt was passed on 06.05.2011 and period of limitation prescribed for recovery of the same under the decree is 12 years as per Article 136 of the Limitation Act, 1963. This Petition which is filed in September, 2018 is very well within limitation. 18. Thus, it is clear that in the pleadings and submissions which was raised by Financial Creditor-Respondent No. 2 before the Adjudicating Authority regarding the question of limitation was claiming limitation of 12 years. The Adjudicating Authority did not return any finding or recorded any reason on the objection regarding limitati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial Creditor, passed by the DRT, or any other Tribunal or Court, or the issuance of a Certificate of Recovery in favour of the Financial Creditor, would give rise to a fresh cause of action for the Financial Creditor, to initiate proceedings under Section 7 of the IBC for initiation of the Corporate Insolvency Resolution Process, within three years from the date of the judgment and/or decree or within three years from the date of issuance of the Certificate of Recovery, if the dues of the Corporate Debtor to the Financial Debtor, under the Judgement and/or decree and/or in terms of the Certificate of Recovery, or any part thereof remained unpaid. 21. Now the question is as to whether the Respondent No. 2 can claim One Time Settlement Offer which was given by Principal Borrower to the IDBI Bank for the purpose of extension of limitation period of the Application filed against the Corporate Guarantor i.e. Corporate Debtor. 22. We have already noticed that the Section 7 Application by the Financial Creditor against the Principal Borrower has already been held to be barred by time by this Tribunal in its Judgement dated 18th December, 2019 in Company Appeal (AT) Ins. No. 650 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Order has been brought on record along with the Reply filed by the Respondent No. 2 dated 18.12.2021. The Order dated 14.02.2017 is to the following effect: This application is filed by appellants to dismiss its appeal on the ground that appeal is registered without considering serious defects involved in the appeal and first prayer is to direct the Registry of DRAT, Mumbai to enquire and investigate into the illegality/serious defects involved in numbering of appeal and the second prayer to dismiss the appeal with liberty to appellants to take appropriate steps. Therefore appellants want its appeal to be dismissed. With regard to contention that appeal is wrongly numbered, it is for the appellants to take appropriate steps and if appeal is wrongly numbered appellant is equally responsible for filing such defective appeal. Other request made is to allow the appellants to take steps for review of common order that is challenged in the appeal. If law provides right to a party there is no necessity to give any permission and therefore such a relief cannot be entertained. When statute provide such relief it is for the party to invoke such remedy and not for the Tribunal to grant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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