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2023 (3) TMI 1406 - SC - Insolvency and BankruptcyExtension of time period or not - One Time Settlement (OTS) proposal - applicability of time limitation to IBC proceedings - section 7 application filed within time limitation or not - HELD THAT - This letter for OTS proposal clearly acknowledges and accepts the jural relationship between the appellant - Bank of India as creditor and the Corporate Debtor/respondent no.3 - M/s Radheshyam Agro Products Pvt. Ltd. as the debtor. The letter clearly accepts that the Corporate Debtor/respondent no.3 - M/s Radheshyam Agro Products Pvt. Ltd. was sanctioned principal amount of Rs.37 crores, and that repayment in various forms to the extent of Rs. 19 crores stands made. Thus, acknowledging that there was substantial liability due and payable towards the principal amount. Section 18 of the Limitation Act requires that the words used in the purported acknowledgement must indicate the existence of a jural relationship and the statement should be made with the intention of admitting the jural relationship - However, such acknowledgment, for the purpose of Section 18 of the IBC, need not be accompanied with a promise to pay, whether expressly or by implication; and simple admission of the debt is sufficient. In M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK ANR. 2017 (9) TMI 58 - SUPREME COURT it has been held that the Adjudicating Authority, while considering an application under Section 7 of the IBC, is only required to see if there is an existence of debt and default. Any dispute with regard to the quantum of debt is immaterial. For this purpose, the Adjudicating Authority should see the records of information utility or other evidence produced by the financial creditor. It is accepted that the OTS proposal is within three years from the date the debt was declared to be NPA i.e. on 30.09.2014. Thus, the provisions of Section 18 of the Limitation Act are attracted and applicable. The period of limitation would get extended in view of the OTS proposal submitted by the Corporate Debtor/respondent no.3 - M/s Radheshyam Agro Products Pvt. Ltd. vide the letter dated 01.06.2016. Thus, it is held that the application under Section 7 of the IBC filed by the appellant - Bank of India against the Corporate Debtor/respondent no.3 has been filed within the prescribed period of limitation - appeal allowed.
Issues involved:
The issues involved in the judgment are related to the classification of credit facilities as Non-Performing Assets (NPA), initiation of proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC), the acceptance of One Time Settlement (OTS) proposal, and the application of Section 18 of the Limitation Act to extend the period of limitation. Classification of Credit Facilities as NPA: The Corporate Debtor had obtained credit facilities from the Bank of India, which were declared as Non-Performing Assets (NPA) due to defaults, leading to outstanding balances towards the principal amount, interest, and penalty. Initiation of Proceedings under IBC: The Bank of India initiated proceedings against the Corporate Debtor under the Insolvency and Bankruptcy Code, 2016 (IBC) by filing an application under Section 7, which was contested on the ground of limitation but rejected by the National Company Law Tribunal (NCLT). Acceptance of OTS Proposal and Limitation Act: The National Company Law Appellate Tribunal (NCLAT) accepted the plea that the proceedings were barred by limitation, but the Supreme Court disagreed, stating that the One Time Settlement (OTS) proposal dated 01.06.2016 extended the period of limitation as it acknowledged the liability and jural relationship between the parties. Application of Section 18 of the Limitation Act: The Supreme Court held that Section 18 of the Limitation Act applies to IBC proceedings and requires an acknowledgment indicating the jural relationship without the need for a promise to pay. The court emphasized that the OTS proposal submitted within three years from the date of NPA declaration extended the period of limitation. Conclusion: The Supreme Court allowed the appeal, setting aside the NCLAT judgment, and held that the application under Section 7 of the IBC was filed within the prescribed period of limitation. The parties were directed to appear before the NCLT for further proceedings, and any pending applications were disposed of to expedite the legal process.
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