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2020 (9) TMI 1219 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - pendency of the claim filed by the applicant in other CIRP proceeding - time limitation - HELD THAT - Mere plain reading of the provision shows that Section 18(1) of Limitation Act says that Where, before the expiration of the prescribed period for a suit or 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 the time when the acknowledgment was so signed. Whether the acknowledgement of debt can change the date of default in view of Section 18 of the Limitation Act or not? - HELD THAT - Specially Sub Section 18(1) of the Limitation Act, which says that the Where, before the expiration of the prescribed period for a suit or 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 the time when the acknowledgment was so signed. Article 137 of the Limitation Act says that if there is no period is prescribed then an application or suit shall be filed within 3 years when the right to apply accrues, it means a person may file an application within 3 years from the date when the right to apply accrues and here in this case, the right to apply accrues, when the default has occur and the NPA was declared on 31.12.2015, therefore, right to file an application under Section 7 accrues within 3 years from the date of NPA i.e. on 31.12.2015 but when we shall consider the Section 18 in which it is clearly mentioned the word property or right, which means the acknowledgement in respect of property or right, if it is made in writing then the period of limitation shall be computed from the date when the acknowledgement in writing was made. As per the NPA the period of limitation comes to an end on 30.12.2018 but prior to that an acknowledgement of debt was made in writing by the Corporate Debtor on 18.07.2017. Under Section 18 of the Limitation Act, if the acknowledgement of debt in writing and signed by the person before the expiration of prescribed period of limitation then the limitation shall be computed from the time when the acknowledgment was so signed and in this case, the acknowledgement was signed by the Corporate Debtor on 18.07.2017, therefore, the limitation runs from that day and the present application was filed by the corporate Debtor on 04.03.2020 hence, the application is within time. Whether during the pendency of the claim filed by the applicant in other CIRP proceeding, this application is maintainable or not? - HELD THAT - Section 12A is not applicable, so far the claim filed by the person before the IRP is concerned. The decisions upon which, the petitioner has placed reliance, in our considered view the facts of that decision is different from the facts of the case in hand, therefore, none of the decision will help the respondent to substantiate its submission that a person can withdraw its claim only under Section 12A of the IBC with the approval of the 90% of the member of the CoC - there are no option but to hold that there is no force raised on behalf of Ld. Counsel for respondent that the petition filed by this applicant is not maintainable because he had already filed its claim before the RP in the CIRP initiated against the parent company of the respondent i.e. EIEL. The applicant has succeeded to establish that there is a financial debt and Corporate Debtor is in default in making the payment of that financial debt, the application is complete - Application admitted - moratorium declared.
Issues Involved:
1. Whether the debt is barred by limitation. 2. Whether the present application is barred under the IBC due to a prior claim filed by the petitioner in the CIRP initiated against the parent company of the respondent. Detailed Analysis: Issue 1: Whether the debt is barred by limitation The petitioner filed the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiating the Corporate Insolvency Resolution Process (CIRP) against the respondent due to its inability to liquidate its financial debt. The respondent contended that the claim was time-barred under the Limitation Act, 1963, as the default occurred on 31.12.2015, and the application was filed on 04.03.2020, beyond the three-year limitation period prescribed by Article 137 of the Limitation Act. However, the petitioner argued that the limitation period was extended under Section 18 of the Limitation Act due to an acknowledgment of debt by the respondent in a letter dated 18.07.2017. The letter explicitly acknowledged the debt for the purpose of Section 18 of the Limitation Act, which resets the limitation period from the date of acknowledgment. The Tribunal agreed with the petitioner, noting that the acknowledgment was made within three years from the date of NPA (31.12.2015), thus extending the limitation period. Consequently, the application filed on 04.03.2020 was within the extended limitation period. Issue 2: Whether the present application is barred under the IBC due to a prior claim filed by the petitioner in the CIRP initiated against the parent company of the respondent The respondent argued that the petitioner's application was not maintainable as it had previously filed a claim in the CIRP against the parent company of the respondent, Era Infra Engineering Limited (EIEL). The petitioner countered that it had withdrawn its claim from the CIRP of EIEL before filing the present application, and the RP had acknowledged this withdrawal via email dated 19.03.2020. The Tribunal examined the provisions of the IBC and relevant regulations, noting that Section 12A of the IBC pertains to the withdrawal of applications admitted under Sections 7, 9, or 10 of the IBC and requires the approval of 90% of the CoC. However, this was not applicable to the withdrawal of claims filed by creditors. The Tribunal found that the petitioner's claim withdrawal was valid and acknowledged by the RP, and thus, there was no pending claim before the RP at the time of filing the present application. The Tribunal also addressed the respondent's contention of forum shopping, referencing the decision in Dr. Vishnu Kumar Aggarwal v. M/s. Piramal Enterprises Ltd., which prohibits multiple claims for the same debt in different CIRPs. However, since the petitioner's claim in the CIRP of EIEL was withdrawn, this issue did not arise. Conclusion: The Tribunal concluded that the application was within the limitation period due to the acknowledgment of debt under Section 18 of the Limitation Act. It also held that the petitioner's application was maintainable despite the prior claim in the CIRP of EIEL, as the claim had been validly withdrawn. Consequently, the Tribunal admitted the application and initiated the CIRP against the respondent, appointing Mr. Anil Kohli as the Interim Resolution Professional (IRP). The moratorium under Section 14 of the IBC was also imposed, staying all proceedings against the corporate debtor and ensuring the continuation of essential services. The Financial Creditor was directed to deposit the fee for the IRP, and the IRP was instructed to follow the rules and regulations as per the IBC.
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