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2023 (4) TMI 1256 - AT - Insolvency and BankruptcyMaintainability of CIRP application - one time settlement - time limitation - petition has been filed beyond the period of three years from the date of default - date of default can be changed by the Bank or not - Payment of Rs. 2.75 Lakh on 29.03.2017 by the Appellant in their account. Time limitation - petition has been filed beyond the period of three years from the date of default - HELD THAT - There is no dispute that the Bank did not mention the date of default in Part IV of Form 1 i.e. the application filed under Section 7 of the Code and disclosed the date of default only in its supplementary affidavit which was filed pursuant to the order passed by the Adjudicating Authority. The Bank has mentioned the date of default as 31.08.2013 in the affidavit. It has also mentioned the date of NPA as 31.03.2014. The Bank has tried to change the date of default as 31.03.2014 which in fact has been mentioned as the date of NPA. The period of limitation counted from 31.08.2013 i.e. date of default would continue till 31.08.2016 and shall expire w.e.f. 01.09.2016. The Bank failed to produce any evidence of acknowledgement of debt on the part of the Appellant during the period from 31.08.2013 to 31.08.2016. Whether the date of default can be changed by the Bank? - HELD THAT - It has been held by the Hon ble Supreme Court in the case of RAMESH KYMAL VERSUS M/S SIEMENS GAMESA RENEWABLE POWER PVT LTD. 2021 (2) TMI 394 - SUPREME COURT that the date of default cannot be changed. It has also been held in the case of LAXMI PAT SURANA VERSUS UNION BANK OF INDIA ANR. 2021 (3) TMI 1179 - SUPREME COURT BABULAL VARDHARJI GURJAR VERSUS VEER GURJAR ALUMINIUM INDUSTRIES PVT. LTD. ANR. 2020 (8) TMI 345 - SUPREME COURT B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES 2018 (10) TMI 777 - SUPREME COURT and B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES 2018 (10) TMI 777 - SUPREME COURT that the period of limitation would be attracted from the date when the default occurs and not from the date of declaration of NPA. Therefore the date of NPA cannot be taken to be the date of default for the purpose of limitation. Payment of Rs. 2.75 Lakh on 29.03.2017 by the Appellant in their account - HELD THAT - It has now been well settled by three judge bench of the Hon ble Supreme Court in the case of SHANTI CONDUCTORS (P) LTD. AND ORS. VERSUS ASSAM STATE ELECTRICITY BOARD AND ORS. 2019 (12) TMI 1513 - SUPREME COURT that Section 19 would come into play if the payment is acknowledged in the handwriting of or in a writing signed by the person making the payment - thus no advantage can be given to the Bank of the entry dated 29.03.2017. One time settlement - HELD THAT - It has come on record that the OTS has occurred much after the expiry of period of limitation therefore it cannot be taken into consideration for the purpose of Section 18 to extend the period of limitation. The impugned order is patently illegal and the appeal is thus hereby allowed and the impugned order is set aside.
Issues Involved:
1. Limitation Period for Filing Application under Section 7 of the Insolvency and Bankruptcy Code, 2016. 2. Date of Default and its Impact on Limitation. 3. Acknowledgment of Debt and Extension of Limitation Period. Summary: 1. Limitation Period for Filing Application under Section 7 of the Insolvency and Bankruptcy Code, 2016: The appeal was filed by the Suspended Director of the Corporate Debtor against the order dated 26.08.2022, which admitted an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 by IDBI Bank Limited. The Corporate Debtor contested the application on the ground that it was filed beyond the three-year limitation period from the date of default. 2. Date of Default and its Impact on Limitation: The Adjudicating Authority allowed the Bank to file a supplementary affidavit to specify the date of default, which was initially missing in the application. The Bank mentioned 31.08.2013 as the date of default and 31.03.2014 as the date of NPA. The Bank attempted to use the date of NPA to extend the limitation period, but the Tribunal held that the date of default triggers the limitation period, not the date of NPA. The Tribunal cited the Supreme Court's rulings in several cases, including Babulal Vardharji Gurjar and Jignesh Shah, which confirmed that the period of limitation starts from the date of default. 3. Acknowledgment of Debt and Extension of Limitation Period: The Bank argued that the limitation period was extended due to part payments and an OTS (One Time Settlement) offer. However, the Tribunal noted that for an acknowledgment to extend the limitation period under Section 18 of the Limitation Act, it must occur within the original limitation period. The Tribunal referred to the Supreme Court's decision in Shanti Conductors Pvt. Ltd., which clarified that any acknowledgment must be in writing and signed by the debtor. Since the payments and OTS occurred after the limitation period had expired, they could not extend the limitation period. Conclusion: The Tribunal concluded that the application under Section 7 of the Code was filed beyond the limitation period. The impugned order admitting the application was set aside, and the appeal was allowed. The IRP was advised to seek any other remedy available to him for the costs incurred.
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