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2020 (7) TMI 59 - AT - Insolvency and BankruptcyTime Limitation - section 7 of the Insolvency and Bankruptcy Code, 2016 - CIRP process - HELD THAT - The effect of Section 18 of the Limitation Act, 1963 is that an acknowledgment of liability in respect of a right made in writing and signed by the debtor before expiration of prescribed period for a suit or an application would result in a fresh period of limitation being computed from the time when acknowledgment was so signed. It is abundantly clear that such acknowledgment of liability must be made by the debtor in writing and signed by him before the expiration of prescribed period of limitation. The ample evidence brought on record by the 'Financial Creditor' and not disputed, denied or refuted by the 'Corporate Debtor' brings it to the fore that the financial debt is payable and the acknowledgment in writing before expiry of period of limitation by the 'Corporate Debtor' through a series of written communications in the form of letters, settlement, proposal, settlement agreement and payments made in pursuance thereof have extended the limitation as each of these has the effect of giving a fresh lease of life to the liability with fresh period of limitation commencing from such acknowledgment in writing having been made within limitation period, OTS followed by settlement agreement and part payments made on two occasions in pursuance thereof. Admittedly, application under Section 7 of the 'I B Code' has been filed within three years of the last part payment of ₹ 1.5 Crore approx. effected on 9th February, 2017. This factual position emerging from documentary evidence on record stares in the face of the Appellant who has preferred the appeal without substantial grounds - Appeal is dismissed.
Issues Involved:
1. Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (I&B Code) filed by the Financial Creditor is barred by limitation. Issue-Wise Detailed Analysis: 1. Application Barred by Limitation: - Background and Facts: - The Corporate Debtor approached the Bank of Baroda in 2011 for credit facilities, which were sanctioned on 6th January 2011. - The Corporate Debtor failed to repay the loan, leading to the debt being assigned to the Financial Creditor on 26th March 2014. - The Financial Creditor sought initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for a default amounting to ?44,51,74,964/-. - Appellant's Contention: - The Appellant argued that documents dated 20th August 2014, 13th November 2015, and the One-Time Settlement (OTS) dated 2nd December 2015 do not amount to acknowledgment under Section 18 of the Limitation Act, 1963. - They contended that even if these documents were considered acknowledgments, they were executed after the limitation period had expired, rendering the Financial Creditor's claim barred by limitation. - The Appellant did not dispute the documents or communications between the parties, including the letter dated 20th August 2014. - Financial Creditor's Argument: - The Financial Creditor maintained that the Corporate Debtor had acknowledged its liability multiple times, including in letters dated 26th March 2014, 13th November 2015, and through the OTS on 2nd December 2015. - Payments made in pursuance of the OTS on 5th December 2015, 31st March 2016, and 9th February 2017 were highlighted as extending the limitation period. - The application under Section 7 of the I&B Code was filed on 16th August 2018, within three years from the last acknowledgment of debt and part payment. - Tribunal's Analysis: - The Tribunal noted that the facts regarding the loan facility and assignment of debt were undisputed. - The debt was declared as Non-Performing Asset (NPA) on 30th September 2012, with a demand notice issued on 1st October 2012. - The Tribunal referenced Article 137 of the Limitation Act, 1963, which prescribes a three-year limitation period for initiating CIRP, starting from the date the financial debt is declared as NPA. - Sections 18 and 19 of the Limitation Act, 1963, were considered, which deal with the effect of acknowledgment in writing and payment on account of debt. - Acknowledgment and Part Payment: - The Tribunal found that the Corporate Debtor's proposal for OTS on 26th March 2014 was the first acknowledgment of liability, commencing a new limitation period. - Subsequent acknowledgments and payments, including those on 13th November 2015, 2nd December 2015, 5th December 2015, 31st March 2016, and 9th February 2017, extended the limitation period. - The application under Section 7 filed on 16th August 2018 was within the extended limitation period. - Conclusion: - The Tribunal concluded that the acknowledgment of liability and part payments made by the Corporate Debtor before the expiration of the limitation period extended the limitation. - The appeal was dismissed as frivolous, with no substantial grounds, and no order as to costs was made. Summary: The Tribunal dismissed the appeal challenging the initiation of CIRP on the grounds of limitation. It held that the acknowledgments of liability and part payments made by the Corporate Debtor within the limitation period extended the limitation, making the application under Section 7 of the I&B Code timely.
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