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2020 (8) TMI 536 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and default - applicability of time Limitation - HELD THAT - Keeping in view of provision of Section 18 of the Limitation Act and reading the same with the contents of letter dated 09.06.2016, the same needs to be construed as an acknowledgement of the debt outstanding and merely because in the document the Corporate Debtor mention that the proposal was given was without prejudice to the rights and contentions in pending Court proceedings, will not make any difference - when NPA was declared on 30.6.2009, the documents pointed out by the learned Counsel for the Appellant dated 24.04.2012 (page 277), 12.03.2014 (page-419) and 09.06.2016 (page-420) calculated from the date of NPA, give fresh periods of limitation and filing of Section 7 Application on 11.7.18 was not barred. The Adjudicating Authority erred in dismissing the Application under Section 7 of the IBC - matter is remitted back to the Adjudicating Authority - appeal allowed by way of remand.
Issues:
- Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation? Analysis: 1. The Appellant, a financial creditor, filed an application under Section 7 of the IBC claiming a financial debt outstanding against the Corporate Debtor. The Adjudicating Authority rejected the application as barred by limitation based on the acknowledgment letters provided. 2. The Appellant argued that acknowledgment letters dated 24.04.2012, 12.03.2014, and 09.06.2016 constituted valid acknowledgments of debt within the limitation period. The letter dated 09.06.2016 specifically mentioned a one-time settlement proposal for outstanding dues, indicating acknowledgment of the debt. 3. The Respondent contended that the letter dated 09.06.2016 should not be considered an acknowledgment as it was stated to be "without prejudice" to the rights and contentions of the Corporate Debtor in pending court proceedings. The Respondent supported the Adjudicating Authority's decision to dismiss the application based on this argument. 4. The Appellant relied on Section 18 of the Limitation Act, emphasizing that the letter dated 09.06.2016 should be construed as an acknowledgment of the outstanding debt. Reference was made to the Supreme Court's judgment in "ITC Limited Vs. Blue Coasts Hotel Ltd." to support the argument that a letter labeled "without prejudice" can still constitute an acknowledgment of liability. 5. Considering the provisions of Section 18 of the Limitation Act and the contents of the letter dated 09.06.2016, the Appellate Tribunal held that the letter should be construed as an acknowledgment of the outstanding debt. The Tribunal found that the acknowledgment letters provided were within the limitation period, and therefore, the application under Section 7 of the IBC was not barred by limitation. 6. The Appellate Tribunal concluded that the Adjudicating Authority erred in dismissing the application under Section 7 of the IBC. The Appeal was allowed, the Impugned Order was quashed, and the matter was remitted back to the Adjudicating Authority for further suitable orders on the admission of the application under Section 7 of the IBC. No costs were awarded, and the parties were directed to appear before the Adjudicating Authority on a specified date.
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