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2020 (8) TMI 609 - AT - Insolvency and BankruptcyMaintainability of application - CIRP process - NPA - relevant date of default - Principles of Natural Justice - Appellant submitted that the Adjudicating Authority did not observe the principal of Natural Justice and had passed the order for commencement of CIRP in nearly three days without even providing an opportunity to file written submissions or objections on application under Section 7 of I B Code - HELD THAT - The Bank has declared it as NPA on 30.06.2015. We are agreed with the finding of Adjudicating Authority that the NPA date is 30.06.2015. The Application under Section 7 of I B Code is filed on 15.03.2019 i.e. after three years from the date of default. Therefore, the question for consideration is whether the Corporate Debtor has acknowledged the debt as per the requirement of under Section 18 of limitation Act, only then, the date of default can be forwarded to a future date. It is now well settled that a writing to be an acknowledgement of liability must involve an admission of subsisting Jural relationship between the parties and a conscious affirmation of an intention of continuing such relationship in regard to an existing liability. The Admission need not be in regard to any precise amount nor by expressed words. If a defendant writes to the plaintiff requesting him to send his claim for verification of payment it amounts to an acknowledgement. Corporate Debtor has acknowledged the debt within three years i.e, before the expiration of the prescribed period for a suit or application. Thus, the Learned Adjudicating Authority has rightly held that the Application under Section 7 of I B Code is well within limitation - Therefore, no interference is called for in this Appeal. Appeal dismissed.
Issues Involved:
1. Adherence to the principles of natural justice. 2. Defective application under Section 7 of the Insolvency and Bankruptcy Code (I&B Code). 3. Determination of the date of default and its impact on the period of limitation. 4. Acknowledgment of debt under Section 18 of the Limitation Act. 5. Validity of the Corporate Insolvency Resolution Process (CIRP) initiation order. Detailed Analysis: 1. Adherence to the Principles of Natural Justice: The appellant contended that the Adjudicating Authority did not observe the principles of natural justice by passing the order for commencement of CIRP within three days without providing an opportunity to file written submissions or objections. The appellant argued that this rapid decision-making process violated their right to a fair hearing. 2. Defective Application under Section 7 of the I&B Code: The appellant argued that the application under Section 7 of the I&B Code was defective as it did not disclose the date of default, which is crucial for determining the period of limitation. The appellant pointed out discrepancies in the dates provided by the Financial Creditor, with the NPA date mentioned as 30.06.2015 in the demand notice under Section 13(2) of the SARFAESI Act and 01.04.2015 in the additional affidavit. This inconsistency, according to the appellant, rendered the application defective and time-barred. 3. Determination of the Date of Default and Its Impact on the Period of Limitation: The Adjudicating Authority had to consider whether the application filed on 15.03.2019 was within the limitation period. The Financial Creditor had declared the Corporate Debtor as NPA on 30.06.2015, making the application time-barred unless there was an acknowledgment of debt within three years. The Adjudicating Authority concluded that the NPA date was 30.06.2015 and examined whether the debt was acknowledged within the limitation period. 4. Acknowledgment of Debt under Section 18 of the Limitation Act: The appellant contended that the acknowledgment of debt was not valid as the letter dated 27.03.2017 did not specifically admit the debt or the exact amount due. The appellant cited the Delhi High Court's decision in Dorham Carelline India Ltd. vs. Studio Line, which outlined the requirements for acknowledgment under Section 18 of the Limitation Act. The appellant argued that the letter did not meet these criteria. The Financial Creditor, however, argued that the Corporate Debtor's reply to the demand notice dated 27.03.2017 and subsequent One Time Settlement (OTS) proposals constituted acknowledgment of debt. The Corporate Debtor's reply admitted the liability and expressed an intention to settle the dues, which the Financial Creditor claimed was sufficient acknowledgment under Section 18 of the Limitation Act. 5. Validity of the CIRP Initiation Order: The Adjudicating Authority, after considering the arguments and evidence, held that the Corporate Debtor had acknowledged the debt within the limitation period. The acknowledgment was evidenced by the reply to the demand notice and the OTS proposals. The Adjudicating Authority found that the application under Section 7 of the I&B Code was within the limitation period and validly initiated the CIRP. Conclusion: The Appellate Tribunal upheld the Adjudicating Authority's decision, finding that the principles of natural justice were observed, the application under Section 7 of the I&B Code was not defective, and the debt was acknowledged within the limitation period. Consequently, the initiation of the CIRP was deemed valid. The appeal was dismissed, and the interim order was vacated, allowing Respondent No. 4 to file its claim before the IRP as per the Adjudicating Authority's direction. No order as to cost was made.
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