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2020 (12) TMI 872 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Did unauthorized Person file the Application? - principles of natural justice - time limitation. Principles of Natural Justice - HELD THAT - In Appeal, the original of the affidavit of Advocate Annexure A9 at page 129 to 130 of the Appeal Paper Book has not been filed although depicting that Advocate has filed Affidavit in this Appeal. Even otherwise subsequently preparing such affidavit would not be helpful unless on the day concerned the Advocate filed Application that he is present and wants to argue but is not being permitted to argue or whatever. We do not have response of Adjudicating Authority to such allegation. We do not believe that the Adjudicating Authority would not let the Advocate argue and still record that none appeared for the Respondents. Our experience shows that at times, the Advocates are appearing and mark their presence and when the matter is actually called out, at times advocate is unable to reach. If the Authority proceeds further and records the Order that none appeared in spite of repeated calls, we would not give weight to the signature or appearance marked, (which could be even before or after recording of the order) even if the same had not been scored out - Adjudicating Authority considered all issues raised in Reply and which are still being raised and answered them. Thus, no prejudice was caused. Even after hearing Appellants, for reasons this Judgment will show, Corporate Debtor has had no substantial defence - Principles of Natural Justice were not violated. Did unauthorized Person file the Application? - HELD THAT - It is all comprehensive paragraph which has conferred powers to this Chief Manager. We do not find any substance in the argument that as such General Power of Attorney was executed before coming into force of Insolvency and Bankruptcy Code hence, the said Chief Manager did not have authority. In our view, it is General Power of Attorney and not confined to any particular Act or Acts. We do not find any defect on this account with the Application under Section 7 of IBC - Although the Learned Counsel for Appellants did not turn up to make submissions at the final stage, still the Adjudicating Authority does appear to have considered the objections raised by the Appellants and in Paragraph 12 of the Impugned Order looked into this issue and did not find any substance in the objections raised that the Power of Attorney was not competent to file the Application. Time Limitation - HELD THAT - The provisions of Limitation Act, 1963 shall apply as far as may be to the proceedings or Appeals before the Adjudicating Authority or this Tribunal. Thus it is necessary to look into the Limitation Act to consider how far Limitation Act may be, or could be applied - there was no intention to give new lease of life to debts which are time-barred. Thus, the consideration is whether a given debt is time-barred. It is also clear from the above that for Applications under Section 7 of IBC the Hon ble Supreme Court in B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES 2018 (10) TMI 777 - SUPREME COURT found that residuary Article 137 in the Third Division of Limitation Act dealing with Applications was the Article applicable. The Judgment shows that if there is delay in filing of Application one has to go to the Sections where Section 5 would apply. Section 5 would be relevant if an Application which is time-barred and extension of prescribed period is sought showing sufficient cause for not filing the Application within prescribed period. Section 18 applies to not merely suits but also applications and where before expiry of the prescribed period for an Application an acknowledgment is made, the Section provides for computing fresh period of Limitation from the time when acknowledgment was so signed. Perusal of Section 19 shows that where payment is made on account of a debt or interest before expiration of the prescribed period by the person liable to pay, a fresh period of Limitation shall be computed from the time when the payment was made. The date of NPA will not shift. It will remain the foundational date and Period of Limitation gets triggered from that date. But when prescribed period is computed in accordance with the Limitation Act and facts of this matter, Section 18 and 19 do appear to be attracted - In the instant case, when Bank declared NPA to recover dues, it moved DRT. If the Corporate Debtor made some payments, as a reasonable prudent person, Bank received the payments. Section 19 of the Limitation Act, 1963 is not subject to any qualification/exception that after Account is declared NPA, if the debtor makes payments on account of debt, the Section would not be applicable. The Adjudicating Authority found that there were not merely repayments but also Acknowledgments. We do not find that the Adjudicating Authority erred in its observations of the Impugned Order to hold that the Application was within Limitation - Appeal dismissed.
Issues Involved:
1. Principles of Natural Justice 2. Authorization of the Person Filing the Application 3. Limitation Period for Filing the Application Detailed Analysis: 1. Principles of Natural Justice: The appellants claimed that the Principles of Natural Justice were violated as their counsel was not allowed to address the Tribunal on 11th March 2020, and his attendance was cut out from the Order-Sheet. However, the Tribunal found no evidence that the counsel filed any application stating he was not allowed to argue. The Order-Sheet indicated that the Tribunal recorded "None appeared on behalf of Respondents despite repeated call." The Tribunal relied on the Adjudicating Authority’s records, which showed that ample opportunities were given to both sides. The Tribunal concluded that the Principles of Natural Justice were not violated, and no prejudice was caused to the appellants. 2. Authorization of the Person Filing the Application: The appellants argued that the application under Section 7 of IBC was signed by a person whose Power of Attorney was executed before IBC came into force, making it defective. The Tribunal examined the General Power of Attorney given to the Chief Manager of Union Bank of India and found that it conferred comprehensive powers to commence, prosecute, and defend any legal proceedings. The Tribunal concluded that the General Power of Attorney was not confined to any particular Act and was valid for filing the application under Section 7 of IBC. 3. Limitation Period for Filing the Application: The appellants argued that the application was time-barred as it was filed in 2019, while the account was classified as NPA on 30th September 2014. They contended that under Article 137 of the Limitation Act, the period of limitation is three years from the date of default. The Tribunal examined the records and found that the Corporate Debtor had acknowledged the debt in writing and made payments even after the account was declared NPA. The Tribunal referred to Section 18 and Section 19 of the Limitation Act, which state that acknowledgment of debt and payment on account of debt before the expiration of the prescribed period extends the limitation period. The Tribunal found that the Corporate Debtor had issued a Balance Confirmation Letter on 7th April 2016 and made regular credit entries till May 2018. The Tribunal concluded that the application was within the limitation period as the acknowledgment and payments extended the limitation period. Conclusion: The Tribunal dismissed the appeal, finding no substance in the appellants' arguments. The Tribunal held that the Principles of Natural Justice were not violated, the person filing the application was properly authorized, and the application was within the limitation period. No orders as to costs were made.
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