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2021 (4) TMI 351 - 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 - Non-performing assets - time limitation - HELD THAT - As seen from the decision in the case of SESH NATH SINGH ANR. VERSUS BAIDYABATI SHEORAPHULI CO-OPERATIVE BANK LTD AND ANR. 2021 (3) TMI 1183 - SUPREME COURT , it is clear that the Article 137 of the Limitation Act, 1963 defining a period of 3 years will be computed after considering Section 18 or 19 of The Limitation Act, 1963 with a fresh period of limitation inspite of these dates being after the date of NPA. Appellant acknowledging the debt on 21.06.2017 itself shifts the 3 years period to June, 2020 whereas the Application before the Adjudicating Authority itself is filed on 22.11.2019. If we consider the part payment which has been made between May, 2019 to June / July, 2019, then naturally the application has been filed within a period of 3 years. There are no merit in this appeal - appeal dismissed.
Issues Involved:
1. Admissibility of the petition under Section 7(5) of the Insolvency and Bankruptcy Code, 2016. 2. Allegations of forum shopping and online auction under Section 13(4) of the SARFAESI Act. 3. Barred by limitation as per the Limitation Act, 1963. 4. Applicability of Section 18 and 19 of the Limitation Act, 1963 to the Insolvency and Bankruptcy Code, 2016. Detailed Analysis: 1. Admissibility of the Petition under Section 7(5) of the Insolvency and Bankruptcy Code, 2016: The appeal was filed by the Appellant under Section 61 of the Insolvency and Bankruptcy Code, 2016 against the order dated 05.02.2020 by the Adjudicating Authority (NCLT, New Delhi Bench). The petition was filed by Financial Creditor - Corporation Bank, New Delhi under Section 7(5) of the Code. The Adjudicating Authority noted that the total default amount was ?70,34,19,678.23/- and the Corporate Debtor’s account was classified as a Non-Performing Asset (NPA) on 30.09.2016. The Corporate Debtor failed to provide cogent reasons to avoid triggering the Corporate Insolvency Resolution Process (CIRP). 2. Allegations of Forum Shopping and Online Auction under Section 13(4) of the SARFAESI Act: The Appellant claimed that the Respondent Bank was engaging in forum shopping and conducting online auctions under Section 13(4) of the SARFAESI Act. They mentioned that an OTS Settlement was reached on 11.06.2019, with ?8,22,28,000/- paid towards a settlement amount of ?67 Crore. The Appellant was willing to pay the full amount by 31.05.2020, which the Bank did not accept. 3. Barred by Limitation as per the Limitation Act, 1963: The Appellant argued that the petition was barred by limitation since it was filed more than three years after the default occurred. They cited several judgments to support their claim, including BK Educational Services Pvt Ltd. Vs. Parag Gupta and Gaurav Harigovindbhai Dave Vs. ARC (India) Ltd. The Appellant contended that revival letters and OTS proposals cannot shift the date of default, nor can payments made by the Appellant extend the limitation period. They also argued that balance sheets cannot be treated as acknowledgment of debt. 4. Applicability of Section 18 and 19 of the Limitation Act, 1963 to the Insolvency and Bankruptcy Code, 2016: The Respondent Bank affirmed that the date of default/NPA was 30.09.2016. They argued that the Corporate Debtor acknowledged the debt through a revival letter dated 21.06.2017 and multiple letters proposing one-time settlement offers. The Bank received part payments between May 2019 and July 2019, which they claimed met the criteria of Section 19 of the Limitation Act for computing a fresh period of limitation. The Bank cited RBI circulars to support their argument that the default date can shift based on subsequent acknowledgments and payments. The Tribunal referred to recent judgments by the Hon'ble Apex Court, including Sesh Nath Singh & Anr. Vs. Baidyabati Sheoraphuli Co-operative Bank Ltd and Laxmi Pat Surana Vs. Union Bank of India. The judgments clarified that the right to initiate action within three years from the acknowledgment of debt accrues to the Financial Creditor. Section 238A of the IBC incorporates the provisions of the Limitation Act, 1963, making them applicable to proceedings before the NCLT/NCLAT. Conclusion: After reviewing the submissions and recent judgments, the Tribunal concluded that Article 137 of the Limitation Act, 1963, defining a period of three years, would be computed after considering Sections 18 and 19 of the Limitation Act. The acknowledgment of debt by the Appellant on 21.06.2017 shifted the three-year period to June 2020, and the application filed on 22.11.2019 was within this period. Consequently, the appeal was dismissed, and the impugned order was upheld. Pending applications were disposed of, with no order as to costs.
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