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2021 (4) TMI 574 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor - amount paid towards interest as on 31.03.2019 - time limitation complied or not for amount paid towards interest - applicability of section 18(1) 19 of Limitation Act, 1963 - HELD THAT - In the present case evidently there has been payment of TDS on interest on 31.03.2014, an amount of ₹ 60,493/- was paid on 31.03.2017, an amount of ₹ 2,40,000/- was paid towards TDS on interest on 31.03.2018, and finally as last tranche of payment of ₹ 60,493/- as TDS on interest was made on 31.03.2019. If the date of default is construed as 1.01.2015, then the three year limitation would end on 01.01.2018, but since the interest was made within three years of limitation period and such payments continued to be made by the Corporate Debtor intermittently and the last tranche was made on 31.03.2019, this bench is of the considered view that the period of limitation has been extended as envisaged under Sec 18 Sec.19 of the Limitation Act, 1963 - Perusal of Section 19 shows that where payment is made on account of debt or interest before expiration of the prescribed period by the person liable to pay, fresh period of limitation of time can be computed when the payments are made. The date of NPA will not shift, it will remain the foundation of debt and period of limitation gets triggered from that date. But if the prescribed period is computed in accordance with the Limitation Act, section 18 and 19 are attracted. The Corporate Debtor failed to pay the amounts due as on 31.12.2014 and again on 31.03.2019 on the date of payment of TDS on interest by the Corporate Debtor,the limitation for filing a petition therefore starts on 31.03.2019 and extends for period of three years from 31.03.2019.Therefore, the petitioner s claim under Sec 3(6)(a) of the Code is established, further there is clear evidence of debt and default of non-payment of monies by Corporate Debtor - an investment is payable on demand. Payment of TDS on interest is not only an acknowledgment of debt which constitutes a confirmation of debt by Corporate Debtor that is liable to pay the principal sum borrowed and further extends the limitation of liability from the date of payment of last tranche of monies to the Income Tax department as reflected in Form 26 AS. Thus, the essential ingredients of the Section 7 of IBC are satisfied and the Petition deserves admission. Application admitted - moratorium declared.
Issues Involved:
1. Whether the amount paid towards interest as on 31.03.2019 extends the period of limitation. 2. Whether section 18(1) & 19 of Limitation Act, 1963 is applicable to the provisions of IBC. Issue-Wise Detailed Analysis: 1. Whether the amount paid towards interest as on 31.03.2019 extends the period of limitation: The Tribunal considered whether the payment of TDS on interest by the Corporate Debtor extended the period of limitation. The Petitioner demonstrated that the Corporate Debtor intermittently paid TDS on interest, with the last payment made on 31.03.2019. The Tribunal noted that the period of limitation would typically end on 01.01.2018 if the default date was 01.01.2015. However, since the interest payments continued within the three-year limitation period, the Tribunal concluded that the limitation period was extended under Sections 18 and 19 of the Limitation Act, 1963. Section 19 states that where payment is made on account of debt or interest before the expiration of the prescribed period, a fresh period of limitation can be computed from the time when the payments are made. 2. Whether section 18(1) & 19 of Limitation Act, 1963 is applicable to the provisions of IBC: The Tribunal examined whether Sections 18 and 19 of the Limitation Act applied to the Insolvency and Bankruptcy Code (IBC). It cited several judgments, including "BK Educational Services vs. Parag Gupta & Associates" and "Babulal Gurjar vs. Veer Gurjar Aluminium Industries Pvt. Ltd.," which held that the Limitation Act is applicable to applications filed under Sections 7 and 9 of the IBC. The Tribunal also referred to the NCLAT's decision in "Yogeshkumar Thakker v. IOB," which confirmed that Section 18 of the Limitation Act applies to the IBC proceedings. Furthermore, the Tribunal highlighted that the payment of TDS on interest amounts to part repayment of the loan under Section 198 of the Income Tax Act, thereby extending the limitation period. Findings and Conclusion: The Tribunal found that the Corporate Debtor failed to pay the amounts due as on 31.12.2014 and again on 31.03.2019, when the last tranche of TDS on interest was paid. This payment extended the limitation period, making the petition filed on 31.03.2019 within the permissible period. The Tribunal concluded that the essential ingredients of Section 7 of the IBC were satisfied, and the petition deserved admission. Order: The Tribunal admitted the application under Section 7 of the IBC, prohibiting the institution or continuation of suits against the Corporate Debtor, transferring or disposing of its assets, and recovering any property occupied by the Corporate Debtor. The Tribunal also ordered the continuation of essential goods or services to the Corporate Debtor during the moratorium period. Mr. Shashi Agarwal was appointed as the Interim Resolution Professional to carry out the functions under the IBC. The Registry was directed to communicate the order to the Financial Creditor and the Corporate Debtor immediately.
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