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2021 (7) TMI 59 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - applicability or nonapplicability of Section 18 of the Limitation Act 1963 - Corporate Debtor put up a defence that under Section 238A of the I B Code read with Article 137 of the Limitation Act 1963 the period of limitation was three years and the account having been declared NPA on 15th March 2016 the Application filed in 2019 was time barred - HELD THAT - The question with regard to applicability or nonapplicability of Section 18 of the Limitation Act 1963 is now settled by the Hon ble Supreme Court in recent judgments such as in the matter of SESH NATH SINGH ANR. VERSUS BAIDYABATI SHEORAPHULI CO-OPERATIVE BANK LTD AND ANR. 2021 (3) TMI 1183 - SUPREME COURT and then in Judgement in the matter of LAXMI PAT SURANA VERSUS UNION BANK OF INDIA ANR. 2021 (3) TMI 1179 - SUPREME COURT and in ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED VERSUS BISHAL JAISWAL ANR. 2021 (4) TMI 753 - SUPREME COURT . The Hon ble Supreme Court has dealt with its earlier judgments and now it is quite clear that Sections 18 19 of the Limitation Act 1963 and the other provisions of the Limitation Act as far as may be apply to the proceedings under the I B Code - Thus Section 18 of the Limitation Act 1963 applies. The reply filed by the Corporate Debtor which was filed before the Adjudicating Authority clearly shows that the Corporate Debtor had specifically raised issue with regard to limitation and made reference to Section 348A as well as judgments on which the Appellant wants to rely and the issues were specifically raised and the Adjudicating Authority in impugned order considered the issue with regard to limitation and recorded finding as in para 8. Thus it is not the case where foundation has not been laid. There were pleadings before the Adjudicating Authority. The format has been prescribed by the statute and the Bank had clearly while filing details pointed out even the acknowledgment and had attached the documents. When all this is there there is no substance in the arguments raised before us that the matter should be remanded back to the NCLT and there should be amendment of pleadings. The pleadings are already there. The issues were dealt with and have been decided. Term loan granted on 17th March 2011 and other financial services were referred to the Corporate Debtor as per other agreements referred - When the account become NPA on 15th March 2016 and there was default the Corporate Debtor acknowledged liability on 10th July 2018 as per the document at page 309 and thus the application filed in 2019 could not be said to be time barred. Appeal dismissed - decided against appellant.
Issues Involved:
1. Applicability of Section 18 of the Limitation Act, 1963 to the Insolvency and Bankruptcy Code (I&B Code). 2. Whether the application under Section 7 of the I&B Code was time-barred. 3. The validity of the acknowledgment of debt by the Corporate Debtor. 4. The necessity of amending pleadings or remanding the matter to the NCLT. Detailed Analysis: 1. Applicability of Section 18 of the Limitation Act, 1963: The Appellant argued that Section 18 of the Limitation Act, 1963 does not apply to applications under Section 7 of the I&B Code. However, the Tribunal referred to recent Supreme Court judgments, including "Sesh Nath Singh & Anr. vs. Baidyabati Sheoraphuli Co-Operative Bank Ltd. & Anr." and "Laxmi Pat Surana vs. Union Bank of India & Anr.," which clarified that Sections 18 and 19 of the Limitation Act apply to proceedings under the I&B Code. The Tribunal concluded that Section 18 of the Limitation Act applies, allowing for the extension of the limitation period based on the acknowledgment of debt. 2. Whether the Application under Section 7 of the I&B Code was Time-Barred: The Corporate Debtor contended that the application was time-barred as the account was declared NPA on 15th March 2016, and the application was filed in 2019, beyond the three-year limitation period. The Tribunal examined the acknowledgment of debt dated 10th July 2018 and concluded that this acknowledgment extended the limitation period, making the application filed in 2019 within the permissible time frame. 3. The Validity of the Acknowledgment of Debt by the Corporate Debtor: The Tribunal reviewed the acknowledgment letter dated 10th July 2018, which confirmed the outstanding debit balance under various credit facilities. This acknowledgment was deemed sufficient to extend the limitation period under Section 18 of the Limitation Act. The Tribunal emphasized that the acknowledgment must be made before the expiration of the original limitation period, which was satisfied in this case. 4. The Necessity of Amending Pleadings or Remanding the Matter to the NCLT: The Appellant requested the Tribunal to remand the matter to the NCLT to allow for the amendment of pleadings, citing deficiencies in the original pleadings. The Tribunal, however, found that the necessary pleadings and documents, including the acknowledgment of debt, were already on record and had been considered by the Adjudicating Authority. The Tribunal referred to the Supreme Court's directions in similar cases, which allowed for the amendment of pleadings at the appellate stage but found no need for such an amendment or remand in this case. Conclusion: The Tribunal dismissed the appeal, upholding the Adjudicating Authority's decision that the application under Section 7 of the I&B Code was within the limitation period due to the acknowledgment of debt by the Corporate Debtor. The Tribunal found no merit in the arguments for remanding the matter to the NCLT or amending the pleadings, as the necessary facts and documents were already on record.
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