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2022 (4) TMI 1367 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Application barred by time limitation or not - HELD THAT - The Application under Section 7 against the Corporate Debtor has been filed on 9th March, 2018 and the limitation for filing the Application under Section 7, under Article 137 of the Limitation Act, 1963 is three years from the date when right to sue accrue. Normally, period of three years is to be counted from the date, the account is declared NPA, thus taking three years period from 10th January, 2014, the Application ought to have been filed on or before 9th January, 2017. The Application under Section 7 filed by the State Bank of India is admittedly beyond the period of three years from the date of declaration of NPA and can be held to be barred by time, unless the State Bank of India is able to satisfy that the limitation for filing Section 7 Application stands extended by virtue of provision of Limitation Act, 1963. There can be no dispute to the proposition that limitation for suit is to be calculated as on the date of filing of the suit, meaning thereby that date for filing of the suit is a crucial date to find out as to whether the suit is within the period of limitation or not. Whether the letters on which reliance is being placed by the State Bank of India dated 19th February, 2016 and 29th March, 2016 contain an acknowledgement, which can be treated as acknowledgement within the meaning of Section 18 of the Limitation Act? - HELD THAT - It is well settled that any request by Borrower for one-time settlement tantamount to acknowledgement under Section 18 of the Limitation Act. In Dena Bank 2019 (3) TMI 1751 - THE NATIONAL COMPANY LAW TRIBUNAL - BENGALURU BENCH itself Hon ble Supreme Court has laid down that offer of one-time settlement contains an acknowledgement of debt. The acknowledgement made by the Principal Borrower within three years period from the date of account being declared NPA, there shall be fresh period of limitation available to the Financial Creditor and the Application under Section 7 having been filed within three years from the date of acknowledgement, cannot be held to be barred by time - the Application filed by the State Bank of India under Section 7 was within the period of limitation and has rightly been admitted by the Adjudicating Authority. There are no merits in the appeal - appeal dismissed.
Issues Involved:
1. Whether the application filed by the State Bank of India under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation. 2. Whether the filing of OA No.493 of 2015 before the Debt Recovery Tribunal (DRT) stopped the limitation period for filing an application under Section 7 of the IB Code. 3. Whether the acknowledgments of debt by the Principal Borrower extended the limitation period under Section 18 of the Limitation Act, 1963. Issue-wise Detailed Analysis: 1. Whether the application filed by the State Bank of India under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation: The Appellant argued that the application filed by the State Bank of India (SBI) on 9th March 2018 was barred by time as the account of the Principal Borrower was declared Non-Performing Asset (NPA) on 10th January 2014. According to Article 137 of the Limitation Act, 1963, the period for filing an application under Section 7 is three years from the date when the right to sue accrues. Thus, the application should have been filed by 9th January 2017. Since the application was filed beyond this period, it was argued that it should be rejected as time-barred. However, the Respondent contended that the application was within the limitation period due to the filing of OA No.493 of 2015 before the DRT and the acknowledgments of debt by the Principal Borrower. 2. Whether the filing of OA No.493 of 2015 before the Debt Recovery Tribunal (DRT) stopped the limitation period for filing an application under Section 7 of the IB Code: The Respondent argued that the filing of OA No.493 of 2015 on 24th September 2015 before the DRT stopped the running of the limitation period. They relied on the Supreme Court judgments in Sheshnath Singh & Anr. vs. Baidyabati Sheoraphuli Cooperative Bank Limited & Anr. and Dena Bank vs. C. Shivakumar Reddy and Anr., which held that proceedings under the SARFAESI Act are civil proceedings and that filing a civil suit arrests the limitation period. However, the Tribunal concluded that the proceedings under Section 7 of the IB Code are separate and independent from the proceedings under the 1993 Act. The filing of OA No.493 of 2015 did not stop the limitation period for the Section 7 application. Therefore, the application under Section 7 had to be filed within the period prescribed under Article 137 of the Limitation Act. 3. Whether the acknowledgments of debt by the Principal Borrower extended the limitation period under Section 18 of the Limitation Act, 1963: The Respondent also argued that the acknowledgments of debt by the Principal Borrower in letters dated 19th February 2016 and 29th March 2016 extended the limitation period under Section 18 of the Limitation Act. The Tribunal referred to the Supreme Court judgment in Dena Bank vs. C. Shivakumar Reddy and Anr., which held that an offer of one-time settlement within the period of limitation constitutes an acknowledgment of debt, thereby extending the limitation period. The Tribunal also relied on the Supreme Court judgment in Laxmi Pat Surana vs. Union Bank of India and Anr., which held that acknowledgments by the Principal Borrower are binding on the Corporate Guarantor. Therefore, the acknowledgments by the Principal Borrower extended the limitation period, and the application filed on 9th March 2018 was within time. Conclusion: The Tribunal concluded that the application filed by the State Bank of India under Section 7 of the IB Code was within the period of limitation due to the acknowledgments of debt by the Principal Borrower. The filing of OA No.493 of 2015 before the DRT did not stop the limitation period for the Section 7 application. The Tribunal found no merit in the appeal and dismissed it, affirming the decision of the Adjudicating Authority to admit the application under Section 7 of the IB Code.
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