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2022 (11) TMI 1044 - AT - Insolvency and BankruptcyCIRP - Date of default - whether the application was barred by time limitation - Application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 was admitted - non-performing assets - HELD THAT - The material on record shows that the Corporate Debtor had paid an amount of Rs.50,000/- on 13.10.2017, reaffirmed by the Corporate Debtor vide Reply dated 04.12.2017, whereunder an objection was raised to the possession Notice issued by the Financial Creditor under the SARFAESI Act. From the ratio of the Judgement in DENA BANK (NOW BANK OF BARODA) VERSUS C. SHIVAKUMAR REDDY AND ANR. 2021 (8) TMI 315 - SUPREME COURT , it is clear that even an offer of One-Time Settlement made within the period of Limitation can be construed as an Acknowledgement of Debt . Any acknowledgement in the Balance Sheets, or any part payments made thereunder can be construed as an Acknowledgement under Section 18 of the Limitation Act, 1962 . The Hon ble Apex Court in a catena of Judgements has laid down that it is not the date of NPA which strictly triggers the cause of action but the date of default - In the instant case, it is to be construed that the date of default is 31.03.2016 as till then, several attempts were made to restructure the loan and fresh sanctions were also made in favour of the Corporate Debtor . At the cost of repetition, the last payment was made on 13.10.2017 and this part payment is covered under Section 18 of the Limitation Act, 1962. Thus, the Application was well within the period of Limitation. It is also relevant to note that the copy of the Financial Statements dated 2013, 2014 showing the record of default were also appended to the Application. The documents on record clearly evidence that there was a date of default and we find no illegality or infirmity in the Order of the Adjudicating Authority in admitting the Section 7 Application - however the Company is already under Liquidation as of today. Appeal dismissed.
Issues:
Challenge to Impugned Order dated 17.09.2021 admitting Section 7 Application under Insolvency and Bankruptcy Code, 2016 by Financial Creditor against Corporate Debtor. Main contention of fraud, limitation, debt, default, and nature of proceeding. Analysis: 1. Limitation Issue: - Adjudicating Authority admitted Section 7 Application addressing the issue of limitation. - Financial Creditor proved debt within limitation period through documents. - Corporate Debtor's objection on limitation plea rejected based on Supreme Court judgments. - Financial Creditor's actions deemed legally sustainable within limitation. 2. Fraud Allegation: - Appellant claimed Impugned Order obtained through fraud by Financial Creditor. - Allegations include incorrect NPA date, non-compliance with restructuring terms, and lack of default under the Code. - Additional Affidavit filed by Financial Creditor challenged for being out of time. - Appellant's arguments on fraud and limitation not accepted by the Tribunal. 3. Debt and Default Assessment: - Financial Creditor argued debt and default existence based on loan history and restructuring. - Appellant contended the proceeding as a recovery process, not a resolution. - Financial Creditor's compliance with SARFAESI Act and subsequent legal actions highlighted. - Tribunal found sufficient evidence of debt, default, and compliance with legal requirements. 4. Legal Precedents and Judgments: - Both parties relied on various Supreme Court judgments to support their arguments on limitation, debt acknowledgment, and default. - Tribunal considered the application of legal principles in the context of the present case. 5. Tribunal's Decision: - Tribunal dismissed the Appeal based on findings related to limitation, debt acknowledgment, and default. - Acknowledged the Financial Creditor's actions as legally valid within the limitation period. - Noted the Corporate Debtor's current liquidation status but upheld the Adjudicating Authority's decision. In conclusion, the Tribunal dismissed the Appeal, emphasizing the legal validity of the Financial Creditor's actions within the limitation period and the existence of debt and default. The judgment analyzed the fraud allegations, debt restructuring, and compliance with legal requirements, ultimately upholding the Adjudicating Authority's decision to admit the Section 7 Application.
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