2024 (11) TMI 212 - AT - IBC

Maintainability of application - time limitation - application contested on the ground that it is barred by the limitation as prescribed under Article 137 of the Limitation Act, 1963 - HELD THAT - The Tribunal has committed a patent error in examining the issue of limitation in respect of the petition filed under Section 7 by the Appellant. There is no dispute that all the accounts of the Respondent were declared NPA on 31.03.2015 and the application was filed by the Appellant for the resolution of an amount of Rs. 158.83. It is also not in dispute, as it has emerged from the record, that a sum of Rs. 2.65 Cr. was paid by the CD in the month of December, 2016 in the loan account which means that the Respondent had acknowledged its liability in the month of December, 2016, in terms of Section 18 and 19 of the Act, hence, the limitation would start again from the date of acknowledgement i.e. December, 2016 and will continue for three years up to December, 2019. The Respondent having acknowledged the debt in the month of December, 2016, during subsistence of period of limitation, would start the period of limitation again from Dec, 2016 and shall give a fresh period of three years to the Appellant to count the limitation to file the application under Section 7 i.e. from December, 2016 to December, 2019 whereas the application under Section 7 was filed in the year 2018 much before the expiry of the period of limitation. These findings have not been challenged by the Respondent by way of an appeal and has attained finality against the Respondent. Even otherwise, there are no error in the aforesaid findings recorded by the Tribunal. The present appeal is found to be meritorious and the same succeeds. The impugned order is hereby set aside. The matter is remanded back to the Tribunal - appeal allowed by way of remand.

Summary

Issues:
1. Application under Section 7 of the Code filed by Punjab National Bank against Walia Traders Limited for resolution of debt.
2. Contention of Respondent that application is barred by limitation under Article 137 of the Limitation Act, 1963.
3. Tribunal's interpretation of limitation period based on the date of default and NPA declaration.
4. Appellant's argument regarding payments made by Respondent in December 2016 acknowledging liability.
5. Maintaining a second CP against the same corporate debtor by the same financial creditor.

Analysis:
1. The Punjab National Bank filed an application under Section 7 of the Code against Walia Traders Limited for the resolution of a substantial amount, including term loans and bank guarantees.
2. Walia Traders Limited contested the application, claiming it was time-barred under Article 137 of the Limitation Act, 1963.
3. The Tribunal referred to the Supreme Court's decision, stating that the limitation period starts from the date of default, which, in the case of NPA declaration, is when the account is classified as NPA.
4. The Appellant argued that payments totaling Rs. 2.65 Cr. made by the Respondent in December 2016 should reset the limitation period, as it acknowledged liability within the limitation timeframe.
5. The issue of maintaining a second CP against the same corporate debtor by the same financial creditor was raised, but the Tribunal found no impediment in allowing it due to different debts and default dates in the two CPs.

Conclusion:
The Tribunal found the appeal meritorious, setting aside the impugned order and remanding the matter back for further proceedings. The parties were directed to appear before the Tribunal, emphasizing the need for an expedited resolution due to the case's age. The Tribunal's decisions on the limitation period and the permissibility of maintaining a second CP were upheld, and the matter was scheduled for further consideration.