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2020 (3) TMI 1185 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Period of limitation - Financial Debt - Corporate Debtor failed to make repayment of its debt - HELD THAT - An Acknowledgment does not create any new right and it extends the limitation period as per decision P. SREEDEVI VERSUS P. APPU 1990 (8) TMI 412 - KERALA HIGH COURT - When a Debtor makes an acknowledgment of his liability to pay a Debt, it would mean that he was admitting a subsisting liability to pay. The burden lies on the Creditor to prove that an acknowledgment was made within time. An acknowledgment in writing must indicate Jural Relationship as that of Debtor and Creditor between the parties. As far as the present case present case is concerned the pendency of OA No. 310 of 2010 (filed on 14.7.2010) before the Debt Recovery Tribunal -III Kolkata will not preclude the first Respondent/bank to file the application under Section 7 of the Code before the Adjudicating Authority. If a party claiming the benefit of the Section 14 of the Limitation Act, 1963 had failed to secure relief in favour of earlier proceeding not because of any defect or Jurisdiction or some other cause of like nature, he cannot derive the benefit of the ingredients of Section 14 of the Act. By virtue of Deed of Guarantee Corporate Debtor being a Corporate Person owes debt to the Bank.In the present case the Corporate Debtor is the Guarantor and in the year 2008, undertook to repay the debt in case of default by the Principal Borrower. As per Section 3(8) of the Code Corporate Debtor means a Corporate Person who owes debt of any person. This Tribunal keeping in mind the present facts and circumstances of the instant case in an integral fashion, which float on the surface case comes to an inescapable conclusion that there is an acknowledgment of Debt on various dates like 2.2.07, 17.2.07, 3.8.07 for the loan facilities availed by Mahaveer Construction the Letters of Guarantee Acknowledged by the Corporate Debtor (M/s Surana Metals Ltd.) on 16.9.10, 3.3.12, 27.5.15, 24.10.16 executed by the Appellant and on 8.12.18 by the Surana Metals Ltd. etc. This apart, here is an acknowledgment of Debt by the Principal Borrower but also the Corporate Debtor on 27.5.15 8.12.18 respectively.The object of specifying time limit for limitation is undoubtedly based on Public Policy .The application projected before the Adjudicating Authority(NCLT) Kolkata Bench, on 13.2.19 is well within limitation and not barred by Limitation. Appeal dismissed.
Issues Involved:
1. Whether the claim is time-barred. 2. Applicability of Section 5A of the IBC, 2016 regarding the definition of Corporate Guarantor. 3. Validity and maintainability of the application under Section 7 of the IBC against the Corporate Guarantor. 4. Acknowledgment of debt and its impact on the limitation period. 5. Relevance and admissibility of certain documents and letters. Issue-wise Detailed Analysis: 1. Whether the claim is time-barred: The Adjudicating Authority observed that the claim was not time-barred despite the default date being 03.01.2010 and the application filed on 13.02.2019. The Authority noted that unlike the case before the Supreme Court in Gaurav Hargovindbhai Dave v. Asset Reconstruction Company (India) Ltd. & Anr., there were acknowledgments of debt by the Corporate Debtor even in 2018, thus falling within the limitation period. 2. Applicability of Section 5A of the IBC, 2016 regarding the definition of Corporate Guarantor: The Corporate Debtor argued that it could not be considered a Corporate Debtor under Section 5A because it was a guarantor to an individual, not a corporate person. The Authority rejected this argument, clarifying that Section 5A is merely explanatory and does not exclude the applicability of IBC provisions to the Corporate Debtor who had executed a deed of guarantee. 3. Validity and maintainability of the application under Section 7 of the IBC against the Corporate Guarantor: The Appellant contended that insolvency proceedings could not be initiated against a Sole Proprietorship Firm, and hence, against the Corporate Guarantor. The Authority held that M/s Surana Metals Ltd., being a registered company, falls within the definition of a Corporate Debtor, making the application under Section 7 maintainable. 4. Acknowledgment of debt and its impact on the limitation period: The Appellant argued that letters issued by the Principal Borrower did not constitute acknowledgment of debt. The Authority found that the Corporate Debtor had acknowledged its debt on multiple occasions, including letters dated 16.09.2010, 03.03.2012, 27.05.2015, 24.10.2016, and 08.12.2018, thus extending the limitation period. 5. Relevance and admissibility of certain documents and letters: The Appellant claimed that the letter dated 08.12.2018 was privileged and inadmissible. The Authority dismissed this argument, noting that the letter was an acknowledgment of debt and relevant for the case. The Authority also dismissed the argument that the letter dated 03.12.2019, not produced before the NCLT, should not be relied upon. Conclusion: The Tribunal concluded that the application under Section 7 of the IBC was not time-barred and was maintainable. The Corporate Debtor had acknowledged the debt multiple times, extending the limitation period. The appeal was dismissed, and the Appellant was directed to furnish a certified copy of the impugned order.
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