2020 (9) TMI 582 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of dues - time limitation - Appellant submits that the application filed by the 1st Respondent / Bank (Financial Creditor) is time barred - the said application was filed on 01.04.2019 but the date of default mentioned in Section 7 application before the Adjudicating Authority was on 01.01.2016 - it is the stand of the Appellant that the application filed by the 1st Respondent / Bank after the expiry of three years is hit by the plea of Limitation . HELD THAT - The requirement of Section 18 and 19 of the Limitation Act are independent and not cumulative. Further, the actual payment of money is not an essential one under Section 18 of the Limitation Act, 1963, but it is an essential one under Section 19 of the Act. An acknowledgment of debt interrupts the running of prescription. An acknowledgement only extends the period of limitation as per decision P. SREEDEVI VERSUS P. APPU 1990 (8) TMI 412 - KERALA HIGH COURT . It is to be remembered that a mere denial will not take sheen off the document and the claim of creditor remains alive within the meaning of Section 18 of the Limitation Act. Besides this, an acknowledgement is to be an acknowledgement of debt and must involve an admission of subsisting relationship of debtor and creditor; and an intention to continue it and till it is lawfully determined must also be evident as per decision MEKA VENKATADRI APPA ROW BAHADUR ZEMINDAR GARU AND ORS. VERSUS RAJA PARTHASARATHY APPA ROW BAHADUR ZEMINDAR GARU AND VICE-VERSA 1921 (3) TMI 4 - PRIVY COUNCIL . An acknowledgement does not create a new right. This Tribunal, had perused the various confirmation letters as stated supra which are legally valid and binding documents between the inter se parties and the same cannot be repudiated on one pretext or other. Therefore, this Tribunal comes to an inevitable, inescapable and irresistible conclusion that the date of default i.e 01.01.2016 gets extended by the debit confirmation letters secured by the 1st Respondent/Bank from the Corporate Debtor (for making a new period run from the date of debit confirmation letters) towards the outstanding debt in Loan Account . Indeed, the application under Section 7 of the I B Code, 2016 was filed by the 1st Respondent/Bank on 01.04.2019 before the Adjudicating Authority within the period of Limitation. Furthermore, in view of the fact, that ingredients of Section 18 of the Limitation Act, 1963 are quite applicable both for Suit and Application and the debit confirmation letters in the instant case were duly acknowledged in accordance with Law laid down on the subject, the instant Appeal deserves to be dismissed - Appeal dismissed.

Summary

Issues Involved:
1. Delay in filing the appeal.
2. Admission of Section 7 application under the Insolvency and Bankruptcy Code (IBC).
3. Applicability of the Limitation Act to the Section 7 application.
4. Acknowledgement of debt and its implications on the period of limitation.
5. Validity of documents and authority of the signatory.

Issue-wise Detailed Analysis:

1. Delay in Filing the Appeal:
The Appellant sought condonation of a six-day delay in curing defects and filing the appeal. The delay was attributed to the time taken to obtain necessary documents and affidavits. The Tribunal, satisfied with the reasons provided, condoned the delay and disposed of the application.

2. Admission of Section 7 Application Under IBC:
The Appellant challenged the order of the National Company Law Tribunal (NCLT), Ahmedabad Bench, which admitted the Section 7 application filed by the 1st Respondent/Bank. The NCLT found the application complete and the Corporate Debtor in default of financial debt, thus fulfilling the requirements of Section 7 of the IBC.

3. Applicability of the Limitation Act to the Section 7 Application:
The Appellant argued that the Section 7 application was time-barred, as it was filed more than three years after the date of default (01.01.2016). The Appellant cited several Supreme Court judgments to support the contention that the application should be barred by limitation.

4. Acknowledgement of Debt and Its Implications on the Period of Limitation:
The Appellant contended that the balance confirmation and revival letters relied upon by the 1st Respondent/Bank were not placed before the Adjudicating Authority and lacked the Corporate Debtor's stamp. The Appellant also denied the execution of these acknowledgments. The 1st Respondent/Bank argued that the debt was acknowledged through various documents, extending the limitation period. The Tribunal noted that the balance confirmations and revival letters were valid and binding, thus extending the limitation period.

5. Validity of Documents and Authority of the Signatory:
The Appellant questioned the authority of the signatory of the Section 7 application. The Tribunal found that the application was signed by the Chief Manager of the 1st Respondent/Bank, who was duly authorized by the Board of Directors. The Tribunal held that the application was free from legal infirmity.

Conclusion:
The Tribunal concluded that the Section 7 application filed by the 1st Respondent/Bank was within the period of limitation due to the valid acknowledgments of debt. The appeal was dismissed, and the order of the Adjudicating Authority admitting the application and declaring moratorium was upheld. All connected interlocutory applications were closed, with no order as to costs.