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2021 (3) TMI 118 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make the repayment of its dues - Petition was filed in the year 2019 after a lapse of six years - time limitation - HELD THAT - The Contention of the Learned Counsel that the Directors were not served a copy and therefore sufficient opportunity was not given to them to present their case is untenable, in the light of the admitted position of fact that the Notice was admittedly hand delivered to the Official Liquidator who was appointed by the Hon ble High Court of Bombay on 25.01.2018; but the Corporate Debtor did not enter any appearance nor has chosen to file any Reply despite the Adjudicating Authority having given sufficient opportunities to do so. Whether the Section 7 Application is barred by limitation? - HELD THAT - In the instant case the date of default (NPA) is 31.03.2013 and the Application under Section 7 was filed on 10.10.2019. The contention of the Learned Counsel appearing for the Bank that there was another Balance and Security Confirmation Letter dated 03.07.2014, page 84 of the Reply, which is vehemently opposed by the Appellant Counsel on the ground that it has not been filed before the Adjudicating Authority, which would give a fresh lease of life to the debt, is unsustainable as three years has lapsed for computing the limitation as the date of filing of the Application is 10.10.2019. The other Balance and Security Confirmation Letter relied upon by the Respondent Counsel is dated 17.06.2017 which is also beyond three years of the date of NPA. The letter dated 11.06.2017 written by the Corporate Debtor seeking for request for restructuring of the existing loan has not been accepted by the Bank - this communication relied upon by the Respondent Bank is beyond the period of three years from the date of NPA and also does not fall within the provisions of Section 18 of the Limitation Act, 1963 - Further, there is nothing on record to suggest that the Appellant has acknowledged the debt within three years and has agreed to pay the debt. The matter is remitted to the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench) to be listed on 5th April, 2021 for quantifying the fees of the RP to be borne by Applicant/Financial Creditor - petition dismissed.
Issues Involved:
1. Whether the Section 7 Application filed by the Financial Creditor was barred by limitation. 2. The impact of the winding-up order and the appointment of an Official Liquidator by the Hon'ble High Court of Bombay on the Section 7 Application. 3. Whether the Corporate Debtor was given sufficient opportunity to present their case. 4. The applicability of Section 18 of the Limitation Act, 1963, in extending the limitation period due to acknowledgment of debt. Detailed Analysis: Issue 1: Limitation Period of Section 7 Application The primary contention by the Appellant was that the Section 7 Application filed by the Financial Creditor was barred by limitation, as it was filed six years after the Corporate Debtor’s account was declared as NPA on 31.03.2013. The Appellant argued that the application was thus barred by limitation under the Insolvency and Bankruptcy Code (IBC). The Tribunal analyzed several judgments, including 'Babulal Vardharji Gurjar' v. 'Veer Gurjar Aluminium Industries Pvt. Ltd. & Anr.', which emphasized that the limitation period for filing an application under Section 7 of the IBC is three years from the date of default. The Tribunal noted that the Section 7 Application was filed on 10.10.2019, which was beyond the three-year limitation period from the date of NPA (31.03.2013). Issue 2: Winding-Up Order and Official Liquidator The Respondent argued that the Section 7 Application was maintainable despite the pending winding-up proceedings and the appointment of an Official Liquidator by the Hon'ble High Court of Bombay. They cited the Supreme Court’s decision in 'Jaipur Metals and Electricals Employees Organization' v. 'Jaipur Metals and Electricals Ltd. & Ors.', which held that a Section 7 Application under the IBC is an independent proceeding and is not affected by pending winding-up proceedings. The Tribunal accepted this argument, noting that the Section 7 Application is independent and not barred by the winding-up order. However, this did not impact the limitation issue. Issue 3: Opportunity for the Corporate Debtor The Appellant contended that the Directors were not served with a copy of the Petition, thus not given a sufficient opportunity to present their case. The Tribunal found this argument untenable, noting that the Notice was hand-delivered to the Official Liquidator appointed by the Hon'ble High Court of Bombay, and the Corporate Debtor did not enter any appearance or file a reply despite sufficient opportunities. Issue 4: Acknowledgment of Debt and Section 18 of the Limitation Act The Respondent argued that the limitation period was extended due to the acknowledgment of debt by the Corporate Debtor through letters dated 11.06.2017 and 17.06.2017, which should trigger a fresh limitation period under Section 18 of the Limitation Act, 1963. The Tribunal examined these letters and concluded that the acknowledgment of debt was beyond the three-year limitation period from the date of NPA. The Tribunal held that these acknowledgments did not fall within the provisions of Section 18 of the Limitation Act, 1963, thus not extending the limitation period. Conclusion The Tribunal concluded that the Section 7 Application was barred by limitation as it was filed beyond the three-year period from the date of NPA. The Tribunal dismissed the Petition but noted that this dismissal would not affect the ongoing winding-up proceedings before the Hon'ble High Court of Bombay. The matter was remitted to the Adjudicating Authority for quantifying the fees of the Resolution Professional to be borne by the Financial Creditor. Final Order The Appeal was allowed, and the Impugned Order was set aside. The Tribunal directed the matter to be listed on 5th April 2021 for quantifying the fees of the Resolution Professional. The Registry was instructed to upload the Order on the website and remit a copy to the Adjudicating Authority.
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