2021 (3) TMI 467 - AT - IBC

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - time limitation - date of declaring the NPA is date of default or not - existence of debt and dispute or not - HELD THAT - The date of default is 30th April 2013 and the Application filed before the Learned Adjudicating Authority under Section 7 of the I B Code on 12th September 2018 which is beyond three years and we agree with the finding(s) given by the Learned Adjudicating Authority, that the Application is barred by limitation. The Application filed by the Appellant, is hit by Article 137 of the Limitation Act, 1963, since for filing the Application, the period of limitation is three years. Taking into account and in following the judgment of the Hon ble Supreme Court in B.K. Educational Services Pvt. Ltd. 2018 (10) TMI 777 - SUPREME COURT the date of NPA is the date of default. In the present case as stated above, the date of default as mentioned by the Appellant in Form-I is 30th April 2013 and the Application filed by them on 12th September 2018 is beyond three years. It is an admitted fact that the Respondent exited from the MRA on 31st January 2015. Therefore, the Appellant cannot rely upon the acknowledgement in the Master Restructuring Agreement. Even otherwise, taking into consideration the Master Restructuring Agreement it is well beyond three years, therefore, the Appellant cannot take a stand with regard to the acknowledgement. Further even taking into consideration, the OTS proposal given by the Respondent dated 19th June 2015 as contended by the Learned Counsel for the Appellant that at page 147 of the Appeal paper book. It is stated as under Proposing for One Time Settlement with banks with a payment in 6 quarters . The Learned Counsel for the Appellant strongly relied upon, the above statement of the Respondent, that since the Respondent had given a One Time Settlement Proposal on 19th June 2015. Therefore, it is a clear acknowledgement by the Respondent regarding debt. Appeal dismissed.

Summary

Issues:
1. Application for initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of I&B Code.
2. Barred by limitation based on the date of default and acknowledgment of debt.

Analysis:
1. The Appellate Tribunal heard an appeal arising from an Order passed by the Adjudicating Authority rejecting an Application under Section 7 of the Insolvency and Bankruptcy (I&B) Code. The Appellant Bank provided credit facilities to the Respondent, who defaulted on repayments, leading to the rejection of a Revival Proposal by the Consortium of Lenders. The Respondent's account was exited from the CDR package due to defaults, and the Appellant initiated SARFAESI action. The key issue was the rejection of the Application by the Adjudicating Authority, primarily based on the limitation period from the date of default.

2. The Adjudicating Authority determined that the Application was time-barred under Article 137 of the Limitation Act, 1963, considering the date of default as 30th April 2013 and the filing date of the Application on 12th September 2018. The Tribunal upheld this decision, citing the Supreme Court's judgment in B.K. Educational Services Pvt. Ltd. v. Parag Gupta and Associates, emphasizing the date of default as crucial for calculating the limitation period under the I&B Code. The Respondent argued that the Appellant's reliance on acknowledgment of debt was unfounded, as the Respondent exited the Master Restructuring Agreement in January 2015, rendering any acknowledgments therein ineffective for extending the limitation period.

3. The Tribunal noted that the Appellant failed to provide written acknowledgment of debt by the Respondent within the limitation period. Despite references to a One Time Settlement proposal by the Respondent in June 2015, the Tribunal found no valid acknowledgment in writing within the statutory timeframe. Additionally, the Tribunal distinguished other judgments where clear written acknowledgments extended the limitation period, which was absent in the present case. Ultimately, the Tribunal dismissed the appeal, upholding the Adjudicating Authority's decision, as no legal grounds were found to interfere with the rejection of the Application as time-barred under the I&B Code and the Limitation Act.