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2021 (4) TMI 302 - AT - IBCMaintainability of application - initiation of CIRP - Corporate Debtor failed to make the repayment of its dues - time limitation - Appellant claims that the debt due and claimed before the Adjudicating Authority by the Bank was time-barred and thus the Application should not have been admitted - HELD THAT - Hon'ble Supreme Court in the case of SESH NATH SINGH ANR. VERSUS BAIDYABATI SHEORAPHULI CO-OPERATIVE BANK LTD AND ANR. 2021 (3) TMI 1183 - SUPREME COURT where it was held that Section 5 and Section 14 of the Limitation Act are not mutually exclusive. Even in a case where Section 14 does not strictly apply, the principles of Section 14 can be invoked to grant relief to an applicant under Section 5 of the Limitation Act by purposively construing sufficient cause . It is well settled that omission to refer to the correct section of a statute does not vitiate an order. The documents on record referred by Learned Counsel for Bank show series of Acknowledgments of debts by Corporate Debtor since date of NPA which extend period of limitation if Section 18 of Limitation Act is considered. Considering the Judgment of the Hon ble Supreme Court in Sesh Nath Singh, OTS Proposals and Settlement requests and balance sheet referred, it is not found that the Application under Section 7 could be said to be barred by Limitation. Appeal dismissed.
Issues:
1. Admittance of Application under Section 7 of Insolvency and Bankruptcy Code, 2016 (IBC) based on debt being time-barred. 2. Consideration of Acknowledgments of debts by the Corporate Debtor and their impact on the period of limitation. 3. Application of Section 5, 14, and 18 of the Limitation Act, 1963 to proceedings under the IBC. Issue 1: Admittance of Application under Section 7 of IBC based on debt being time-barred: The Appellant, a director of the Corporate Debtor, challenged the admission of the Application under Section 7 of IBC by the Adjudicating Authority, claiming the debt was time-barred. The Appellant argued that the debt became a Non-Performing Asset (NPA) in 2010, and the application was filed in 2020, exceeding the limitation period under the Limitation Act, 1963. However, the Adjudicating Authority, referring to previous judgments, held that the application was within limitation, considering SARFAESI Proceedings and demand notices issued by the Financial Creditor. Issue 2: Consideration of Acknowledgments of debts by the Corporate Debtor: The Respondent Bank relied on acknowledgments of debts by the Corporate Debtor, including OTS Proposals and settlement requests, to argue that these actions extended the period of limitation under Section 18 of the Limitation Act. The Bank presented various documents, such as balance sheets and filings with the Registrar of Companies, to demonstrate the acknowledgment of debts by the Corporate Debtor. The Court considered these acknowledgments in light of the Supreme Court's observations on acknowledgment of liabilities and its impact on the limitation period. Issue 3: Application of Section 5, 14, and 18 of the Limitation Act to IBC proceedings: The Court referenced the Supreme Court's observations on the applicability of Section 5, 14, and 18 of the Limitation Act to proceedings under the IBC. It noted that Section 238A of the IBC makes the provisions of the Limitation Act applicable to NCLT and NCLAT proceedings. Acknowledging the importance of acknowledgments of debts and the commencement of fresh limitation periods, the Court emphasized that the provisions of the Limitation Act should be applied mutatis mutandis to IBC proceedings. The Court concluded that the Application under Section 7 was not barred by limitation, considering the acknowledgments of debts and relevant provisions of the Limitation Act. In conclusion, the Appellate Tribunal dismissed the Appeal, finding no merit in the challenge raised by the Appellant regarding the time-barred debt. The Tribunal highlighted the significance of acknowledgments of debts and the application of the Limitation Act provisions to IBC proceedings in determining the admissibility of the Application under Section 7.
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