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2021 (5) TMI 443 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - scope of IBC - HELD THAT - The clear cut stand of the 1st Respondent/Bank is that the Corporate Debtor (as agreed) had failed in its repayment of the balance amount, inspite of repeated reminders given by the Bank/ Financial Creditor , in respect of the loan facilities availed by it - It is brought to the fore that the 1st Respondent/Bank/ Financial Creditor had issued a notice to the Corporate Debtor on 02.06.2016, as per Section 13(2) of the SARFAESI Act and that the Corporate Debtor had not paid the debt sum, despite the lapse of 60 days time given to it. The stand of the Appellant is repelled by the 1st Respondent/Bank that the total amount of debt granted on 17.06.2011 was ₹ 90 Crores and on 30.03.2015 was ₹ 18.67 Crores and that the amount claimed to be in default was ₹ 78,74,73,945/- as on 31.03.2016 against the Term Loan-1 and ₹ 4,15,03,499.06 as on 31.03.2016 against the Term Loan-2 , totalling in all, a sum of ₹ 82,89,77,444/- and the total memorandum dues as on 30.06.2019 was ₹ 144,02,51,063.09. Further, the guarantor(s) on 20.02.2018 had executed Balance and Security Confirmation Letters for ₹ 78,74,73,945/- in respect of the account of Saptarishi Hotels Pvt. Ltd. (Corporate Debtor) in respect of the Term Loan Facility , which clearly point out that there was an Acknowledgement of Debt , in terms of Section 18 and 19 of the Limitation Act, 1963. Insolvency and Bankruptcy Code, 2016 - HELD THAT - Section 3(11) of the I B Code, defines debt meaning a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt. Section 3(12) of the code, defines default meaning non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be. Limitation Act, 1963 - HELD THAT - The Application filed by the 1st Respondent/ Financial Creditor (Punjab National Bank) in July 2019 (vide intimation given by the 1st Respondent/Bank/Financial Creditor s Advocate through communication dated 18.07.2019 addressed to the Saptarishi Hotels Pvt. Ltd. Corporate Debtor ) is perfectly maintainable in Law, of course, well within the period of Limitation. As such, the Contra Plea taken on behalf of the Appellant that the Application filed by the 1st Respondent/ Financial Creditor (Punjab National Bank) (under Section 7 of the I B Code) is barred by limitation is legally untenable and is rejected. In the present case, the 1st Respondent/Bank ( Financial Creditor ) has proved the existence of Debt and Default (vide documents) filed along with the Application under Section 7 of the Code against the Corporate Debtor and that the conclusion arrived at in admitting the Application by the Adjudicating Authority is free from legal infirmities, as opined by this Tribunal . Appeal dismissed without costs.
Issues Involved:
1. Whether the application under Section 7 of the Insolvency and Bankruptcy Code (I&B Code) filed by the Financial Creditor is barred by limitation. 2. Whether the acknowledgment of debt by the Corporate Debtor extends the period of limitation. 3. Whether the Adjudicating Authority violated principles of natural justice by not addressing the issue of limitation. Issue-wise Detailed Analysis: 1. Whether the application under Section 7 of the I&B Code filed by the Financial Creditor is barred by limitation: The Appellant contended that the application under Section 7 of the I&B Code filed by the Financial Creditor was barred by limitation. The date of default was cited as 30.03.2016, and the Non-Performing Asset (NPA) date was 30.06.2016. The Appellant argued that the limitation period of three years expired on 29.03.2019 and 29.06.2019, respectively. Since the application was filed on 18.07.2019, it was claimed to be beyond the limitation period. 2. Whether the acknowledgment of debt by the Corporate Debtor extends the period of limitation: The Financial Creditor countered that the Corporate Debtor had acknowledged the debt through Balance and Security Confirmation Letters dated 20.02.2018, which extended the limitation period as per Section 18 of the Limitation Act, 1963. The Financial Creditor also pointed out a payment of ?15,262.75 made by the Corporate Debtor on 15.10.2018, which further acknowledged the debt. 3. Whether the Adjudicating Authority violated principles of natural justice by not addressing the issue of limitation: The Appellant argued that the Adjudicating Authority did not address the issue of limitation, thus violating the principles of natural justice. However, the Tribunal found that the acknowledgment of debt and the payment made by the Corporate Debtor were sufficient to extend the limitation period, making the application filed by the Financial Creditor within the permissible period. Tribunal's Findings: 1. Acknowledgment of Debt: The Tribunal referred to the Balance and Security Confirmation Letters dated 20.02.2018, which clearly acknowledged the debt. The Tribunal also noted the payment made by the Corporate Debtor on 15.10.2018. These acknowledgments extended the limitation period as per Section 18 of the Limitation Act, 1963. 2. Legal Precedents: The Tribunal cited several judgments, including the Supreme Court decision in Babulal Vardharji Gurjar v Veer Gurjar Aluminium Industries Pvt. Ltd., which clarified that the limitation period for an application under Section 7 of the I&B Code is three years from the date of default, extendable by acknowledgment of debt. 3. Principles of Natural Justice: The Tribunal found no violation of natural justice principles, as the issue of limitation was inherently addressed through the acknowledgment of debt by the Corporate Debtor. Conclusion: The Tribunal concluded that the application under Section 7 of the I&B Code filed by the Financial Creditor was within the limitation period due to the acknowledgment of debt. The appeal was dismissed, and the application was maintained as legally tenable. Final Judgment: The Company Appeal (AT)(CH)(INS) No.01 of 2021 was dismissed without costs, and the Stay Application (I.A.03 of 2021) was closed.
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