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2021 (6) TMI 321 - Tri - 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 - Date of default - date of NPA - Time Limitation - HELD THAT - Section 3 of the Limitation Act, 1963 states that subject to the provisions contained in sections 4 to 24 (inclusive), every suit instituted, appeal preferred, and application made after the prescribed period shall be dismissed, although limitation has not been set up as a defence. In the present case, the Corporate Debtor has prima facie set up the Limitation as a defence in the present Application - From Part IV of the Application, it is seen that the Financial Creditor has failed to state the Date of Default in the Application. Further, no pleadings as such has been made by the Financial Creditor as to how the present Application falls well within the period of limitation. It is found that the after the Date of Default i.e. the date of NPA of 31.12.2007, the Financial Creditor has not placed any record or document recognized under the law to substantiate that the debt falls well within the period of limitation. This Adjudicating Authority is conscious of the decision of the Hon ble Apex Court in the matter of SESH NATH SINGH ANR. VERSUS BAIDYABATI SHEORAPHULI CO-OPERATIVE BANK LTD AND ANR. 2021 (3) TMI 1183 - SUPREME COURT , has held that the time spent in the SARFAESI proceedings can be excluded in terms of Section 14 of the Limitation Act, 1963 for the purpose of calculating the period of limitation for an Application filed under Section 7 of IBC, 2016. The debt as claimed by the Financial Creditor is time barred and the Financial Creditor has failed to place on record any shred of document recognized under the law to substantiate that the debt falls well within the period of limitation - this Adjudicating Authority, based on the documents filed by the Financial Creditor, comes to an irresistible conclusion that the debt on the part of the Respondent/Corporate Guarantor is time barred and as such the Application filed by the Financial Creditor is liable to be dismissed. Application dismissed on the ground of time limitation.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Guarantor. 2. Determination of limitation period for filing the application under Section 7 of the Insolvency & Bankruptcy Code, 2016 (IBC, 2016). 3. Applicability of precedents and legal principles regarding acknowledgment of debt and limitation. Issue-wise Detailed Analysis: 1. Initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Guarantor: The application was filed under Section 7 of IBC, 2016 by the Financial Creditor for initiating CIRP against the Corporate Debtor, who stood as a Corporate Guarantor for loans availed by the Principal Borrower. The Financial Creditor submitted that the Corporate Debtor had defaulted in repayment of a sum of ?88,83,26,278/- as on 31.10.2018. The Respondent argued that the Financial Creditor could not initiate CIRP against the guarantor when proceedings were already initiated against the Principal Borrower, referencing the NCLAT judgment in Dr. Vishnu Kumar Agarwal vs. Piramal Enterprises Ltd. However, the Tribunal noted that this interpretation was not followed in subsequent judgments, including State Bank of India vs. Athena Energy Ventures Private Limited, and held that CIRP could be initiated against the Corporate Guarantor. 2. Determination of limitation period for filing the application under Section 7 of IBC, 2016: The Tribunal emphasized the importance of the 'Date of Default' in determining whether the claim was within the limitation period. The Financial Creditor failed to mention the 'Date of Default' in the application. The Tribunal referred to several judgments, including Babulal Vardharji Gurjar vs. Veer Gurjar Aluminium Industries Pvt. Ltd., which held that the period of limitation for an application under Section 7 of IBC is governed by Article 137 of the Limitation Act, 1963, and is three years from the date when the right to apply accrues. The Tribunal found that the Financial Creditor did not provide sufficient evidence to show that the application was within the limitation period, as the default occurred on 31.12.2007, and the application was filed on 14.12.2018. 3. Applicability of precedents and legal principles regarding acknowledgment of debt and limitation: The Tribunal examined the documents submitted by the Financial Creditor, including various loan and guarantee agreements, assignment agreements, and orders from the Debts Recovery Tribunal (DRT). However, it found that no documents were provided to substantiate that the debt fell within the limitation period. The Tribunal referred to the Supreme Court's decisions in cases like Babulal Vardharji Gurjar and Asset Reconstruction Company (India) Limited vs. Bishal Jaiswal, which clarified that acknowledgment of debt must be within the limitation period to extend it. The Tribunal concluded that the Financial Creditor failed to provide any acknowledgment of debt within the required period. Conclusion: Based on the documents and arguments presented, the Tribunal concluded that the debt claimed by the Financial Creditor was time-barred and dismissed the application as barred by limitation. The Tribunal emphasized that the Financial Creditor did not provide any evidence to substantiate that the debt was within the limitation period, leading to the dismissal of the application. No order as to costs was made.
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