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2021 (8) TMI 812 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - non-performing asset - existence of debt and dispute or not - One time settlement - time limitation - HELD THAT - The offer of OTS can be relied on for the purpose of considering acknowledgement under Section 18 of Limitation Act. Issue of Recovery Certificate by DRT also is relevant for the purpose of calculating limitation. Respondent Bank claims Corporate Debtor made various repayments in 2018 while making OTS offers. Repayments were made is not disputed by Appellant but argued that payments were made so that OTS proposals should be accepted. This does nomakes any difference for applicability of Section 19 of the Limitation Act. There are no merit in the appeal - appeal dismissed.
Issues Involved:
1. Whether the debt of the Corporate Debtor was time-barred under Section 7 of the Insolvency and Bankruptcy Code (IBC). 2. Whether the One Time Settlement (OTS) proposals could be considered as acknowledgments of debt under Section 18 of the Limitation Act. 3. Applicability of Section 23 of the Indian Evidence Act to the OTS proposals. 4. Impact of payments made during the OTS proposals on the limitation period. 5. Relevance of judgments from the Hon'ble Supreme Court and other legal precedents. Issue-wise Detailed Analysis: 1. Timeliness of Debt under Section 7 of IBC: The Appellant argued that the debt was declared Non-Performing Asset (NPA) on 31st March, 2013, and the application under Section 7 was filed on 1st February, 2019, making the claim time-barred. The Appellant cited judgments from the Supreme Court, including "Jignesh Shah vs. Union of India" and "Gaurav Hargovindbhai Dave vs. Asset Reconstructions Company (India) Limited," to support their claim. However, the Respondent Bank countered that the debt was acknowledged multiple times through OTS proposals, extending the limitation period. 2. OTS Proposals as Acknowledgments of Debt: The Respondent Bank presented several OTS proposals and letters from the Corporate Debtor acknowledging the debt, including letters dated 20.10.2014, 21.11.2016, 07.04.2017, 16.05.2017, and others. The Bank argued that these acknowledgments extended the limitation period as per Section 18 of the Limitation Act. The Bank relied on judgments such as "Laxmi Pat Surana vs. Union Bank of India" and "ARCIL vs. Bishal Jaiswal" to support their argument. 3. Applicability of Section 23 of the Indian Evidence Act: The Appellant contended that Section 23 of the Indian Evidence Act rendered the OTS proposals inadmissible as evidence. Section 23 states that admissions made under an express condition that they should not be given as evidence are not relevant. However, the Respondent Bank argued that no such condition was present in the OTS proposals, and thus, Section 23 did not apply. The Tribunal agreed with the Respondent, finding that the facts did not support the applicability of Section 23. 4. Impact of Payments on Limitation Period: The Respondent Bank highlighted various payments made by the Corporate Debtor during the OTS proposals, which included amounts paid on several dates in 2018. The Bank argued that these payments extended the limitation period under Section 19 of the Limitation Act. The Appellant acknowledged the payments but argued they were made to facilitate OTS acceptance. The Tribunal found that these payments did indeed extend the limitation period. 5. Legal Precedents and Judgments: The Tribunal referenced the Supreme Court judgment in "Dena Bank vs. C. Shivakumar Reddy," which addressed issues of limitation in the context of IBC. The Supreme Court held that acknowledgments of debt within the limitation period extend the limitation period by three years. Additionally, a judgment or decree for money in favor of the Financial Creditor or a Recovery Certificate issued by the DRT gives rise to a fresh cause of action. Conclusion: The Tribunal concluded that the debt was not time-barred, as the OTS proposals and payments made by the Corporate Debtor extended the limitation period. The Tribunal dismissed the appeal, affirming that the application under Section 7 of IBC was rightly admitted by the Adjudicating Authority. The appeal was dismissed with no orders as to costs.
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