9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (3) TMI 364 - 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 - whether the Application which was filed by the Financial Creditor against the Corporate Debtor was within limitation or beyond limitation? - HELD THAT - It is the settled law that Application under Section 7 of the IBC is covered by Article 137 of the Limitation Act, 1963 according to which the Application under Section 7 is to be filed within three years from the date when right to sue occurs. The first submission of Learned Counsel for the Respondent No. 2 is based on One Time Settlement offer given by Principal Borrower on 11.02.2014 and 04.03.2016. Before we proceed to consider the above submission, it is relevant to find out what was the case of the Respondent No. 2 before the Adjudicating Authority on the question of limitation, the Application under Section 7 filed by the Financial Creditor against the Corporate Debtor is filed as Annexure A-18 of the Appeal Paper Book. Under Part-IV of the Application in Item No. 2 the date of first occurrence of default is mentioned 13.03.1989 and under Part-V Particulars of an Order of a Court, Tribunal or Arbitral Panel Adjudicating on the default, if any (attach a copy of the order), reference to Order passed by Tribunal as Annexure 17 of the Appeal Paper Book has been made. It is clear that in the pleadings and submissions which was raised by Financial Creditor-Respondent No. 2 before the Adjudicating Authority regarding the question of limitation was claiming limitation of 12 years. The Adjudicating Authority did not return any finding or recorded any reason on the objection regarding limitation and without answering the objection and recording any findings, has admitted the Application. When objection was raised before the Adjudicating Authority that Application was barred by time it was incumbent on the Adjudicating Authority to consider and answer the question of limitation - it is mandate of law to dismiss the Application which is barred by limitation. The Adjudicating Authority committed error in not adverting to the objection of Limitation and proceeded to admit the Application. Whether the Respondent No. 2 can claim One Time Settlement Offer which was given by Principal Borrower to the IDBI Bank for the purpose of extension of limitation period of the Application filed against the Corporate Guarantor i.e. Corporate Debtor? - HELD THAT - When the Application under Section 7 against the Principal Borrower has already been dismissed by this Tribunal and confirmed by the Hon ble Supreme Court, we need not entertain any submissions of the Learned Counsel for Respondent No. 2 that Principal Borrower was entitled for extension of limitation under Section 18 by virtue of One Time Settlement Offer dated 11.02.2014 and 04.03.2016 - there is no need to consider the above submissions of Learned Counsel for Respondent No. 2 quo the Application of Principal Borrower within time by virtue of extension of limitation on the basis of aforesaid the proposal of One Time Settlement. The fresh cause of action which arose to the Financial Creditor on the basis of Decree dated 06.05.2011 and the Recovery Certificates dated 22nd December, 2011 of Debt Recovery Tribunal came to an end in the year 2014 itself and the Application under Section 7 filed on 10th July, 2018 was beyond the period of Limitation. Application under Section 7 filed by the Financial Creditor against the Corporate Debtor was beyond the period of limitation and could not have been admitted by the Adjudicating Authority - Appeal allowed.
Issues involved:
1. Admissibility of the Application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016. 2. Whether the Application filed by the Financial Creditor against the Corporate Debtor was barred by limitation. 3. The applicability of the Limitation Act, 1963 to proceedings under the Insolvency and Bankruptcy Code. 4. The impact of acknowledgments of debt and appeals on the limitation period. Issue-wise detailed analysis: 1. Admissibility of the Application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016: The appeal was filed by two Suspended Directors of the Corporate Debtor against the order dated 08th May 2019 by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench) admitting the application filed by Respondent No. 2 (Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (the ‘Code’). The application was filed against the Corporate Debtor, M/s. Dugal Projects Development Company Private Limited, following the default in repayment by the Principal Borrower, M/s. Sima Hotels and Resorts Ltd., which had obtained financial assistance in 1986. 2. Whether the Application filed by the Financial Creditor against the Corporate Debtor was barred by limitation: The main contention of the appellants was that the application under Section 7 was barred by time. They argued that the limitation period for filing the application was three years from the date of the decree passed by the Debt Recovery Tribunal (DRT) on 06.05.2011, which ended on 05.05.2014. Since the application was filed on 10th July 2018, it was argued to be time-barred. The appellants also referenced a prior judgment by the Tribunal dated 18.12.2019, which dismissed a similar application against the Principal Borrower as barred by time. 3. The applicability of the Limitation Act, 1963 to proceedings under the Insolvency and Bankruptcy Code: The respondent argued that the provisions of Sections 5, 14, and 18 of the Limitation Act, 1963, are applicable to proceedings under the Code. They contended that acknowledgments of debt by the Principal Borrower through One Time Settlement proposals extended the limitation period. Additionally, they argued that the limitation period should be counted from the date when the appeal against the DRT decree was dismissed on 14.02.2017. 4. The impact of acknowledgments of debt and appeals on the limitation period: The Tribunal considered the submissions regarding the acknowledgment of debt through One Time Settlement offers dated 11.02.2014 and 04.03.2016. The Tribunal noted that such acknowledgments could extend the limitation period under Section 18 of the Limitation Act. However, it was emphasized that the application against the Principal Borrower had already been dismissed as time-barred, and the same principle should apply to the Corporate Debtor. The Tribunal also examined the dismissal of the appeal by the Corporate Debtor on 14.02.2017 and concluded that it did not provide a fresh cause of action for extending the limitation period. Conclusion: The Tribunal held that the application under Section 7 filed by the Financial Creditor against the Corporate Debtor was beyond the period of limitation and should not have been admitted by the Adjudicating Authority. The order dated 08.05.2019 admitting the application was set aside, and the application was dismissed as barred by time. The appeal was allowed, and each party was ordered to bear its own costs.
|
