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2022 (6) TMI 623 - 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 - HELD THAT - It is undisputed fact that the Corporate Debtor has borrowed the funds from Respondent No.1 and the amounts claimed to be in default is approx. Rs. 216.95 Crore - Security held and certificate of registration of charges issued by Registrar of Companies is also not in dispute. At any point of time some acknowledgment of accepting its liability by Corporate Debtor exists that too within stipulated time period of three years (Article 137 of the Limitation Act, 1963). Hence, Section 18 of the Limitation Act, 1963 provides for a fresh period of limitation shall be computed from the time when the acknowledgment was so signed and hence the stand of the Appellant does not seem to be correct - Now, it is a settled law by the Hon ble Apex Court that the Code does not exclude the Application of Section 14 or Section 18 or any other provisions of Limitation Act. Hence, it can be firmly said that the provisions of Section 18 of the Limitation Act, 1963 are applicable to the proceedings under the Code and hence, the impugned order deserves to be upheld. Appeal dismissed.
Issues Involved:
1. Timeliness of the application under Section 7 of the Insolvency and Bankruptcy Code (IBC) concerning the Limitation Act, 1963. 2. Acknowledgment of debt by the Corporate Debtor (CD). 3. Application of Section 18 of the Limitation Act to proceedings under the IBC. 4. Validity of the Corporate Insolvency Resolution Process (CIRP) initiation and subsequent actions. Issue-wise Detailed Analysis: 1. Timeliness of the application under Section 7 of the IBC concerning the Limitation Act, 1963: The appellant argued that the application filed by the Financial Creditor (SBI) under Section 7 of the IBC was time-barred as the date of default was 15.04.2011, and the application was filed on 25.11.2019, exceeding the three-year limitation period stipulated under the Limitation Act, 1963. The appellant contended that the acknowledgment of debt through One Time Settlement (OTS) proposals in 2018 and 2019 was beyond the limitation period, which lapsed on 15.04.2015. 2. Acknowledgment of debt by the Corporate Debtor (CD): The Financial Creditor (SBI) submitted that the CD had acknowledged its debt multiple times within the limitation period, including letters dated 18.07.2011, 24.12.2013, and subsequent restructuring agreements. The CD's OTS proposals in 2018 and 2019 were argued to be acknowledgments of debt under Section 18 of the Limitation Act, thereby extending the limitation period. 3. Application of Section 18 of the Limitation Act to proceedings under the IBC: The tribunal referred to various judgments, including the Supreme Court's rulings in Dena Bank vs. C. Shivakumar Reddy, Asset Reconstruction Company vs. Bishal Jaiswal, and Laxmi Pat Surana vs. Union of Bank of India, which affirmed that Section 18 of the Limitation Act applies to IBC proceedings. These rulings clarified that acknowledgments of debt within the limitation period reset the limitation clock, allowing the application under Section 7 of the IBC to be filed within a renewed limitation period. 4. Validity of the CIRP initiation and subsequent actions: The tribunal upheld the Adjudicating Authority's order dated 23.09.2021, which initiated CIRP against the CD and appointed an Interim Resolution Professional (IRP). The tribunal found that the CD had acknowledged its liability within the stipulated time, and the application under Section 7 was within the period of limitation as per Section 18 of the Limitation Act. The tribunal dismissed the appeal, affirming the commencement of CIRP and all subsequent actions. Conclusion: The tribunal concluded that the application filed under Section 7 of the IBC was within the limitation period due to the acknowledgments of debt by the CD. The provisions of Section 18 of the Limitation Act were applicable, and the appeal was dismissed, upholding the initiation of CIRP and the appointment of the IRP. The tribunal emphasized that the Code does not exclude the application of Sections 14 and 18 of the Limitation Act, ensuring that acknowledgments of debt reset the limitation period for filing applications under the IBC.
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