9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (7) TMI 1284 - AT - Insolvency and BankruptcyRejection of application for initiation of CIRP - Period of limitation - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - application was required to be filed within a period of three years from the date of default - what is the import of Section 25(3) of the Indian Contract Act, 1872? - whether the period of limitation has been extended in view of Section 18 of the Limitation Act, 1961 with the time-to-time partial payment and admission of debt by the Corporate Debtor? - HELD THAT - It is an admitted fact that the period of three years had expired from the alleged date of default occurred in the year 1998 but there is no denial to the fact also that the Assignment Agreement was executed on 27.09.2013 between TFCI and the Appellant, assigning their entire debt of the Corporate Debtor and in the said agreement the Corporate Debtor and one Mr. Paresh Shah (as mortgagor) were confirming parties to the Assignment Agreement. As a matter fact, with the execution of the Assignment Agreement dated 27.09.2013, a fresh agreement for the payment of dues came into being and a period of three years began from the said date. There is no dispute about the fact that the debt has been acknowledged by the Corporate Debtor in its balance sheet for the year 2013-14. The first partial repayment of Rs. 75,00,000/- was made by the Corporate Debtor on 12.06.2015. The finding recorded by the Adjudicating Authority does not talk of this partial payment which acknowledges the debt and extends the period of limitation from the said date i.e. 12.06.2015 for another period of three years. It is needless to mention that the partial repayment of Rs. 75,00,000/- was made between 27.09.2013 to 27.09.2016 and because of said payment on 12.06.2015 the period of limitation had once again extended upto 12.06.2018. The Adjudicating Authority has further lost sight of the fact that another partial repayment of Rs. 50,00,000/- was made by the Corporate Debtor on 24.06.2018 which means that now the limitation would stand extended for a period of three years up to 24.06.2018. During the period of limitation i.e. 24.06.2014 to 24.06.2018 the Corporate Debtor vide letter dated 05.12.2016 confirmed and acknowledged its entire debt due and payable to the Appellant and as a result thereof, the limitation was extended from the said date i.e. 05.12.2016 to 05.12.2019. The Adjudicating Authority has only referred to the letter dated 05.12.2016 in Para VII of the impugned order to hold that Section 18 of the Limitation Act, shall not be applicable because the acknowledgement was made on 05.12.2016 which was beyond the period of three years from 27.09.2013. Thus, the Adjudicating Authority has committed error in appreciating the facts available on record in coming to the conclusion which is apparently contrary to the record. There are no hesitation to hold that the Adjudicating Authority has committed a patent error of law and fact while passing the impugned order, which deserves to be set aside - the matter is remanded back to the Adjudicating Authority to consider and decide the application filed under Section 7 of the Code in accordance with law - appeal allowed by way of remand.
Issues Involved:
1. Applicability of Section 25(3) of the Indian Contract Act, 1872. 2. Extension of the period of limitation under Section 18 of the Limitation Act, 1961. Detailed Analysis: 1. Applicability of Section 25(3) of the Indian Contract Act, 1872: The Appellant argued that the Corporate Debtor revived the debt by becoming a confirming party and signatory to the Assignment Agreement dated 27.09.2013, thus creating a fresh contractual liability. This was supported by Section 25(3) of the Indian Contract Act, 1872, which states, “It is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.€¯ The Appellant cited several judgments to support this argument: - A. V Murthy Vs. BS Nagabasavanna: The Supreme Court held that a promise to pay a time-barred debt is a valid contract under Section 25(3). - Dinesh Choksi Vs. Rahul Vasudeo Bhatt: The Bombay High Court confirmed that a written promise to pay a time-barred debt is enforceable. - Madishetti Shekhar Vs. Pulivala Komureli: The Andhra Pradesh High Court held that an agreement to pay a time-barred debt is valid under Section 25(3). - R. Suresh Chandra & Co. Vs. Vadnere Chemical Works & Ors.: The Bombay High Court held that an unconditional acknowledgment of debt implies a promise to pay. - SBI Vs. Kanahiya Lal: The Delhi High Court held that an acknowledgment of debt can be treated as an implied promise to pay. - Sri Kapaleeswara Temple, Mylapore Vs. T. Tirunavukarasu: The Madras High Court held that a fresh contract under Section 25(3) is enforceable even if the debt is time-barred. - ARM Nizmathuallah Vs. Vaduganathan: The Madras High Court held that a written promise to pay a time-barred debt furnishes a fresh cause of action. - Adivelu Vs. Narayanachari: The Karnataka High Court held that a promise under Section 25(3) constitutes a valid agreement for suing. 2. Extension of the Period of Limitation under Section 18 of the Limitation Act, 1961: The Appellant argued that the period of limitation was extended due to partial payments and acknowledgments of debt by the Corporate Debtor. The Adjudicating Authority dismissed this argument, stating that the acknowledgment dated 05.12.2016 was beyond three years from the date of the Assignment Agreement (27.09.2013). However, the Appellant contended that: - The Corporate Debtor made partial payments of Rs. 75,00,000/- on 12.06.2015 and Rs. 50,00,000/- on 24.06.2015, extending the limitation period. - The Corporate Debtor acknowledged the debt in its balance sheet for the year 2013-14 and vide letter dated 05.12.2016. The Appellant cited several judgments to support this argument: - Asset Reconstruction Company (India) Limited Vs. Bishal Jaiswal and Anr.: The Supreme Court held that Section 18 of the Limitation Act applies to IBC proceedings. - Laxmi Pat Surana Vs. Union Bank of India & Anr.: The Supreme Court held that the provisions of the Limitation Act apply to IBC proceedings, including Section 18. - Yogesh Kumar Jashwantlal Thakar Vs. Indian Overseas Bank and Ors.: The NCLAT held that acknowledgment of debt extends the period of limitation. Judgment: The Tribunal held that the Adjudicating Authority committed an error in dismissing the application on the ground of limitation. The Tribunal found that the Assignment Agreement dated 27.09.2013 created a fresh contractual liability, and the partial payments and acknowledgments extended the period of limitation. Conclusion: The appeal was allowed, and the impugned order dated 08.04.2021 was set aside. The matter was remanded back to the Adjudicating Authority to consider and decide the application filed under Section 7 of the Code in accordance with law. The parties were directed to appear before the Adjudicating Authority on 15th September 2022.
|
