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2023 (8) TMI 482 - AT - Insolvency and BankruptcyMaintainability of application filed u/s 7 of IBC - barred by time limitation or not - Appellant, contends that the Adjudicating Authority/ Tribunal, had failed to appreciate that the Claim of the 1st Respondent / Petitioner / Financial Creditor, was hopelessly barred by Limitation - HELD THAT - Dealing with the aspect of Reply Notice, dated 19.06.2019, issued on behalf of the Corporate Debtor (for the Legal Notice, dated 10.06.2019), issued by the 1st Respondent / Bank / Financial Creditor, the Paragraph 2 of the said Reply, makes a reference to the Financial Turmoil, faced by the Corporate Debtor, in the recent past, resulting to Non payment of Loan Amount, and the discussion both had with O.T.S. Proposal, for Fourteen Cr., which was under due consideration, etc. - an admission, is the best peace of evidence, which can be used against the Maker, and this can be taken advantage of, by a Party, which places reliance, so as to bind, the said Maker. This Tribunal, to point out an admission, is not a self serving statement, but it is a self harming one. An Admission, is Confession or Voluntary Acknowledgement, made by a Party or Someone, identified with him, in legal interest, of the existence of certain facts, which are in issue or relevant to an issue, in the case, as per decision - It cannot be forgotten that the Corporate Debtor, had acknowledged the Debt, by offering One Time Settlement Proposal for Rs.14 Crore, through a Letter dated 03.03.2018. Also that the OTS Letters (sent by the Corporate Debtor ), 13.07.2021, 03.08.2021, 31.12.2021, 04.01.2022 and 13.01.2022, were rejected by the 1st Respondent / Bank / Financial Creditor, as not Financially viable. An Unconditional Acknowledgment, is held to imply, a promise, to pay as per decision of the Hon ble Supreme Court of India, in Hiralal Ors. Badkulal, 1953 (3) TMI 36 - SUPREME COURT . An Acknowledgement, extends the Limitation Period. No wonder, an Acknowledgement, contained in the Balance Sheet of the Company, begins a fresh commencing point of Limitation - Undoubtedly, if any documents is executed, during the subsistence of Limitation, thereby the Dues, are / were acknowledged, the Limitation, will be revived, afresh, from the Date of Acknowledgement. In the instant case, the Default, committed by the Corporate Debtor, in respect of the Financial Debt, is more than Threshold Limit of Rs. 1 Crore (vide Section 4 of the Code, after amendment) - In the present case, as on date, for the Loan Facilities, provided by the 1st Respondent / Bank, to the Corporate Debtor, a Sum of Rs.239,51,53,055.83/-, being the Due Default Amount, committed by the Corporate Debtor. If there is any Financial Debt and Default, in repayment of the same, by the Corporate Debtor, then, an Adjudicating Authority/ Tribunal, by exercising its Discretion, after subjectively satisfying, itself that a Default, was committed by the Corporate Debtor, then, the Section 7 Application, filed by the Financial Creditor, can be admitted, under the I B Code, 2016. In the instant case on hand, the Adjudicating Authority / Tribunal, on the available materials on record, came to an ultimate conclusion that the Corporate Debtor, had committed Default, in respect of the Debt, to be paid by it, to and in favour of the 1st Respondent / Bank. Indeed, the Section 7 Application, was admitted, by the Adjudicating Authority / Tribunal through its impugned order, dated 06.05.2022, and appointed, an Interim Resolution Professional and declared Moratorium, etc., which is free from any Legal Infirmities. Appeal dismissed.
Issues Involved:
1. Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation. 2. Whether the Corporate Debtor's acknowledgment of debt extended the limitation period. 3. Whether the adjudicating authority properly admitted the application for Corporate Insolvency Resolution Process (CIRP). Summary: 1. Limitation Issue: The Appellant contended that the claim under Section 7 of the Insolvency and Bankruptcy Code, 2016 (I & B Code) was barred by limitation, as the period of three years for filing the claim lapsed on 10.06.2009, while the application was filed on 29.02.2020. The Appellant argued that the default occurred on 11.06.2006, and the claim was time-barred. 2. Acknowledgment of Debt: The Appellant acknowledged the debt through various "One Time Settlement" (OTS) proposals and acknowledgment letters dated 30.09.2007, 30.06.2008, 01.06.2011, 20.05.2014, and 11.05.2017. The Tribunal emphasized that an acknowledgment in writing extends the limitation period, as it indicates a jural relationship between the debtor and creditor. The Appellant's acknowledgment letters were within the limitation period, thus extending the limitation. 3. Adjudication by the Authority: The Adjudicating Authority found that the Financial Creditor had provided evidence of a financial debt and default, which surpassed the threshold limit of Rs. 1 Crore. The Tribunal noted that the Corporate Debtor admitted its liability in its counter and through various communications. The Tribunal also referenced the Supreme Court's decision in Innoventive Industries Ltd. v. ICICI Bank, which held that once the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete. Conclusion: The Tribunal concluded that the Section 7 application was within the period of limitation and that the Corporate Debtor had committed a default. The application for CIRP was rightly admitted by the Adjudicating Authority, and the appeal was dismissed with no costs. The connected pending interlocutory applications were also closed.
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