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TMI Blog2019 (5) TMI 1687X X X X Extracts X X X X X X X X Extracts X X X X ..... s barred by limitation - Appeal dismissed. - Company Appeal (AT) (Insolvency) No. 549 of 2018 - - - Dated:- 14-5-2019 - S.J. MUKHOPADHAYA, CHAIRPERSON AND Bansi Lal Bhat, JUDICIAL MEMBER For the Appellant : Piyush Singh and Kumar Pradyuman, Advs. For the Respondent : Ramji Srinivasan, Sr. Adv., Sonal Jain, Ms. Sylona Mohapatra, Nikhil Ramdev, Ms. Heena Sharma, Anant A. Pavgi, A. Anand, Advs. JUDGMENT Justice S.J. Mukhopadhaya, Chairperson. The Respondent - 'JM Financial Asset Reconstruction Co. Ltd.' filed an application under Section 7 of the 'Insolvency and Bankruptcy Code', 2016 (for short, the 'I B Code') against 'Veer Gurjar Aluminium Industries Pvt. Ltd.' (Corporate Debtor) which was admitted by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench by an order dated 9th August, 2018. 2. The appeal was earlier taken on 17th September, 2018 by this Appellate Tribunal, when the following order was passed: The Appellant, Director of 'Veer Gurjar Aluminium Industries Pvt. Ltd.' (Corporate Debtor) has preferred this appeal against order dated 9th August, 2018 passed by the Adjudicatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culated in the appeal memo is vague, but, as the objection regarding limitation goes to the root of the matter and touches upon the jurisdiction of the National Company Law Tribunal to proceed with the claim of the respondent; and since the recent decision of this Court in B.K. Educational Services Pvt. Ltd. v. Paras Gupta Associates - AIR 2018 SC 5601 has held that the question of limitation is applicable even the applications filed under Section 7 of the I B. Code, it would be just and necessary to answer the said objection appropriately, in accordance with law. Indisputably, neither the National Company Law Tribunal nor the National Company Law Appellate Tribunal, in the present case, has examined the said contention. Indeed, according to the respondent, the plea of claim being barred by limitation is unsustainable and, to buttress this argument, the respondent has relied upon the entries in the books of account of the appellant and other related documents. However, that is a matter which ought to be agitated before the National Company Law Appellate Tribunal in the first place. 5. Learned counsel appearing on behalf of the Appellant argued on the question of limitation an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Recovery of Debts Due to the Banks and Financial Institution Act, 1993' . The said petition for recovery against the 'Corporate Debtor' is pending before the DRT. This is also accepted by the learned counsel appearing on behalf of the Appellant which is apparent from the order dated 17th September, 2018 wherein the appellant took a plea that petition under Section 19 of 'The Recovery of Debts Due to Banks and Financial Institution Act, 1993' is pending before the DRT, Aurangabad wherein question raised is whether the amount is payable to the assignee or not. 12. The 'Financial Creditor' has also brought on record a letter dated 31st July, 2018 issued by the appellant to the respondent - 'Financial Creditor' for one time settlement. The aforesaid fact shows that there is a continuous cause of action under Section 19 filed by the respondent - 'Financial Creditor' which is pending before the DRT. 13. The respondent has brought to the notice of the Adjudicating Authority 'Form 1' which shows that the 'Corporate Debtor' has mortgaged number of properties at Aurangabad, as is apparent from Part V of Form 1 with the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n force. Sixty days. The date of the decree, order or sentence. 17. Period of Limitation' in terms of Section 2(j) prescribed in Limitation Act, - Part I - 'Suits relating to accounts' ; Part II - 'Suits relating to Contracts' ; Part III - 'Suits relating to Declarations' ; Part IV - Suits relating to Decrees and Instruments' ; Part V - 'Suits relating to immovable property; Part VI - 'Suits relating to movable property; Part VII - Suits relating to Tort'; Part VIII - 'Suits relating to Trusts and Trust property' ; Part IX - 'Suits relating to miscellaneous matters' and Part X - 'Suits for which there is no prescribed period'. 18. Second Division of 'Limitation Act' deals with 'Appeals' whereas Third Division deals with Applications. Part I of Third Division relates to 'Applications in specified cases' and on the other hand Part II of Third Division relates to 'Other Applications'. 19. Part I of Third Division relates to 'Applications in specified cases' which is not applicable for an application filed under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pposed to this, an operational creditor means a person to whom an operational debt is owed and an operational debt under Section 5(21) means a claim in respect of provision of goods or services. 28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the Explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor - it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in Part III, particulars of the financial debt in Part IV and documents, records and evidence of default in Part V. Under Rule 4(3), the applicant is to dispatch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;debt' is not payable in law by the 'Corporate Debtor' and/or the 'default' being barred by limitation. 27. We have noticed that immediately on 'default', Respondent No. 2 - 'Financial Creditor' has already moved before the DRT under Section 19 of the 'The Recovery of Debts Due to the Banks and Financial Institution Act, 1993' and O.A. No. 172 of 2017 which is still pending. This fact has also been accepted and pleaded by the Appellant. 28. The Appellant has suppressed the fact that recently the 'Corporate Debtor' by letter dated 31st July, 2018 approached Respondent No. 2 (Financial Creditor) for one time settlement. There is a finding that there is a continuous cause of action. The appellant has not disputed that 9 properties i.e. land and building have been mortgaged by the 'Corporate Debtor' with Respondent No. 2 - 'Financial Creditor'. Respondent No. 2 also preferred a criminal proceeding on 27th June, 2017 as the enforcement mortgage of which possession was taken by 2nd Respondent after the order passed by the DRT, Aurangabad. 29. Part V (First Division) of Limitation Act relates to 'Suits rela ..... X X X X Extracts X X X X X X X X Extracts X X X X
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