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TMI Blog2020 (2) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... 09.15, it is held by this Tribunal that the application filed by the Bank before the Adjudicating Authority is barred by Limitation. The Corporate Debtor M/s Kew Precision Parts Pvt. Ltd. is released from the rigour of the Corporate Insolvency Resolution Process . All actions taken by the Interim Resolution Professional / Resolution Professional and Committee of Creditors , if any, are declared illegal and set aside. The Resolution Professional is directed to hand over the records and assets of the Corporate Debtor to the promoter/Directors of the Corporate Debtor forthwith - the matter is remitted to Adjudicating Authority ( National Company Law Tribunal ) New Delhi Bench to determine the Fee and Cost of Corporate Insolvency Resolution Professional as incurred by him, which is to be borne and paid by 1st Respondent / Bank - appeal allowed. - Company Appeal (AT) Insolvency No. 1349 of 2019 - - - Dated:- 8-1-2020 - Justice Venugopal M. Member (Judicial), Kanthi Narahari Member (Technical) And V.P. Singh Member (Technical) For the Appellants : Mr. Mohit Chaudhary, Ms. Garima Sharma, Mr. Imran Ali and Mr. Kunal Sachdeva, Advocates For the Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv. Term Loan I : ₹ 240.00 Lakhs v. Term Loan-II : ₹ 334.00 Lakhs vi. Term Loan-III : ₹ 462.00 Lakhs vii. Conditional WCDL : ₹ 200.00 Lakhs Total Exposure : ₹ 2036.00 Lakhs 5. It is represented on behalf of the Appellants that on 05.03.2014 certain terms and conditions were revised in respect of sanction dated 07.02.2014 in renewal of loan. In fact, the Board of Directors of the Corporate Debtor in its Board Meeting dated 29.11.2012 and 15.03.2013 had passed a Resolution for accepting the terms of sanction and authorised Mr. Munish Kumar Bhunsali to execute loan and security documents. That apart, on 29.11.2012 the loan and security documents were executed between the 1st Respondent/Bank/Financial Creditor and the Corporate Debtor M/s Kew Precision Parts Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account as NPA) whereas the application was filed on 30.01.2019 viz. three years after the occurrence of default. In this regard, the Learned Counsel for the Appellants places reliance on the decision of Hon ble Supreme Court in B.K. Educational Services Pvt. Ltd. Vs. Parag Gupta Associates (Civil Appeal No. 23988/17) wherein it is held that the right to sue accrues when default occurs. Further, it is observed that if the default had occurred beyond three years before the date of filing of the application, the application would be barred under Article 137 of Limitation Act, 1963 save and accept in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing the application. 13. The Learned Counsel for the Appellant cites the decision in Shibcharan Das Vs.(Firm) Gulab Chand Chhotey Lal (AIR 1936 ALL 157) and contends that the 1st Respondent / Bank is barred by Section 23 of the Indian Evidence Act, 1872 from relying upon the One Time Settlement Letter dated 12.12.2018 as it constitutes a privileged communication. Moreover, the Learned Counsel for the Appellants comes out with a plea that the statements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econstruction Company(India) Limited (NCLAT); Company Appeal (AT) (Insolvency) No. 525 of 2019 wherein it is held that there is no continuous cause of action and the Financial Creditor cannot derive any benefit of the action taken under SARFAESI Act, 2002 which is guided by separate provision of limitation. 20. Contending contra, it is the submission of the Learned Counsel for the 1st Respondent / Bank that in the instant case there was a recurring and continuous cause of action from both the parties viz. the borrower / Corporate Debtor and the 1st Respondent. 21. The Learned Counsel for the 1st Respondent contends that the default occurred in June, 2015 due to non-payment of dues and on 30.09.2015 the amount was declared as NPA as per RBI guidelines. Moreover, the 1st Respondent recalled the loan on 09.10.2015 and invoked the present guarantee. In this case, the Learned counsel for the 1st Respondent points out that the cheques issued towards repayment of loan were presented for encashment and they got bounced due to insufficient funds upto February, 2017 against which a complaint u/s 138 of Negotiation Instrument Act, 1881 is pending before the concerned court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Limited again approached the 1st Respondent / Bank for settlement of its dues and submitted another proposal on 12.12.2018 wherein it was mentioned by the Managing Director of the Company that his Company was non-functional since the last three years and the Bank by taking a sympathetic view of his precarious situation accept the One Time settlement amount of Rupees Thirteen crores to help close this long pending matter. 27. The Learned Counsel for the 1st Respondent by referring to the One Time settlement proposal of the Corporate Debtor dated 12.12.2018 submits that the Corporate Debtor had clearly mentioned in the said proposal that if the said one time settlement was accepted by the Bank, the amount would be paid within 15 days from the date of its acceptance. 28. The Learned Counsel for the Respondent / Bank refers to the judgement of this Appellate Tribunal in Company Appeal(AT)(Ins.) No. 672 of 2019 in the matter of Sesh Nath Singh Vs. Baidyabati Sheoraphuli Cooperative Bank Ltd. wherein it is held that the period from which SARFAESI action were pending should be excluded for the purpose of limitation. 29. The Learned Counsel for the 1st Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Debtor / Company had also averred in it Reply before the Learned Adjudicating Authority that the settlement of Account of the Company would show that the account was never out of order and why the 1st Respondent/Bank as an Applicant before the Adjudicating Authority had mentioned in the application in part IV under the caption details of the facilities sanctioned by the Appellant that the WCDL of ₹ 200 lakhs was availed by the Corporate Debtor which was an incorrect one. However, since November, 2012 though the amount of WCDL of 200 lakhs was sanctioned the same was not disbursed despite repeated requests for the reason best known to the Bank. In short, the Corporate Debtor had made an endeavour to project certain inconsistencies in relation to the claimed amount and that the Adjudicating Authority found that the default was in excess of Rs. one lakh, being the minimum threshold limit fixed under I B Code, 2016 and resultantly admitted the application. 33. The 1st Respondent or Bank s plea is that there was continuous and recurring cause of action from both sides i.e. the borrower and the Corporate Debtor and the Bank also, that if any decree is passed by any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey became due unless the limitation period prescribed was extended under any other provision of the Limitation Act. Article 137 of the Limitation Act constitutes the residuary article as regards the application. To put it succinctly, Article 113 pertains to the Suits , the Article 137 relates to Applications . The language of Article 137 clearly postulates that the applicability of the said article will be restricted to the applications not mentioned in the 3rd division of the schedule to the Limitation Act, 1963. 39. It is to be pertinently pointed out that the Transfer of Property Act, 1882 created and recognised the rights and obligations of the mortgagor and mortgagee and that the acknowledgement as per Section 18 of the Limitation Act can be made by either / any party to a transaction and such acknowledgement may be made with reference to all suits involving properties or rights for which the Limitation is specified under the Limitation Act, as per decision Prabhakaran and Others Vs. M.Azhagiri Pillai (Dead) by LRS. And Others (2006) 4 Supreme Court cases page 484 at Spl. Page 485. Apart from this, in the aforesaid decision at page 486 it is held that acknowledgement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision Yashant Vs. Walchand reported in AIR 1951 Supreme Court page 16, the Hon.Supreme Court had observed that the time consumed in insolvency proceedings cannot be excluded u/s 14 of the Limitation Act for filing the execution case on the basis of money decree obtained against the alleged Insolvency. Section 14 of the Limitation Act, 1963 will not aid a person who is guilty of inaction, lapse or malafide. In the decision Jayaramma Vs. V.Raj Gopalan reported in AIR 1965, Madras at page 459, it is held that Section 14 of the Limitation Act will not be attracted when the plaint is filed in a wrong court out of time. 45. In the present case, the 1st Respondent / Bank/Financial Creditor was given the liberty in SA 250/2016 (filed by the Corporate Debtor by the Debt Recovery Tribunal, Lucknow and another) Appellants on 10/04/2017 to recover the dues from the Appellants by proceeding afresh under the provisions of SARFAESI Act, 2002 and the Rules made thereunder. Later the 1st Respondent/Bank filed OA 576 before the Debt Recovery Tribunal, Delhi against the Corporate Debtor and others and obtained decree on 2.05.2019. Therefore, it is not open to the 1st Respondent/Bank to tur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served that just sending a letter to the higher authorities to settle the issues does not amount to an Acknowledgement . 48. As a matter of fact, and that on 9.10.15 the loan was recalled by the Bank. The One Time Settlement proposal given by the Corporate Debtor dated 12.12.2018 was not accepted by the 1st Respondent / Bank. The application u/s 7 of the I B Code was filed by the 1st Respondent / Bank before the Adjudicating Authority on 30.01.19. 49. In the One Time Settlement of term loan of M/s Kew Precision Parts Pvt. Ltd. dated 12.12.2018 signed by the Managing Director of the Corporate Debtor was addressed to the 1st Respondent / Bank it was among other things mentioned that the Company was non-functional for the last three years and, therefore, a reference was made to take a sympathetic view of the precarious situation and accept the One Time Settlement amount of ₹ 13 crores. Also, it was categorically made mention of in the said One time settlement proposal of the Corporate Debtor that if the said proposal was accepted then, within 15 days from the date of acceptance by the Bank, the said amount would be paid. However, the fact of the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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