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TMI Blog2020 (4) TMI 604X X X X Extracts X X X X X X X X Extracts X X X X ..... ankruptcy Code, 2016 simultaneously. There is no question of any exclusion of time under section 14 of the Limitation Act for initiation of proceedings under section 7 of the Insolvency and Bankruptcy Code, 2016 by the petitioner/financial creditor against the corporate debtor - In the present case the account was declared as NPA on 30-4-2013, whereas the present petition under section 7 of the I B Code was filed on 12-9-2018, which was filed beyond three years. As such the present application is liable to be rejected. Petition dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the respondent/corporate debtor: 3.1 The respondent/corporate debtor has raised a preliminary objection that the application is filed by Assistant General Manager, who is not the authorized person under law to maintain the same. The corporate debtor submitted that so-called letter of authority said to have been executed by the DGM of the financial creditor does not mention the authority given to the AGM to file and maintain this petition. 3.2 It is averred that the application has to be rejected even on the ground of doctrine of legitimate expectation and breach of promise, apart from driving the Corporate Debtor into unwarranted, forced debts through false promises and CDR Scheme etc. It is averred that the application also needs to be rejected on the ground of suppression of facts 3.3 It is averred that the Corporate Debtor company became one of the leading Indian Seed Company in India with a turnover from ₹ 28 lakh to over ₹ 1000 crore group by 2012. The Corporate Debtor with its group of companies had become one of the leading crop improvement research, hybrid seed production, supplying superior quality seeds of field and vegetable crops. The Corporate Deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 cr. Out of which, an amount of ₹ 10 cr. was adjusted to keep the accounts standard for CDR approval, which is nothing but an utter breach of legitimate expectation and promissory estoppel. (v) The Corporate Debtor had approached Chairmen of all Banks during March and April, 2013 for release of funds but the banks have not made any disbursement. (vi) It is averred that the CDR was approved in June 30, 2013 with a proposed Priority Debt disbursement of ₹ 90 cr. as against requested amount of ₹ 122 cr. The LOI of CDR was issued in September, 2013 and MRA was signed in November and a PD of ₹ 26 cr. was disbursed after the Kharif sales season and the remaining amount was not disbursed by several banks and adjusted towards keeping their account standard. The action of the banks was a total breach of doctrine of legitimate expectation and promissory estoppel. (vii) In April, 2014 JLM of the Corporate Debtor requested the bankers for sanction of ₹ 15 cr. towards packing credit. It was apprised in the JLM and CDR EG that the seeds are seasonal and perishable and the quality of stock gets deteriorated. Therefore the Corporate Debtor needs to act swiftly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of Master Restructure Agreement, and dropping out of the strategic Investor Bayer due to no change in GM seeds Policy of the Government. 3.10 In para 12 of the Counter the respondent/corporate debtor lamented that had working capital limits sanctioned after JLM held on 28-8-2012 given the collapse of the company could have been avoided. 3.11 In para 13 of the Counter the respondent/corporate debtor submitted that the respondent had addressed representations to the Government of Gujarat and Government of India to bail out the seed industry, more particularly when state of the art infrastructure is created by the respondent/corporate debtor. 3.12 In para 15 of the Counter it is averred that the majority of dues are from Gujarat organizers and farmers. The Corporate Debtor had made large investments in agricultural research and infrastructure. Banks including the Financial Creditor need to consider for long-term deep restructuring of debt, considering the agriculture sector needs, and taking hair cut on interest as the Corporate Debtor became NPA in 2013, and a reasonable haircut on principal as Corporate Debtor has already paid interest and term loans close to ₹ 762 cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case maybe, was not paid." 4.3 In para 5 of the Additional Counter the respondent/corporate debtor has tried to rely on sections 7, 8 and 10 and to read a common expression in all the above three sections, namely, "default has occurred after the Code was enacted." How the respondent tried to find such common expression uniformly in all the above three sections is illustrated as under: Section 7(1) : ".. .. when a default has occurred" Section 8(1) : "An operational creditor may, on occurrence of default, deliver a demand notice .. .." Section 10(1) : "where a corporate debtor has committed a default,......" 4.4 In para 7 of the Additional Counter it is submitted that the default had allegedly occurred on 30-4-2013 when the account of the respondent-company was classified as an NPA, viz. more than three years prior to the Code coming into existence, viz.28-5-2016. The same would be barred by law of limitation, particularly under Article 137 of the Limitation Act. Hence, the present Insolvency Application is not maintainable and is barred by law of limitation. 4.5 In para 8 of the Additional Counter law of limitation has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the Statement of Account produced by the petitioner/financial creditor shows the rate of interest as "0.00% p.a.", whereas on pages 4, 6, 8, 10, 12, 15 and 16, the rate of interest is shown as "ranging from 11.60% to 13.75%". Some other inconsistencies have been pointed out by the respondent/corporate debtor in the Statement of Account produced by the petitioner/financial creditor. 4.11 In para 30 of the Additional Counter certain inconsistencies have been pointed out in letter dated 15-6-2018 (ANNEXURE-XI to the petition) with regard to "the scope of work for IRP'. It is submitted that the items of work mentioned in the enclosure to the said letter (Page XII) do not fall under the scope of work of an IRP. Acceptance of assignment by the IRP is against the provisions of the Code. 5. Written submissions filed on behalf of the financial creditor. 5.1 In para 7(A) of the written submissions it is submitted that the contention of the respondent/corporate debtor that Insolvency and Bankruptcy Code, 2016 is prospective and not retrospective and that the code shall not apply to transactions which have taken place prior to the Code coming into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 1) issued in favour of Mr. B. Sudhakar by DGM of the petitioner/financial creditor, specifically authorizing Mr. B. Sudhakar to initiate CIRP against the respondent/corporate debtor. 5.5 In para 7(E) of the written submissions the petitioner/financial creditor submitted that the contention raised by the respondent/corporate debtor in paras 18-28 of the Additional Counter that the application is not accompanied by a proper certificate issued under Bankers' Book of Evidence, is not tenable. It is submitted that a perusal of Volume No. 3, paras 458-485 of the application filed by the petitioner/financial creditor would clearly establish that the petitioner/financial creditor has enclosed the said certificate. 6. We have heard the learned counsel for the financial creditor and the learned counsel for the corporate debtor. The learned counsel for the financial creditor would contend that the financial creditor provided financial assistance to the corporate debtor under various heads, such as cash credit, corporate loan, term loan, working capital term loan, priority debt, etc. in the year 2011. In this connection the corporate debtor executed various documents referred to in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The learned counsel contended that the corporate debtor admitted the liability to the financial creditor in a Note submitted to the JLM held on 19-6-2015. The learned counsel contended that there is a written correspondence from the corporate debtor dated 19-6-2015, which shall be treated as an acknowledgement of debt and as such the limitation stands extended till 19-6-2018. The learned counsel contended that the corporate debtor gave a representation to the JLM on 6-4-2018, which is shown at page 710 of Volume-3, wherein the corporate debtor admitted the liability and proposed OTS for ₹ 164 crore. By virtue of this presentation the limitation stands extended till 5-4-2021. Thus, the learned counsel contended that the application filed on 12-9-2018 is not barred by limitation and it is not a time-barred debt. Thus, the learned counsel contended that the petition deserves to be admitted and the defence taken by the corporate debtor cannot be accepted. 10. The learned counsel contended that there is proper authorization to the person, who has signed the application on behalf of the financial creditor, viz. State Bank of India. The learned counsel contended that the DGM, who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied on the decision of the Hon'ble Apex Court in the matter of Gaurav Hargovindbhai Dave (supra), and contended that the facts of the case before the Hon'ble Apex Court are similar to the facts of the present case. The learned counsel contended that in the case before the Hon'ble Supreme court the date of NPA was 21-7-2011, whereas application was filed on 03-10-2017. The learned counsel contended that limitation starts from the date of right to sue accrues and Article 137 of the Limitation Act would apply to the application. Therefore, the application filed in 2017 was held barred by limitation. The learned counsel contended similarly in the present case date of default/NPA was 30-4-2013, whereas the application was filed on 12-9-2018. The learned counsel contended that the Tribunal to apply Article 137 of the Limitation Act to the present case and dismiss the application holding that it is barred by limitation. 13. This is an application filed under section 7 of the Insolvency and Bankruptcy Code, 2016. The petitioner is the financial creditor. It is the case of the petitioner that the corporate debtor has committed default of the financial debt. The petitioner has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars from 30-4-2013. However, the present application is filed on 12-9-2018, which is well beyond six years. On this ground alone the present application is liable to be rejected. 17. Further, the contention of the learned counsel for the petitioner/financial creditor is that the debt was alive and the debt is not barred by limitation when the present application is filed under section 7 of the Insolvency and Bankruptcy Code, 2016. The learned counsel contended that the limitation for filing application to be reckoned from the date of acknowledgement of debt. The learned counsel contended that the corporate debtor had acknowledged the debt by executing Revival Letter dated 6-2-2014, which is shown at page 535 of Volume-Ill of the Paper Booklet filed on behalf of the financial creditor. Even assuming that limitation starts from the date of acknowledgement and the application should have been filed within three years from the date of acknowledgment, viz. by February 2017. However, the present application is filed on 12-9-2018. Therefore, on this ground also the application is barred by limitation. As far as the petitioner is concerned there is no other document filed to signify that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 092 of 2019, dated 19-12-2019], has held in para 6 that, "The application moved by 'Corporate Debtor' to restructure the debt or payment of the interest, does not amount to acknowledgment of debt." Thus, the proposal, if any, submitted was in 2014 and the present application is filed against the corporate debtor on 12-9-2018. Apparently, the application is beyond three years from the submission of such proposal. Therefore, the application is hit by Article 137 of the Limitation Act. Secondly, the proposal for restructuring of debt or payment of interest does not amount to acknowledgment of debt. Therefore, either way the application filed by the financial creditor is beyond three years from the date of alleged acknowledgment. As such the application filed under section 7 of the Insolvency and Bankruptcy Code, 2016 is not maintainable and is barred by limitation. 20. It is an admitted fact that the petitioner/financial creditor has already initiated proceedings against the corporate debtor before the Debt Recovery Tribunal. The proceedings being OA No. 2656 of 2017 is filed before the Debt Recovery Tribunal and the same are pending. Admittedly, the proceedings ..... 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