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TMI Blog2020 (8) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... d the same is not due. An Adjudicating Authority is to ascertain whether the record is complete or otherwise, whether there is a Debt and Default was committed by the Corporate Debtor . It is an established fact that existence of an Undisputed Debt is a condition precedent for commencement of Corporate Insolvency Resolution Process. Effect of an Acknowledgment in writing as per Section 18 of the Limitation Act, 1963 - HELD THAT:- It cannot be gain said that Acknowledgment of Liability is to be in writing, signed by a person against whom the property or right is claimed and the same must be within the period of Limitation. Suffice it for this Tribunal to relevantly point out that to bring an acknowledgment within the meaning of Section 18 of the Limitation Act, 1963, it ought to be an unqualified one which gives a fresh cause of action - As per Article 62 of the Limitation Act, 1963, a suit to enforce the mortgage is to be filed within Twelve years from the date when money fell due, unless the limitation period is extended in terms of any provision of the Limitation Act. It is to be borne in mind Article 137 of the Limitation Act, 1963 not only applies to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. Kirusa Software Private Limited, has inter alia held that IBC, 2016 is not intended to be substituted to a recovery forum. In another judgment rendered in Transmission Corporation of A.P.Ltd. Vs. Equipment Conductors and Cables Ltd., Supreme Court of India, it is, interalia held that existence of undisputed debt is sine qua non of initiation CIRP. And ultimately rejected the Application . 3. The Learned Counsel for the Appellant submits that the Respondent/Corporate Debtor with an intention to expand its business, approached the Assignor Bank Vijaya Bank during the year 1986 for certain credit facilities which were sanctioned by the Assignor Bank vide its Sanction Letter dated 20.05.1986 for a Term Loan of Rupees Forty Lakhs along with Corporation Bank. As a matter of fact, the Respondent/Corporate Debtor through its authorised Directors Guarantor had executed the Loan documents in favor of the Assignor Bank for obtaining the aforesaid credit facilities. 4. The Learned Counsel for the Appellant brings to the notice of this Tribunal that the Respondent had mortgaged the immovable properties for securing the said credit facilities: All that piece and parcel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the recovery proceedings against the Respondent. 9. The main plea taken on behalf of the Appellant is that inasmuch as the Recovery Certificate was issued based on the Compromise Terms and the said Recovery Certificate became final and binding upon the Respondent. That apart, it is the case of the Appellant that the Respondent, inspite of numerous opportunities provided to it, had neglected and intentionally defaulted in repayment of its dues. Further, It is stand of the Appellant that the Respondent had acknowledged its Debt payable to Appellant in its financial statements filed under the Companies Act, 2013. 10. Moreover, the Appellant filed the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 before the Adjudicating Authority for initiation of Corporate Insolvency Resolution Process ( CIRP in short ) because of the fact that the Respondent Company could not repay the decretal debt to the Appellant/Financial Creditor. 11. The Learned Counsel for the Appellant takes a stand that the Respondent Company had no cash flow to repay the certificate debt of ₹ 145, 44,46,651.32/-. Also that the impugned order of the Adjudicating Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itor to initiate Corporate Insolvency Resolution Process under the Code dated 27.07.2018 against the Respondent, in Part IV, mentions the particulars of the Financial Debt. However, the debt of default was not mentioned and the date of Loan as Nonperforming Asset was mentioned as 01.04.1993. 16. The Learned Counsel for the Respondent cites the decision of Hon ble Supreme Court in the case of B.K.Educational Services Private Limited V. Parag Gupta and Associates [2018 (14) SCALE 482],wherein it is laid down as under: it is thus clear that since the Limitation act is applicable to applications filed under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted. the right to sue , therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except 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 such application . 17. The Learned Counsel for the Respondent cites the decision of Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that the Corporate Debtor was declared as NPA on 21st July, 2011 held that the application was not maintainable. The said judgment is quoted below as the present Appellant was also the Applicant under Section 7 of the aforesaid case: In the present case, the Respondent No.2 was declared NPA on 21.07.2011. At that point of time, the State Bank of India filed two O.As in the Debt Recovery Tribunal in 2012 in order to recover a total debt of 50 Crores of rupees. In the meanwhile, by an assignment dated 28.03.2014, the State Bank of India assigned the aforesaid debt to Respondent No.1. The Debt Recovery Tribunal proceedings reached judgment on 10.06.2016, the Tribunal holding that the O.As filed before it were not maintainable for the reasons given therein. 2.As against the aforesaid judgment, Special Civil Application Nos. 10621- 10622 were filed before the Gujarat High Court which resulted in the High Court remanding the aforesaid matter. From this order, a Special Leave Petition was dismissed on 25.03.2017. 3.An independent proceeding was then begun by Respondent No.1 on 03.10.2017 being in the form of a Section 7 application filed under the Insolvency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving heard the learned counsel for both sides, what is apparent is that Article 62 is out of the way on the ground that it would only apply to suits. The present case being an application which is filed under Section 7, would fall only within the residuary Article 137. As rightly pointed out by learned counsel appearing on behalf of the appellant, time, therefore, beings to run on 21.07.2011, as a result of which the application filed under Section 7 would clearly be time-barred. So far as Mr.Banarjee s reliance on para 7 of B.K Educational Services Private Limited (Supra), suffice it to say that the Report of the Insolvency Law Committee itself stated that the intent of the Code could not have been to give a new lease of life to debts which are already time-barred. 8. This being the case, we fail to see how this para could possibly held the case of the respondents. Further, it is not for us to interpret, commercially or otherwise, articles of the Limitation act when it is clear that a particular article gets attracted. It is well settled that there is no equity about limitation judgments have stated often time periods provided by the Limitation Act can be arbitrary in na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C is not intended to be substitute to a recovery the forum. It is also laid down that whenever there is existence of real dispute, the IBC provisions cannot be invoked 23. Lastly, it is stand of the Respondent that the Adjudicating Authority had rightly dismissed the application filed by the Appellant which need not be interfered with by this Tribunal. 24. It is to be pointed out that as per Section 238 of the I BC, the provisions of the Code shall have an overriding effect, notwithstanding anything inconsistent therewith contained in any other law for the time being enforce or any instrument having effect by virtue of any such law. 25. As per Section 60(4) of the I BC, an Adjudicating Authority (NCLT) is vested with the powers of the Debt Recovery Tribunal as specified in Part II of the Code for the purpose of Section 60(2) of the Code and hence, it is for the National Company Law Tribunal (Adjudicating Authority) to consider the entire gamut of the matter and to pass appropriate orders thereto. 26. It is not in dispute that the Certificate Holder Bank had assigned the rights of the Judgment Debtor Hotel Poonja International to Reliance ARC dated 03.06.2011 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted, that in the judgment of this Tribunal dated 11.12.2019 V.Hotels Limited V. Asset Reconstruction Company (India) Limited in Company Appeal (AT) (Insolvency) No. 525 of 2019 at para 23 and 24, it is observed as under: Para 23. In the present case, Asset Reconstruction Company (India) Ltd. - ( Financial Creditor ) has failed to bring on record any acknowledgment in writing by the Corporate Debtor or its authorized person acknowledging the liability in respect of debt. The Books of account cannot be treated as an acknowledgment of liability in respect of debt payable to the Asset Reconstruction Company (India) Ltd. ( Financial Creditor ) signed by the Corporate Debtor or its authorized signatory. 24. In Sampuran Singh and Ors. V.Niranjan Kaur and Ors. (1992) 2 SCC 679 , the Hon ble Supreme Court observed that the acknowledgment, if any, has to be prior to the expiration of the prescribed period for filing the suit. 31. In order to claim an exclusion of time spent bona fide in prosecuting the proceedings under Section 14 of the Limitation Act, 1963, the essential factor is that the matter was prosecuted before Court suffering from defect in jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like the two sides of a coin. The mortgagor's right of redemption is coextensive with the mortgagee's right of sale or foreclosure (where such right is recognized in law). Any statement by either, admitting the jural relationship with the other, will extend the limitation for a suit by that other, against the person acknowledging. It follows that when a mortgagee makes a statement about his right to recover the mortgage amount, such statement impliedly acknowledges the corresponding right of redemption of the mortgagor. Further, a statement admitting jural relationship, need not refer to or reiterate the rights and obligations flowing therefrom. Where a party to the mortgage, by his statement, admits the existence of the mortgage or his rights under the mortgage, he admits all legal incidents of the mortgage including rights and obligations of both parties, that is mortgagee and mortgagor. 37. Also, at the aforesaid decision at Para 23 at Page No. 498 it is mentioned as under: It sets out the circumstances in which a fresh period of limitation can be computed for a suit. If the suit is one for recovery of the amount due under an on-demand promissory note, no d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on which an order dated 27.03.2003 came to be passed by the Tribunal. The decretal amount of ₹ 2,61,88,403.05 and a Recovery Certificate was already issued by the DRT, Bengaluru on 27.03.2003 and that the Recovery Certificate was amended on 13.12.2012, based on the Assignment Agreement executed dated 03.05.2011 between the Vijaya Bank and the Appellant. The Statement of Account of Vijaya Bank, the trust name is mentioned as Reliance ARC VB Pilve Trust and the Respondent s is described as Borrower . The Statement of Account dated 18.07.2018 mentioned the amount due as ₹ 1,45,44,46,651.32 and that the Opening Balance as per Recovery Certificate dated 27.03.2003 was ₹ 2,61,88,403.05 etc. Although, the Appellant has placed reliance on Statement of Account of the Respondent, the said Statement of Account is not to be treated as an Acknowledgment of Liability in respect of debt payable to the Appellant/Financial Creditor, in the absence of any acknowledgment in writing by the Respondent/Corporate Debtor or its Authorized Signatory. It is to be remembered that the I B Code is not a substitute for Debt Enforcement Procedure . Under the Code, an Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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