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TMI Blog2020 (9) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... It is to be remembered that a mere denial will not take sheen off the document and the claim of creditor remains alive within the meaning of Section 18 of the Limitation Act. Besides this, an acknowledgement is to be an acknowledgement of debt and must involve an admission of subsisting relationship of debtor and creditor; and an intention to continue it and till it is lawfully determined must also be evident as per decision MEKA VENKATADRI APPA ROW BAHADUR ZEMINDAR GARU AND ORS. VERSUS RAJA PARTHASARATHY APPA ROW BAHADUR ZEMINDAR GARU AND VICE-VERSA [ 1921 (3) TMI 4 - PRIVY COUNCIL] . An acknowledgement does not create a new right. This Tribunal, had perused the various confirmation letters as stated supra which are legally valid and binding documents between the inter se parties and the same cannot be repudiated on one pretext or other. Therefore, this Tribunal comes to an inevitable, inescapable and irresistible conclusion that the date of default i.e 01.01.2016 gets extended by the debit confirmation letters secured by the 1st Respondent/Bank from the Corporate Debtor (for making a new period run from the date of debit confirmation letters) towards the outstanding debt in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is complete in all respect and the Corporate Debtor committed default in paying the financial debt to the applicant and the Respondent Company has acknowledged the debt. 17. In the instant case, the documents produced by the financial creditor clearly establish the debt and there is default on the part of the Corporate Debtor in payment of the financial debt. and resultantly admitted the application after finding that the 1st Respondent / Bank had fulfilled all the requirements of Section 7 of the Code. 4. Challenging the validity, propriety and legality of the impugned order passed by the Adjudicating Authority ( National Company Law Tribunal, Ahmedabad Bench), the Learned Counsel for the Appellant submits that the application filed by the 1st Respondent / Bank ( Financial Creditor ) is time barred and in fact, the said application was filed on 01.04.2019 but the date of default mentioned in Section 7 application before the Adjudicating Authority was on 01.01.2016, therefore, it is the stand of the Appellant that the application filed by the 1st Respondent / Bank after the expiry of three years is hit by the plea of Limitation . 5. The Learned Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co- Operative Bank Limited and Anr. (2019) 9 Supreme Court Cases at page 158 at special page 159 and 160 wherein at paragraph 4 it is observed as under:- 4. In order to get out of the clutches of para 27, it is urged that section 23 of the Limitation Act would apply as a result of which limitation would be saved in the present case. This contention is effectively answered by judgement of three Learned Judges of this Court in Balakrishna Savalram Pujari Waghmare v. Shree Dhyaneshwar Maharaj Sansthan (AIR 1959 SC page 798). In this case, this Court held as follows:- 31 In dealing with this argument it is necessary to bear in mind that Section 23 refers not to a continuing right but to a continuing wrong. It is the very essence of a continuing wrong that it is an Act which creates a continuing source of injury and renders the doer of the act responsible and liable for the continuance of the said injury. If the wrongful act causes an injury which is complete, there is no continuing wrong even though the damage resulting from the act may continue. If, however, a wrongful act is of such a character that the injury caused by it itself continues than the Act Company Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Code Article 137 of the Limitation Act will apply. However, we find in the impugned judgement (Sagar Sharma V. Phoenix ARC (P) Ltd., 2019 SCC online NCLAT 617) that article 62 (erroneously stated to be article 61) was stated to be attracted to the facts of the present case, considering that there was a deed of mortgage which was executed between the parties in this case. We may point out that an application under section 7 of the Code does not purport to be an application to enforce mortgaged liability. It is an application by a financial creditor stating that a default as Company Appeal (AT) (Insolvency) No. 236 of 2020 10 defined under the Code, has been made, which default amounts to ₹ 1,00,000 (Rupees one lakh) or more which then triggers the applications of the code on settled principles that have been laid down by several judgements of this court. 3. Article 141 of the Constitution of India mandates that our judgements are followed in letter and spirit. The date of coming into force of the I B Code does not and cannot form a trigger point of limitation for applications filed under the code. Equally, since applications or petitions which are filed under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries Pvt. Ltd. and Anr. (Civil Appeal no. 6357 of 2019) wherein at paragraphs 11, 13.1, 13.6 and para 31 to 33 wherein it is observed as under: - 11 .it could be reasonably deciphered that the Appellate Tribunal has rejected the plea of bar of limitation essentially on two major considerations; (i) that the right to apply u/s 7 of the Code accrued to the Respondent financial creditor only on 1.12.2016 when the code came into force(19 paragraph 21 of the impugned order) and second, that the period of limitation for recovery of possession of the mortgaged property is twelve years.(20 paragraphs 29 and 30 of the impugned order). Noticeably, though the Appellate Tribunal has referred to the pendency of the application under Section 19 of the Act of 1993 as also the fact that corporate debtor had made a prayer for OTS in the month of July, 2018 but, has not recorded any specific finding about the effect of these factors. 13.1 The learned senior counsel has elaborated on the submissions with reference to the decision of this Court in the case of B.K. Educational Services (supra) and has contended that therein, it is categorically held that Article 137 of the Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded because of acknowledgement of liability. Noticeably, in contradistinction to the proceeding of a suit, this Court observed that a suit for recovery, which is a separate and independent proceeding distinct from the remedy of winding up would, in no manner, impact the limitation within which the winding up proceeding is to be filed (what has been observed in relation to the proceeding for winding up, perforce, applies to the application seeking initiation of CIRP under IBC). It is difficult to read the observations in the aforesaid paragraph 21 of Jignesh Shah to mean that the ratio of B.K. Educational Services has, in any manner, been altered by this Court. As noticed in B.K. Educational Services, it has clearly been held that the limitation period for application under Section 7 of the Code is three years as provided by Article 137 of the Limitation Act, which commences from the date of default and is extendable only by application of Section 5 of Limitation Act, if any case for condonation of delay is made out. The findings in paragraph 12 in Jignesh Shah makes it clear that the Court indeed applied the principles so stated in B.K. Educational Services, and held that the wind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nowledgement of debt was made before the expiration of the limitation period, calculated from the date of default i.e. 01.01.2016. In fact, the said legal position is affirmed in the decision of this Tribunal in Vivek Jha V. Daimler Financial Services India Private Ltd. and Anr. (Company Appeal (AT)(Ins.) No. 756 of 2018. 13. The Learned Counsel for the 1st Respondent / Bank takes a plea that the Section 7 Application filed by the Bank before the Adjudicating Authority was well within the period of limitation and that the cause of action arose in favour of the Bank when the default was committed by the Corporate Debtor on 01.01.2016. Apart from that, the execution of revival letter dated 31.03.2017 and balance confirmation letter dated 31.03.2017 by the Corporate Debtor / Suspended Directors acknowledged the debt within three years from the date of default, which extended the limitation period to 31.03.2020. Also, on the 1st Respondent / Bank side, the decision in Manesh Agarwal v. Bank of India Anr. (Company Appeal (AT)(Ins.) No. 1182/2019 is referred to before this Tribunal. 14. The Learned Counsel for the 1st Respondent / Bank contends that the application u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e admitted, unless the contrary is proved. 19. This Tribunal has heard the Learned Counsels appearing for the parties and noticed their contentions. 20. It is to be pointed out that in form I of the application by the Financial Creditor(s) to initiate Corporate Insolvency Resolution Process under the I B Code, 2016 in caption part IV, the particulars of the financial debt are mentioned as under: - 1. TOTAL AMOUNT OF DEBT GRANTED DATE(S) OF DISBURSEMENT Nature of Facility Sanction Limit (Rs. in Crores) (Sanction letter dt/ 07.08.2012 Renewed 31.03.2015 Term Loan (with Sub Limit of FLC/ILC) 16.75 10.83 Letter of Guarantee fvg. Customs department 00.50 00.50 Letter of Guarantee fvg. MGVCL 00.40 00.40 Total Fund Based 23.65 17.73 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Hon ble Supreme Court J.C. Bhudharaja V. Orissa Mining Corporation Ltd. , reported in 2008 2 SCC at page 444 it is observed that mere acknowledgement of the liability in respect of the right in question, it need not be accompanied by a promise to pay either express or even by implication the statement on which a plea of acknowledgement is based must relate to a present subsisting liability though the exact nature of specific character of said liability may not be indicated in words . 25. In the decision of Hon ble Supreme Court in Babulal Vardharji Gurjar V. Veer Gurjar Aluminium Industries Pvt. Ltd. and Anr. (Civil Appeal no. 6357 of 2019 - decided on 14.08.2020) at paragraph 33.1 it is observed as under:- 33.1 Therefore, on the admitted fact situation of the present case, where only the date of default as 08.07.2011 has been stated for the purpose of maintaining the application u/s 7 of the Code, and not even a foundation is laid in the application for suggesting any acknowledgement or any other date of default, in our view, the submissions sought to be developed on behalf of the respondent no. 2 at the latest stage cannot be permitted. It remains trite that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The appeal is accordingly dismissed with costs quantified at ₹ 5,000. 27. In the judgement of Hon ble Supreme Court A.V. Murthy V. B.S. Nagabasavanna (Criminal Appeal No. 206 of 2002 decided on 8.2.2002)(MANU/SC/0089/2002) at paragraph 5 it is observed as under:- ..Moreover, in the instant, the appellant has submitted before us that the respondent in his balance sheet prepared for every year subsequent to the loan advanced by the appellant had shown the amount as deposits from friends. A copy of the balance sheet as on 31st March, 1997 is also produced before us. If the amount borrowed by the respondent is shown in the balance sheet, it may amount to acknowledgment and the creditor might have a fresh period of limitation from the date on which the acknowledgement. However, we do not express any final opinion on all these aspects, as these are matters to be agitated before the magistrate by way of defense of the respondent. and that the judgements of the Hon ble Supreme Court under Article 141 of the Constitution of India are binding on the Courts / Authorities/ Tribunal(s) in the territory of India. 28. It is not out of place for this Tribunal to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent had confirmed the correctness of the balance dated 05.06.2016 and had affixed his signature on 05.06.2016 itself. Likewise, on 20.05.2015 the Director of the 2nd Respondent had confirmed the correctness of the balance in respect of the credit facilities availed by it and the signature was affixed on 20.05.2015. On 02.09.2016 the Director of the 2nd Respondent / Corporate Debtor had executed the revival letter to and in favour of the 1st Respondent / Bank. Similarly, on 31.03.2017, on behalf of the 2nd Respondent the borrower(s) / guarantor had affixed his signature over the revenue stamp. All these balance Confirmation Letters were issued / given to and in favour of the 1st Respondent / Bank and they belie the stance of the Appellant. 33. It is to be relevantly pointed out that a judgement of the court has to be read in the context of queries which arose for consideration in the case in which the judgement was delivered. Further, an obiter dictum as distinguished from a ratio decidendi is an observation by the court on a legal question suggested in a case before it not arising in such manner as to require a determination. An obiter may not have a binding preced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... knowledgments in writing in accordance with Section 18 of the Limitation Act periodically. As a matter of fact, Section 18 of the Limitation Act, 1963 is applicable both for Suit and Application involving Acknowledgment of Liability , creating a fresh period of limitation, which shall be computed from the date when the Acknowledgment was so signed. 37. For better and fuller appreciation of the present subject matter in issue, it is useful for this Tribunal to make a pertinent reference to Section 18 of the Company Appeal (AT) (Insolvency) No. 236 of 2020 33 Limitation Act, 1963 which runs as under: 18. Effect of acknowledgment in writing. - (1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. (2) Where the writing containing the acknowledgment is undated, oral evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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