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TMI Blog2020 (10) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... e years period prior to the date of filing the Application, the Application would be time-barred. Admittedly, in this case the Corporate Debtor was declared to be Non-performing Asset on 28th May 2014. The date was later changed to 31st January 2010. Therefore, if the position taken by the Financial Creditor Bank is taken as correct, Default occurred on or before 31st January 2010. The period of Limitation for the same would expire on 30th January 2013. The Application for initiation is filed on 23rd July 2018 - 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 . The Application filed under Section 7 of the Code by the Financial Creditor is barred by Limitation - Application dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... king capital limits of the Company be enhanced. 6. Further, the case of the Appellant is that the Consortium entered into a Master Joint Lenders Forum Agreement to deal with the subject account. In the meantime, it was decided that a Concurrent Auditor be appointed. 7. The account of 'Corporate Debtor' was declared to be an NPA by the State Bank of India on 28th May 2014. The Punjab National Bank also declared the account of 'Corporate Debtor' as NPA on 30th June 2014. Later on the Deputy General Manager, State Bank of India, given the failure of restructuring, requested that the date of NPA of the 'Corporate Debtor' be changed to 31st January 2010, which was approved on 10th July 2014. 8. The Appellant further contends that the State Bank of India issued a notice under Section 13(2) of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (from now on referred to as the 'SARAFAESI Act') on 12th August 2014, calling upon the 'Corporate Debtor' to repay a sum of ₹ 71,27,47,889/-. The Corporation Bank also declared the account of the 'Corporate Debtor' as 'Non-Performing As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther pending proceedings will be held in abeyance. Pending applications stand disposed of." 13. As per directions of the Hon'ble Supreme Court, we have re-examined the question of Limitation, having regard to the law laid down by the Hon'ble Supreme Court in B K Educational Services Private Limited vs Parag Gupta and Associates, 2018 SCC OnLine SC 1921 and Sagar Sharma and Another vs Phoenix ARC Private Limited & Another, 2019 SCC OnLine SC 1332. 14. We have heard the arguments of the Learned Counsel for the parties and perused the record. 15. Admittedly, in the year 2007 State Bank of India granted credit facilities to the Corporate Debtor M/s Metal Closures Private Limited. The account of the Corporate Debtor was classified as NPA by SBI on 31st January 2010. However, it was restructured on 17th February 2010, and the Punjab National Bank entered into the Consortium by sanctioning certain credit facilities to the Corporate Debtor on 26th June 2010. As a member of Consortium, the UCO Bank sanctioned 'Working Capital Cash Credit' and 'Letter of Credit Limit 'to the Corporate Debtor on 11th April 2012. The Consortium executed the Master Joint Lende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t can only be extended in the manner provided in the Limitation Act. For example, an acknowledgment of liability under Section 18 of the Limitation Act would certainly extend the limitation period, but 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, by somehow keeping the debt alive for the purpose of the winding-up proceeding." 19. In Sagar Sharma v. Phoenix Arc (P) Ltd., (2019) 10 SCC 353: 2019 SCC OnLine SC 1332 at page 354, Hon'ble Supreme Court has observed: "3. Article 141 of the Constitution of India mandates that our judgments 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" are petitions which are filed under the Code, it is Article 137 of the Limitation Act which will apply to such applications." (emphasis supplied) 20. In case of Babulal Vardharji Gurjar Vs Veer Gurjar Aluminium Industries Pvt Ltd and Another 2020 SCC Online ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or initiation is filed on 23rd July 2018. The contention of the Respondent that their right accrued only on 01st December 2016 is not consonant to the ratio of judgement in B K Educational Services (supra) wherein the Hon'ble Supreme Court has held that "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". 23. In view of the law enunciated by the Hon'ble Supreme Court of India in the above-mentioned cases and the facts and circumstances of this case, it is clear that the Application filed under Section 7 of the Code by the Financial Creditor is barred by Limitation. 24. Given the findings above, we have no other option but to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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