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TMI Blog2020 (12) TMI 872X X X X Extracts X X X X X X X X Extracts X X X X ..... the Advocates are appearing and mark their presence and when the matter is actually called out, at times advocate is unable to reach. If the Authority proceeds further and records the Order that none appeared in spite of repeated calls, we would not give weight to the signature or appearance marked, (which could be even before or after recording of the order) even if the same had not been scored out - Adjudicating Authority considered all issues raised in Reply and which are still being raised and answered them. Thus, no prejudice was caused. Even after hearing Appellants, for reasons this Judgment will show, Corporate Debtor has had no substantial defence - Principles of Natural Justice were not violated. Did unauthorized Person file the Application? - HELD THAT:- It is all comprehensive paragraph which has conferred powers to this Chief Manager. We do not find any substance in the argument that as such General Power of Attorney was executed before coming into force of Insolvency and Bankruptcy Code hence, the said Chief Manager did not have authority. In our view, it is General Power of Attorney and not confined to any particular Act or Acts. We do not find any defect on thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d NPA to recover dues, it moved DRT. If the Corporate Debtor made some payments, as a reasonable prudent person, Bank received the payments. Section 19 of the Limitation Act, 1963 is not subject to any qualification/exception that after Account is declared NPA, if the debtor makes payments on account of debt, the Section would not be applicable. The Adjudicating Authority found that there were not merely repayments but also Acknowledgments. We do not find that the Adjudicating Authority erred in its observations of the Impugned Order to hold that the Application was within Limitation - Appeal dismissed. - Company Appeal (AT) (Insolvency) No. 621 of 2020 - - - Dated:- 18-12-2020 - [Justice A.I.S. Cheema] Member (Judicial) And [V.P. Singh] Member (Technical) For the Appellant: Mr. Nalin Tripathi, Advocate For the Respondent: Ms. Nikita C. Jain, Advocate for R-1. Mr. A.K. Shukla, Advocate for R-2 JUDGEMENT 1. The Respondent No. 2/Union Bank of India filed Application under Section 7 of Insolvency and Bankruptcy Code, 2016 (In short IBC) against M/s. R.K. Infratel Ltd. (Hereinafter referred as Corporate Debtor). The Corporate Debtor is now represented by Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executed before IBC came into force. Thus, according to them, the Application could not be maintained on the basis of signature of such person. Appeal claims that when the matter had come up before Adjudicating Authority for argument on 11th March, 2020 the Learned Counsel for the Appellant appeared but it is stated that the Advocate was not allowed to address the Tribunal and attendance marked of the Learned Counsel in the Order-Sheet was cut out as can be seen from copy of the Order-Sheet filed at Annexure A-8. Thus, the Appellants claim that Principles of Natural Justice were violated and that the Order was passed ex-parte. 4. The Learned Counsel for the Appellant has argued the Appeal on above lines and it is argued that the Adjudicating Authority wrongly held that the Application under Section 7 of IBC was within Limitation. It is argued that under Article 137 of the Limitation Act, 1963 for Application under Section 7 of IBC the period of Limitation is three years and the time began running when the Account of the Corporate Debtor was declared NPA on 30th September, 2014. The date of NPA is seen from the Loan Recall Notice dated 01stOctober, 2014 (Annexure A3 page 36) whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of NPA dated 30th September, 2014 there were documents to show acknowledgments of debt by the Corporate Debtor in writing as well as the Statements of Accounts showed various instalments paid even after declaration of NPA which gives benefit under Section 19 of the Limitation Act. The Learned Counsel stated that the date of NPA would not shift but when instalments are paid and acknowledgments are given of the existing liability the period of Limitation would get extended. 9. We have heard the Learned Counsel for both sides and perused record. Were Principles of Natural Justice Violated? 10. The Appellants have claimed that Principles of Natural Justice were not followed and it is mentioned in Paragraph 7 (p) of Appeal Paper Book that Learned Counsel for the Appellant who appeared on 11th March, 2020 for final argument was not allowed to address the Tribunal and his attendance in the Order-Sheet dated 11th March, 2020 was cut down, and reliance is placed on Order-Sheet Annexure A 8. However there is nothing to show that the Advocate filed any Application before the Adjudicating Authority that he was not being allowed to argue. The Order-Sheet, copy of which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the signature or appearance marked, (which could be even before or after recording of the order) even if the same had not been scored out. The Adjudicating Authority considered all issues raised in Reply and which are still being raised and answered them. Thus, no prejudice was caused. Even after hearing Appellants, for reasons this Judgment will show, Corporate Debtor has had no substantial defence. We do not find that Principles of Natural Justice were violated. Did unauthorized Person file the Application? 11. Coming to the question of authorization, the Application under Section 7 (Annexure A6 page 93 at page 101) shows that the Application under Section 7 was filed under the signature of Chief Manager of the Union Bank of India, Nanpura Branch, Surat, namely Sh. Praveen Kumar Gupta. The document objected to by the Learned Counsel for the Appellant has been filed with Annexure A7 of the Appeal Paper Book. Annexure A7 (Colly) is Reply which the Corporate Debtor filed before the Adjudicating Authority. The Document at Page 123-127 is the General Power of Attorney given by the Bank to said Sh. Praveen Kumar Gupta. Clause 12 of the said General Power of Attorney ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) Letter of Credit 4) 50,00,000 06.03.2013 2) ROS/ADV/1044/13 3) Bank Guarantee 4) 2,00,00,000 1) 06.03.2013 2) ROS/ADV/1044/13 3) Term Loans 4) 14,26,50,000 Total ₹ 20,26,50,000/- 2. AMOUNT CLAIMED TO BE IN DEFAULT AND THE DATE ON WHICH THE DEFAULT OCCURRED (ATTACH THE WORKINGS FOR COMPUTATION OF AMOUNT AND DAYS OF DEFAULT IN TABULAR FORM) ₹ 24,62,98,391/- 31.03.2019 TABULAR FORM HEREUNDER as on GIVEN Account No. Nature of Loan Amount Ledger Balance [RS.] Unpaid Interest + Penalty Other Expenses Date of Default Total Days of Default Total amount claimed to be in Default as on 31.03.2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y). The Adjudicating Authority in Paragraph 5 of the Impugned Order has recorded that the Applicant (i.e. the Bank) has submitted copies of the following documents in support of their claim. The same reads as under: 5. The Applicant has submitted copy of the following documents in support of their claim:- Sl. No. Particulars Page Nos. 1 Application by financial creditor for initiation of corporate insolvency against respondent company under Section 7 of IBC and general affidavit 1-9 2 Power of attorney of authorised signatory of the applicant 10-14 3 Form No. 2 written communication by proposed interim resolution professional 15-17 4 Applicant s sanction advice dated 11.05.2009 18-19 5 Applicant s renewal of limit and sanction of fresh term loan dated 06.03.2010 20-25 6 Applicant s sanctio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 72,00,000/- dated 19.01.2012 ₹ 1,50,00,000/- dated 19.01.2012, ₹ 2,50,00,000/- dated 07.03.2013, ₹ 5,00,00,000/- dated 07.03.2013, ₹ 3,50,00,000/- dated 07.03.2013 104- 123 25 Memorandum of extension of deposit of title deeds registered with sub-registrar dated 22.05.2009 124-136 26 Memorandum of extension of deposit of title deeds registered with sub-registrar, Surat City dated 19.03.2010 137-162 27 Memorandum of extension of deposit of title deeds registered with sub-registrar, Surat City dated 17.01.2012 163-192 28 Instrument of extension of deposit of the title deeds dated 06.03.2013 193-225 29 Valuation report obtained in 2017 226-333 30 CIBIL Report dated 28.12.2018 obtained by applicant 334-360 31 Recall notice dated 01.10.2014 issued by the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ril, 2016 till May, 2018. The corporate debtor by its letter dated 17.11.2018 has also given the details of amount repaid till 30.09.2018 and also acknowledged the amount outstanding in the respective account as on 30.09.2018. Moreover, the corporate debtor in para 29 (a) of its reply, has admitted that it has paid ₹ 16.17 lacs during the financial year 2019-20. Further, the records reveal that from time to time the respondent has executed/entered into various documents acknowledging the debt. This itself shows that the respondent company has acknowledged the debt in the financial year 2019-20. Since the application is filed on 29.04.2019, it is well within time. (Emphasis Supplied) 18. It is argued by Learned Counsel for Respondent Bank that such observations were made by the Adjudicating Authority on the basis of record and the Format Annexure A6 read along with the various documents which were filed. It is argued that record before Adjudicating Authority showed that the Corporate Debtor had issued simple Debit Balance Confirmation Letter dated 07th April, 2016 and that there were regular credit entries even after 07th April, 2016, till May, 2018. The Learned Counsel a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 52.68 39.33 162.78 2015-16 00.00 00.00 00.00 12.39 00.00 12.39 2016.17 00.00 80.25 00.00 00.00 00.00 80.25 2017-18 00.00 110.11 00.00 00.00 00.00 110.11 2018.19 00.00 08.89 00.00 63.22 00.00 72.11 2019.20 00.00 00.00 0.00 16.17 00.00 16.17 Total 98.71 274.01 60.60 243.03 100.32 776.67 (c) The entire instalment paid regularly for TL-I and the loan was repaid as per stipula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned Counsel for Bank stated that the factor of Corporate Debtor making such payments is also reflected in the accounts maintained by the Bank and when even after declaration of NPA and parties proceeding to DRT the Corporate Debtor made payments on account of debt and interest, Section 19 of Limitation Act is attracted. 21. The Learned Counsel for the Appellant referred to above Para 30 of the Reply which was filed by Corporate Debtor before the Adjudicating Authority to submit that the amounts shown as payment of instalments is in an arrangement of cut back which the Appellants agreed even after NPA was declared. It is argued that the Corporate Debtor to maintain good relations accepted that the Bank may deduct particular amount as cut back. Learned Counsel for the parties at the time of arguments submitted that Cut Back is an arrangement whereby the Corporate Debtor agreed that from the payments the Corporate Debtor receives from its customers, the Bank could directly deduct particular percentage towards its dues. Learned Counsel for Appellant argued that in this arrangement Bank directly deducts 10 % from Receipts against its dues and this may not be taken as deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is important to first set out the reason for the introduction of Section 238-A into the Code. This is to be found in the Report of the Insolvency Law Committee of March 2018, as follows: 28 APPLICATION OF LIMITATION ACT, 1963 28.1. The question of applicability of the Limitation Act, 1963 (the Limitation Act) to the Code has been deliberated upon in several judgments of NCLT and NCLAT. The existing jurisprudence on this subject indicates that if a law is a complete code, then an express or necessary exclusion of the Limitation Act should be respected. In light of the confusion in this regard, the Committee deliberated on the issue and unanimously agreed that the intent of the Code could not have been to give a new lease of life to debts which are time-barred. It is settled law that when a debt is barred by time, the right to a remedy is time- barred. This requires being read with the definition of debt and claim in the Code. Further, debts in winding-up proceedings cannot be time-barred, and there appears to be no rationale to exclude the extension of this principle of law to the Code. 28.2. Further, non-application of the law on limitation creates the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication 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. (Emphasis supplied) 23.3. From the above it can be seen that there was no intention to give new lease of life to debts which are time-barred. Thus, the consideration is whether a given debt is time-barred. It is also clear from the above that for Applications under Section 7 of IBC the Hon ble Supreme Court found that residuary Article 137 in the Third Division of Limitation Act dealing with Applications was the Article applicable. The Judgment shows that if there is delay in filing of Application one has to go to the Sections where Section 5 would apply. Section 5 would be relevant if an Application which is time-barred and extension of prescribed period is sought showing sufficient cause for not filing the Application within prescribed period. 23.4 In subsequent Judgments in the matter of Gaurav Hargovindbhai Dave Babulal Vardharji Gurjar , it is argued this factum was reiterated that for Section 7 application time begins to run from dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of acknowledgement in writing: (1) Where, before the expiration of the prescribed period for a suit of application in respect of any property or right, an acknowledgement 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 acknowledgement was so signed. (2) Where the writing containing the acknowledgement is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872, oral evidence of its contents shall not be received. Explanation. For the purposes of this Section,- (a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set-off, or is addressed to a person other than a person entitled to the property or right; (b) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 07th April, 2016 and acknowledged the debt is not correct. The Adjudicating Authority further referred to the account statements showing regular credit entries after 7th April, 2016 till May, 2018. Reference is made to letter dated 17.11.2018 of Corporate Debtor giving details of amounts repaid till 30.09.2018 and acknowledging amount outstanding, in respective accounts as on 30.09.2018. The Appellants have not shown that these findings are incorrect or that they are not borne from Record. Rather the Reply filed by the Appellants before the Adjudicating Authority (Annexure A7) portions of which we have reproduced above in Paragraphs 29 to 31 clearly show that various repayments were indeed made by the Corporate Debtor even after the Bank declared their Accounts as NPA. The Account was declared NPA on 30th September, 2014. There was Balance Confirmation on 07th April, 2016 and the Reply of the Corporate Debtor Paragraph 30 reproduced above claimed that the Appellants offered cut back approximately 10 % on the receipts and deposited ₹ 154.67 lakhs with the Bank during the period 12th June, 2017 till date. We are not impressed with the arguments of the Learned Counsel for ..... 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