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TMI Blog2021 (2) TMI 450X X X X Extracts X X X X X X X X Extracts X X X X ..... 1956PLC000882 which was incorporated on 25.01.1956 and that its Authorized Share Capital and Paid up Capital is Rs. 3,00,00,000/- and Rs. 2,91,70,000/- respectively. The Registered Office of the Corporate Debtor as per the Application is stated to be situated at 6/1A1 & 6/1B1, Sy. No.6, behind Escorts Ltd, Ernavur Village, Tiruvottiyur, Chennai, Tamilnadu, 600019. 3. Part - Ill of the Application discloses the fact that the Financial Creditor had proposed the name of one Mr. Chinnam Poorna Chandra Rao, as the Interim Resolution Professional, who has also filed his consent in Form 2. 4. From Part-IV of the Application, it is seen that the Financial Creditor has disbursed a sum of Rs. 134.88 Crores to one M/s. Victory Electricals Limited (hereinafter referred to as "Principal Borrower") comprising of Term Loan and working capital limits. In Part IV of the Application, it is stated that the Default committed by the Principal Borrower under Term Loan Facilities is 31.05.2012 and that of working capital facilities is 09.03.2012. The present Application is filed before this Tribunal on 06.09.2019 against the Respondent who stood as a Corporate Guarantor in order to se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest accrued thereon to the Financial Creditor and further declared that it along with the Principal Borrower are jointly and severally responsible for the discharge of all such monies and dues payable to the Financial Creditor. 7. It was submitted by the Learned Counsel for the Financial Creditor that the Respondent executed a revival letter dated 01.06.2012 under section 18 of the Limitation Act, 1963 acknowledging the liability for the payment of all outstanding with interest cost, charges and expenses and other monies due and payable by the Respondent / Corporate Guarantor. It was further submitted that by the Counsel for the Financial Creditor that from the Financial Statement for the year 2015 of Respondent, it is seen that the Respondent has declared that it has given guarantee to the Financial Creditor for the Financial Assistance availed by the Principal borrower. 8. The Learned Counsel for the Financial Creditor submitted that the Principal Borrower has offered One Time Settlement vide its letter dated 18.05.2016 and the Financial Creditor has also approved the OTS of Rs. 68 Crores vide its letter dated 06.10.2016 and subsequently, the Financial Creditor by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Financial Creditor relied upon the judgement of the Hon'ble Supreme Court in the matter of State Bank of India -Vs- Indexport Registered And Ors (1992 AIR 1740) and also Cannanore Spinning & Weaving Mills Ltd and Ors ((2002) 5 SCC 54). 14. It was submitted by the Learned Counsel for the Financial Creditor that the liquidation value of the Principal borrower is only a sum of Rs. 27.95 Crores as against the claim of the Applicant amounting to a sum of Rs. 275.01 Crores and if the CIRP in relation to the Respondent / Corporate Guarantor is initiated by this Tribunal, the Financial Creditor does not stand to unjustly enrich or get double dividend by proceeding separately against the Corporate Guarantor. Further, it was submitted that the instant Application satisfies the requirements of the IBC, 2016 and more particularly Section 7(5)(a) of IBC, 2016 and as such the present Application is required to be admitted by this Tribunal. 15. It is seen from the record of proceedings, that this Tribunal vide Order dated 20.02.2020 has directed the Petitioner to file the Written Submissions in relation to the maintainability of this Petition in view of the judgement rendered ..... 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Dave and Sagar Sharma respectively, the following basics undoubtedly come to the fore: (a) that the Code is a beneficial legislation intended to put the corporate debtor back on its feet and is not a mere money recovery legislation; (b) that CIRP is not intended to be adversarial to the corporate debtor but is aimed at protecting the interests of the corporate debtor: (c) that intention of the Code is not to give a new lease of life to debts which are time-barred: (d) that the period of limitation for an application seeking initiation of CIRP under Section 7 of the Code is governed by Article 137 of the Limitation Act and is, therefore, three years from the date when right to apply accrues; (e) that the triager for initiation of CIRP by a financial creditor is default on the part of the corporate debtor: that is to say, that the right to apply under the Code accrues on the date when default occurs; (f) that default referred to in the Code is that of actual non-payment by the corporate debtor when a debt has become due and payable; and (g) that if default had occurred over three years prior to the date of filing of the application: the application would be time-barred save and exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble Supreme Court and Hon'ble NCLAT that the OTS letter does not extend the period of limitation. Even for the sake of argument if the said OTS letter is taken into consideration, the same was obtained only on 06.10.2016 which is much after the expiry of 3 years from the date of default i.e. 31.05.2012. Therefore, in all respects, it is seen that the claim of the Financial Creditor is against a time barred debt. As regards the contention of the Financial Creditor that it is a continuous cause of action, the Supreme Court in the matter of Vashdeo R Bhojwani -Vs-Abhyudaya Co-operative Bank Ltd. & Anr in Civil Appeal No. 11020 of 2018, has rejected the said contention and held that for filing an Application under Section 7 of IBC, 2016, the time starts ticking when the default occurs. Further, it is to be noted here that Section 18 of the Limitation Act, only extends the period of limitation and it does not shift the date of default. In the present case, the Financial Creditor has not placed on record any Revival Letter obtained from the Respondent after 01.06.2012. From the records, it is also to be noted that the Account of the Principal Borrower had been declared as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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