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TMI Blog2021 (4) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... eeding not being a recovery proceeding, this argument cannot be accepted. The date of default mentioned in the Petition relates to pre-assignment era and the said default cannot be related to post assignment proceedings - The Hon ble Supreme Court in Babulal Vardharji Gurjar s case [ 2020 (8) TMI 345 - SUPREME COURT ] on the applicability of Section 18 of the Limitation Act while referring to Para No. 21 of the decision in Jignesh Shah case [ 2019 (9) TMI 1121 - SUPREME COURT ] categorically held that the same relates to the suits or other proceedings wherever it could apply and where the period of limitation gets extended because of acknowledgement of liability. This is not a suit for recovery and hence Section 18 of the Limitation Act will in no manner impact the limitation within which winding up proceedings is to be filed. The debt is grossly barred by limitation and cannot be held to be due for the purpose of the Petition under section 7 of the Code - petition dismissed. - CP (IB) No. 897/MB/2019 - - - Dated:- 8-4-2021 - Hon ble Janab Mohammed Ajmal, Member (Judicial) And Hon ble Shri V. Nallasenapathy, Member (Technical) For the Petitioner : Mr. Mustafa Doctor, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Petition, the amount claimed is ₹ 522,46,05,338/- and the date of default was mentioned as 1998. It is further mentioned that the Corporate Debtor s Balance Sheet for the year 2013-14 reflects this liability. g. The Corporate Debtor failed and neglected to discharge its debt. Hence, the Petitioner, on 04/03/2019, came up with the present Petition under Section 7 of the Code. III. In reply to the pleadings the Corporate Debtor submitted the following: a. That the date of default is 23.06.1998 (mentioned in the Petition as 1998 only). Since the Petition having not been filed within 3 years of the date of default, would be barred by limitation. b. The Petitioner does not have any legal or enforceable and recoverable claim to initiate any present proceeding since cause of action accrued on 23.06.1998. c. Relying on the judgement of B. K. Educational Services Private Limited v. Parag Gupta Associates [2018 SCC online SC 1921], wherein the Hon ble Supreme Court held that Article 137 of the Limitation Act is applicable to the Code, it is submitted that since default occurred more than 20 years prior to the filing of the Petition, the same is barred by limita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it could not be 23rd June 1998 as pleaded by the Petitioner; and iv. The default for the purposes of the Code is actual non-payment of the debt. Neither the provisions for extension of limitation nor the agreement as relied by the Petitioner would extend the date of default. v. The Assignment Agreement dated 27/09/2013, deed of mortgage dated 24/03/2014 or letter of acknowledgement dated 05/12/2016 and books of accounts / balance sheet as on 31/03/2014 relied by the Petitioner for the purpose of acknowledgement under Section 18 of the Limitation Act, came into existence after a period of 3 years of accrual of cause of action on 23/06/1998. Section 18 of the Limitation Act says that acknowledgement shall be before the expiration of the period of limitation prescribed for Suit or Application in respect of any property or right. All the above said documents are subsequent to 3 years of the date of default i.e., 23/06/1998. Hence this Petition is barred by limitation. IV. The learned Senior Counsel for the Petitioner submits as below: i. The Corporate Debtor is a party to the Assignment Agreement, wherein it had confirmed the liability of ₹ 154,54,30,204/- to TFCI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ception to the provisions of Section 18 of the Limitation Act. ii. To butters his submissions the learned Senior Counsel relied on the following cases. Dinesh Chokshi vs. Rahul Vasudeo Bhaat (2012 SCC Online Bom 1585) R. Suresh Chandra Co. vs. Vadnere Chemical Works and Ors. (AIR 1991 BOM 44) Madishetti Shekhar vs. Pulivala Komureli (AIR 2008 AP 131) iii. The aforesaid Judgments reiterate the position when an acknowledgement was accompanied by an express promise to pay a time barred debt; such acknowledgment revives the time barred debt, despite being made beyond the prescribed period of limitation. Such acknowledgment constitutes an agreement to pay the time barred debt. Such a debt continued to be enforceable by virtue of Section 25(3) of the Contract Act. iv. The judgements in Babulal Vardharji Gurjar s case (supra) and Jagdish Prasad Sarada s case (supra), does not deal with Section 25(3) of the Contract Act and reliance on those judgements by the Counsel for the Corporate Debtor is entirely misplaced. v. Based on the ratio laid down in Thakkar s case (supra), it is no longer open for the Corporate Debtor to argue that the provisions of Section 18 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Para 27) (Wherein it was held that the Scheme of the Code is to ensure that when default takes place in the sense debt becomes due and is not paid, the Insolvency Resolution Process begins ---- The Code gets triggered when the amount defaulted is ₹ 1,00,000/- or more ---- It is at the stage of Section 7(5), where the Adjudicating Authority is to be satisfied that a default has occurred, that the Corporate Debtor is entitled to point out a default has not occurred in the sense that debt which may also include disputed claim is not due. A Debt may not be due if it is not payable in law or in fact.) ii. B.K. Educational Services Private Limited (supra) (Para 42) (Wherein it was held it is thus clear that since the Limitation Act is applicable to Application filed under Section 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 the default occurs. If the default occurred over 3 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng cause of action.) vii. Gaurav Hargovindbhai Dave vs. Assets Reconstruction Company (India) Limited and Another (Supra) (In this case NCLT admitted a Section 7 Petition filed on 03.10.2017 wherein the date of default is 21.07.2011 by applying Article 62 of the Limitation Act wherein the period of limitation is 12 years from the date on which the debt has become due. The Hon ble NCLAT applied another reason that the time of limitation would begin to run from 01/12/2016 i.e., the date on which the Code was brought into force. The Hon ble Supreme Court allowed the Appeal and the Judgments of NCLT and Hon ble NCLAT were set aside.) viii. Sagar Sharma and Another vs. Phoenix ARC Private Limited and Another (MANU/SC/1357/2019) (The Hon ble Supreme Court disapproved the proposition that the date of commencement of the Code can be the starting point of limitation and further Article 62 of the Limitation Act is not applicable.) held as below: 30. When Section 238-A of the Code is read with the abovenoted consistent decisions of this Court in Innoventive Industries, B.K. Educational Services, Swiss Ribbons, K. Sashidhar, Jignesh Shah, Vashdeo R. Bhojwani, Gaurav Hargovindbh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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. 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 winding up petition filed beyond three years from the date of default was barred by time. 32.1. Even in the later decisions, this Court has consistently applied the declaration of law in B.K. Educational Services (supra). As noticed, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n behalf of the Respondent No. 2 at the later stage cannot be permitted. It remains trite that the question of limitation is essentially a mixed question of law and facts and when a party seeks application of any particular provision for extension or enlargement of the period of limitation, the relevant facts are required to be pleaded and requisite evidence is required to be adduced. Indisputably, in the present case, the Respondent No. 2 never came out with any pleading other than stating the date of default as '08.07.2011' in the application. That being the position, no case for extension of period of limitation is available to be examined. In other words, even if Section 18 of the Limitation Act and principles thereof were applicable, the same would not apply to the application under consideration in the present case, looking to the very averment regarding default therein and for want of any other averment in regard to acknowledgement. In this view of the matter, reliance on the decision in Mahaveer Cold Storage Pvt. Ltd. does not advance the cause of the Respondent No. 2 . iii. The ratio laid down in the above said case is squarely applicable to the facts of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have no application. In that view of the matter the Petitioner s contention that Section 25(3) of the Contract Act would apply as an exception to Section 18 of Limitation Act would not come to the aid of the Petitioner as indicated supra. viii. The Hon ble Supreme Court in the case of Sagar Sharma K. (supra) held at para 3 as below Article 141 of Constitution of India mandates our judgements are followed in letter and spirit. The date of coming into force of IB 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 Limitation Act which will apply to such Applications. ix. In view of the above categorical rulings by Hon'ble Supreme Court and considering the facts of the case on hand, the judgment in Yogeshkumar Jaswantlal Thakkar (supra) is distinguishable and hence the same is of no assistance to the Petitioner. x. In view of the above discussions, we are unable to accept any of the contentions raised by the Petitioner on the point of limitation. We hold that debt is grossly barred by limitation and cannot be held to be due for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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