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TMI Blog2021 (11) TMI 731X X X X Extracts X X X X X X X X Extracts X X X X ..... nder SICA and 04.05.2016 when the reference was dismissed cannot be excluded form computing the limitation period - The argument of the Learned Counsel that 05.05.2016 should be taken as the first accrual of the cause of action is unsustainable, as the period of limitation i.e. 3 years had already expired before the BIFR reference was made by the Corporate Debtor. The documentary evidence on record does not establish any acknowledgment of liability made in writing, signed by the party against whom the property or right is claimed and hence Section 18 of the Limitation Act, 1963 cannot be made applicable to the facts of the instant case. In the instant case, it is clear that the right to sue accrued when the default occurred way back on 28.02.2002. The material on record does not evidence any acknowledgment of liability under Section 18 of the Limitation Act, 1963 to extend the limitation period. The dismissal of the BIFR reference, relied upon by the Learned Counsel for the Appellant, is also dated 04.05.2016 which is beyond three years form the date of default. The Application under Section 7 was filed on 04.06.2019 for an amount which even according to the Appellant, fell due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eference on 04.05.2016. Learned Counsel for the Appellant had filed an affidavit dated 26.11.2019 giving the timelines for the purpose of Limitation and also attached the RTI Application together with the Reply received from SBI in which the date of NPA was mentioned. It is argued that fresh loan documents were executed under the Restructuring Mechanism right from 25.05.2005 till the revival letter was sent by the Corporate Debtor on 31.01.2007. It is also submitted that the transactions in the Loan Account actively continued till June, 2008. It is contended that the first cause of action accrued on 05.05.2016 after dismissal of both the BIFR references and the Application was filed on 01.10.2018. Without addressing the issues, the Adjudicating Authority has erroneously dismissed the Application on the ground of limitation. 3. Submissions of the Learned Counsel appearing on behalf of the Respondent: Learned Counsel appearing for the Corporate Debtor submitted that the period of limitation had already expired even before the reference was made to the BIFR. The period from 25.04.2006 to 0.05.2016 cannot be excluded for computing the limitation period. Section 22(5) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Assets has not placed on record any such order made by the Board which would give right to Invent Assets to claim the exclusion of period under Section 22(5) of SICA, 1985. 26.Therefore, the claim of exclusion for the purposes of limitation in view of Section 22(5) of SICA, 1985 cannot be accepted. 27. The learned counsel for Invent Assets has relied on the Annual reports for 2015-2016 and 2016-17 of Girnar to show that Girnar has availed credit facilities from BI which were subsequently assigned to Invent Assets and therefore, the period of limitation is extended. 28 Section 18 of the Limitation Act, 1963 is as below:- 18. Effect of acknowledgment in writing. (1) Where, before the expiration of the prescribed period for a suit of 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 acknowledgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaded and this is cited as a reason for the claim in suit being within time. Not describing the acknowledgment as a promise would not deprive plaintiff of the right to have recourse to the legal provision applicable. I understand that after the expiry of the period of limitation nothing short of a clear promise can provide a fresh period of limitation. But such a promise can also be inferred by necessary implication. The Supreme Court in Hiralal v. Badkulal quoted with approval a Privy Council decision in Maniram v. Seth Rupchand 33 Ind Appeals 165 (PC) (C), that an unconditional acknowledgment was sufficient to furnish a cause of action for it implied a promise to pay. A decision of the Allahabad High Court to the contrary (AIR 1935 All 129), was held as not laying down good law. There is nothing ambiguous about Ex.D. It Says that as on 13-11-1974 defendant 1 is indebted to the plaintiff to the extent of ₹ 3,40,652,26 ps. The balance sheet is signed by defendant 3 who is a partner of the firm. Her competence to bind the firm is not disputed. Being thus clear, it amounts to a promise within the meaning of Section 25(3) of the Contract Act. If so, the suit is plainly within ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the main case of the Appellant that the Corporate Debtor was sanctioned various credit facilities by SBI till 30.06.2005 under the CDR Mechanism; that the Appellant had assigned the loan by SBI with an Assignment Agreement dated 22.09.2011; that a demand notice was issued under Section 13(2) of SARFAESI Act, 2002 on 07.11.2011 to the Corporate Debtor as well as to the Guarantors in the loan account of the Corporate Debtor demanding an amount of ₹ 49,78,54,187.32/-; that the Corporate Debtor filed a reference before BIFR vide a Case No. 107/2004 and 338/2004, whereby it was declared as sick unit on 25.04.2006 and then reference was dismissed as not maintainable on 04.05.2016; that the Corporate Debtor challenged the validity of the assignment deed dated 22.09.2011 which is pending before the Hon ble High Court of Madhya Pradesh; that the Application was preferred by the Appellant on 01.10.2018 and therefore it is within three years of the first accrual of cause of action, which is contended to be 05.05.2016, subsequent to the dismissal of the BIFR reference on 04.05.2016. 7. It is seen from the record that three years form the date of NPA i.e. 28.02.2005, as per Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, within three years from the date of the judgment and/or decree or within three years from the date of issuance of the Certificate of Recovery, if the dues of the Corporate Debtor to the Financial Debtor, under the judgment and/or decree and/or in terms of the Certificate of Recovery, or any part thereof remained unpaid. (Emphasis Supplied) 9. At this juncture, it is important to see the Chronological events which are tabled as hereunder:- 1. 28.02.2002 NPA declaration by SBI . 2. 25.04.2006 CD was declared sick by BIFR under SICA 4 years and 58 days 3. 04.05.2016 Dismissal of reference by BIFR 10 years and 9 days 4. 01.10.2018 Filing of Application u/s 7 before Ld. Adjudicating Authority by Appellant 2 years and 149 days 10. The BIFR reference was abated as the Corporate Debtor did not modify the pending reference therefore the deemed date of abatement of refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the right to sue accrues when a default occurs . In B.K. Educational Services Pvt. Ltd. Vs. Parag Gupta and Associates , (2019) 11 SCC 633, it is observed by the Hon ble Supreme Court that if the default 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 an Application . 12. In the instant case, it is clear that the right to sue accrued when the default occurred way back on 28.02.2002. The material on record does not evidence any acknowledgment of liability under Section 18 of the Limitation Act, 1963 to extend the limitation period. The dismissal of the BIFR reference, relied upon by the Learned Counsel for the Appellant, is also dated 04.05.2016 which is beyond three years form the date of default. The Application under Section 7 was filed on 04.06.2019 for an amount which even according to the Appellant, fell due on 14.02.2008 and cannot revive a debt which is no longer due as it is time barred. Therefore, we are of the conside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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