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TMI Blog2021 (12) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... e Respondent No. 1/Bank/Applicant under Section 7 of Insolvency and Bankruptcy Code, 2016 (in short 'IBC'). 2. The 'Adjudicating Authority' while passing the Impugned Order dated 7th February, 2020 in IBA/51/KOB/19, amongst other things, observed that the Application was filed in the capacity of 'Financial Creditor' for final debt of Rs. 14,24,90,488/- (Rupees Fourteen Crores Twenty Four Lakhs Ninety Thousand Four Hundred Eighty Eight) recoverable from the 'Corporate Debtor' viz., Trivandrum International Health Services Ltd and that the documents produced on record proved that disbursement of various loan facilities granted by the 'Financial Creditor' to the 'Corporate Debtor' and consequently in the light of facts and circumstances, came to the conclusion that existence of 'debt' and 'default' was reasonably established by the 'Financial Creditor' as a major constituent for admission of a petition and admitted the petition by declaring moratorium etc. APPELANT'S CONTENTIONS: 3. According to the Learned Counsel for the Appellant the 'Corporate Debtor'/ Trivandrum International Health Services Ltd engaged in the business of 'Health Care Services' for its expansion under the dre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Debt Recovery Tribunal, Ernakulam and the same is pending. As a matter of fact, the 'Corporate Debtor' had addressed a letter dated 31.07.2017 to the 'Financial Creditor' i.e. the Respondent No. 1/Bank with a request to withhold SARFAESI proceedings. 9. The Learned Counsel for the Appellant proceeds to submit that a meeting was convened on 25.05.2017 by the 'Corporate Debtor' and other lenders in the presence of the Hon'ble Finance Minster of Kerala to discuss the restructuring of loan and repayment of arrears and later on, a meeting took place on 15.06.2017 to provide a reasonable opportunity to the 'Corporate Debtor' to settle the arrears of the debt. A true copy of 'One Time Settlement' (in short 'OTS') dated 06.12.2018 was sent by the 'Corporate Debtor' to the Financial Creditor and the Respondent No. 1/Bank replied on 12.12. 2018 by expressing its interest in the proposal submitted by the 'Corporate Debtor'. 10. The Learned Counsel for the Appellant submits that the 'Corporate Debtor' had brought for OTS of credit facility and proposed a final offer of Rs. 8.15 Crores as full and final settlement and the said settlement proposal was dated 11.01.2019, which was approved by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BMISSIONS: 16. The Learned Counsel for the Respondent No. 1/Bank submits that the 'Corporate Debtor' had addressed a letter dated 11.01.2019 to the Respondent No. 1/Bank proposing a refund of OTS Plan Rs. 1.58 Crore as Full and Final Settlement which is an 'acknowledgment' within the meaning of Section 18 of the Limitation Act fresh period of limitation for filing an Application under Section 7 of IBC. 17. The Learned Counsel for the Respondent No.1/Bank projects an argument that the 'Corporate Debtor' after its account was classified as 'NPA' on 30.05.2016 and before the lapse of the limitation period had other communications which constitutes an 'acknowledgment' for the purpose of Section 18 of the Limitation Act, 1963. Added further, a meeting was convened by the 'Corporate Debtor', 'Financial Creditor' and other lenders in the presence of Hon'ble Finance Minister, Kerala, to discuss on 'Restructuring' of the loan facility and repayment of arrears and thereafter, on 06.12.2018, sent a letter proposing OTS of credit facility, which was approved by the Respondent No. 1/Bank in principle as per Sanction Letter dated 22.01.2019. In this regard, the Learned Counsel of the Responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had offered guarantee in respect of loan transaction, the right of the financial creditor to initiate action against such entity being a corporate debtor (corporate guarantor), would get triggered the moment the principal borrower commits default due to nonpayment of debt. Thus, when the principal borrower and/or the (corporate) guarantor admit and acknowledge their liability after declaration of NPA but before the expiration of three years therefrom including the fresh period of limitation due to (successive) acknowledgments, it is not possible to extricate them from the renewed limitation accruing due to the effect of Section 18 of the Limitation Act. Section 18 of the Limitation Act gets attracted the moment acknowledgment in writing signed by the party against whom such right to initiate resolution process under Section 7 of the Code enures. Section 18 of the Limitation Act would come into play every time when the principal borrower and/or the corporate guarantor (corporate debtor), as the case may be, acknowledge their liability to pay the debt. Such acknowledgment, however, must be before the expiration of the prescribed period of limitation including the fresh period of lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction is a Trust property. In short, the stand of the 'Corporate Debtor' was that Trust property cannot be proceeded with by the 'Adjudicating Authority' in Insolvency Resolution Process and further that the Company had availed Long Term Fund of Rs. 31.22 Crores from Dr. K.N. Pai and that the assets of the Company include the funds availed from the Trust. 23. The 'Corporate Debtor' took a stand before the 'Adjudicating Authority' that the Respondent No. 1/'Financial Creditor' had approached the Debt Recovery Tribunal, Ernakulam in O.A. No. 156 of 2018 and that the 'Corporate Debtor' is very much prejudiced because of the plurality of the proceedings initiated in numerous foras. Appraisal: 24. As seen from Section 7 Application in IBA/51/KOB/19, filed by the Respondent No. 1/Bank, before the 'Adjudicating Authority', on 10.12.2019, it is evident that the Respondent No. 1/Bank had issued sanction letter dated 30.03.2015 in favour of the 'Corporate Debtor' approving 'Cash Credit Facility' of Rs. 1.00 Crore and Term Loan Facility of Rs. 15.00 Crores subject to the terms and conditions thereof and the said sanction was amended by the letters dated 25.05.2015 and 08.07.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... national Health Services Ltd addressed to the Chief Manager of the Respondent No. 1/Bank which exhibits that a request was made for fixing 'OTS' amount as Rs. 8.15 Crores, which shall be fulfilled within 180 days of sanction, 20% of this amount to be paid within 90 days of the sanction and 5% will be paid on receiving sanction and the balance 15% within 90 days etc. 29. To put it precisely, the Respondent No. 1/Bank through its letter dated 22.01.2019 (without prejudice) had addressed a communication (without prejudice) to the Managing Director of the 'Corporate Debtor' inter alia, stating that in-principle sanction was only valid upon payment of 5% of the OTS and as per the cut off dated 29.01.2019 and further that this sanction letter was issued by it without prejudice to any right and remedies available to it and it reserves its right to proceed accordingly. 30. It is to be pointed out that an 'acknowledgement' must relate to a present subsisting liability. The word 'occurring' in Section 18 of the Limitation Act, 1963 means admission of the truth pertaining to one's own liability, which in turn may be expressed or employed. 31. In law, a writing to be 'acknowledgment' of lia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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