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TMI Blog2022 (12) TMI 979X X X X Extracts X X X X X X X X Extracts X X X X ..... een from the Balance Sheets that there has been an acknowledgement of liability upto the years 2018-19. The contention of the Learned Counsel for the Respondent that the Restructuring Letters were sanctioned beyond three years of the date of NPA and therefore is barred by Limitation is untenable as at the cost of repetition we hold that as per the ratio of the Hon ble Apex Court in LAXMI PAT SURANA VERSUS UNION BANK OF INDIA ANR. [ 2021 (3) TMI 1179 - SUPREME COURT] the date of default cannot be strictly construed as the date of NPA. The material on record shows that the Corporate Debtor has been consistently acknowledging its debt from 31.03.2010 onwards by way of letters in Restructuring Packages, and also by way of communication the Appellant/Financial Creditor for Restructuring, apart from the liability being shown in the Balance Sheets. The Section 7 Application is not barred by Limitation, and that there is a debt and default, and the facts of the instant case are squarely covered by the ratio of the Hon ble Apex Court in Dena Bank (now Bank of Baroda) - appeal allowed. - COMPANY APPEAL (AT) (INSOLVENCY) NO. 840 of 2021 - - - Dated:- 22-12-2022 - [ Justice Anant Bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1963 mentioned that the right to sue accrues by the Default occurs, the default has occurred over three year prior to the filing of Petition and the Petition is barred by the Limitation under Limitation Act, 1963. In the instant case, it can be seen from the facts of the given case the default occurred as on 31.03.2009 or on 28.06.2012, a recovery certificate issued by the Debt Recovery Tribunal (DRT) on 22.11.2016, the restructuring package as on 07.11.2014, 30.06.2017. 31. The restructuring package further envisaged the payment of instalment from operational cash flows and therefore. there can be no default attributed to the Corporate Debtor. It is the case of the Petitioner that thought the defaults occurred on 31.03.2009. It has balance confirmation letter for the period 2010, 2011 and 2012 and that the Corporate Debtor had made part payment in all the credit facilities till 28.09.2018. Further, they are relying on the acknowledgment of debt in the balance sheet of the Corporate Debtor. The balance sheet confirms that there is no default on behalf of the Corporate Debtor for year 2016 and 2019. The Auditor Report at page 781 and 829 is reproduced below: ... viii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Learned Sr. Counsel, Mr. Malhotra that the liability towards Edelweiss was acknowledged through Restructuring Letters, Request Letters and also in the Balance Sheets. Hence, though the date of NPA is 30.06.2009, the letter of acknowledgement letter dated 31.03.2010 to 31.03.2012 should be taken into consideration together with the Demand Notice dated 06.08.2012 under Section 13(2) of SARFAESI Act, 2002 issued to the Corporate Debtor by State Bank of India ( SBI ) demanding a payment of Rs.62,96,33,561.36/-. The Counsel also gave the chronology of events detailed as follows: On 09.03.2014, SBI had executed the Assignment Agreement in favour of the Appellant. On 07.11.2014, the Appellant sanctioned a Restructuring Package in favour of the Corporate Debtor and its associates, signed by the Corporate Debtor and therefore acknowledges its liability. It is submitted that the liability is also acknowledged in the Balance Sheets for Financial Year 2014 15, 2015 16, 2016 17, 2017 18 2018 19. On 22.09.2016, the first Restructuring Package was revoked by the Appellant and Possession Notice of the Mortgage Property was issued under SARFAESI Act, 2002. On 18.11.2016, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appearing on behalf of the Respondent: Learned Counsel appearing for the Respondent vehemently argued that the account of the Corporate Debtor was declared an NPA way back on 30.06.2009, the first Restructuring Scheme was revoked on 22.09.2016; while the Restructuring Package was in effect, Edelweiss secured the Recovery Certificate from DRT Pune, from the entire claim amount concealing the existence of the Restructuring Package. The second Restructuring Package was sanctioned on 30.07.2017, which was subsequently cancelled on 01.06.2018. The said Revocation was objected to by the Corporate Debtor , vide letter dated 14.06.2018, highlighting all the compliances made in terms of the second Restructuring Package. A Sale Notice was issued on 12.04.2019 and a fresh SARFAESI Notice was issued on 06.12.2019 pursuant to which the date of NPA was stated to be 28.06.2012. Thereafter on 31.01.2020, a Reply was addressed by the Corporate Debtor to the Notice dated 17.02.2019 and therefore the Section 7 Application is barred by Limitation . The letter of acknowledgements relied upon by the Appellant between 31.03.2010 and 31.03.2012 cannot be relied upon as there is no evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tone of the ratio of the Hon ble Apex Court in Dena Bank (now Bank of Baroda) Vs. C. Shivakumar Reddy Anr. (2021) 10 SCC 330 , wherein the Hon ble Apex Court has clearly laid down that Judgement/decree for money or Certificate of Recovery or Arbitral Award in favour of the Financial Creditor , constitutes an acknowledgement of debt and gives rise to a fresh cause of action, provided it is within three years of the default: 130. We see no reason why the principles should not apply to an application under Section 7 IBC which enables a financial creditor to file an application initiating the corporate insolvency resolution process against a corporate debtor before the adjudicating authority, when a default has occurred. As observed earlier in this judgment, on a conjoint reading of the provisions of the IBC quoted above, it is clear that a final judgment and/or decree of any court or tribunal or any arbitral award for payment of money, if not satisfied, would fall within the ambit of a financial debt, enabling the creditor to initiate proceedings under Section 7 IBC. 131. It is not in dispute that Respondent 2 is a corporate debtor and the appellant Bank, a financi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e [Gaurav Hargovindbhai Dave v. Asset Reconstruction Co. (India) Ltd., (2019) 10 SCC 572 : (2020) 1 SCC (Civ) 1] cited by Mr Shivshankar, this Court had no occasion to consider any proposal for one-time settlement. Be that as it may, the balance sheets and financial statements of the corporate debtor for 2016-2017, as observed above, constitute acknowledgment of liability which extended the limitation by three years, apart from the fact that a certificate of recovery was issued in favour of the appellant Bank in May 2017. The NCLT rightly admitted the application by its order dated 21-3-2019 [Dena Bank v. Kavveri Telecom Infrastructure Ltd., 2019 SCC OnLine NCLT 7881]. 140. To sum up, in our considered opinion an application under Section 7 IBC would not be barred by limitation, on the ground that it had been filed beyond a period of three years from the date of declaration of the loan account of the corporate debtor as NPA, if there were an acknowledgment of the debt by the corporate debtor before expiry of the period of limitation of three years, in which case the period of limitation would get extended by a further period of three years. 141. Moreover, a judgment and/o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t - not the date of notifying the loan account of the corporate person as NPA. Further, the expression default has been defined in Section 3(12) to mean non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be. In cases where the corporate person 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 non-payment 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 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 acknowledgment 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 (1 of 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) the word signed means signed either personally or by an agent duly authorised in this behalf, and (c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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