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TMI Blog2023 (4) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... me settlement' (in short 'OTS') proposal of the 'Respondent'. 3. The 'Appellant' also submitted that the 'Respondent' itself had no objection to admission of the Application under Section 7 of the I & B Code, 2016 and initiation of the 'Corporate Insolvency Resolution Process' as the 'Respondent' was inclined for Resolution of the company under I & B Code, 2016. 4. The Counsel for the Appellant stated that the 'Adjudicating Authority' erred in calculating the limitation period. 5. Aggrieved by the 'impugned order' dated 06.01.2021, the present appeal has been filed before this 'Appellate Tribunal'. 6. Heard the Counsel for the Parties and perused the records made available including cited judgments of the Hon'ble Supreme Court of India (and earlier orders of this 'Appellate Tribunal'). 7. It is the case of the 'Appellant' that he is a 'Secured Financial Creditor' in term of Section 5(8) r/w Section 5(7) of the I & B Code, 2016, in respect of 'Corporate Insolvency Resolution Process' of M/s Victory Electricals Ltd. (Principal Borrower). It is further case of the 'Appellant' that as per terms and conditions of the said `Loan', the `Loan', was secured by way of Guarantee, Indemni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Principal Borrower or the Respondent herein. 11. The Counsel for the Appellant stated that the Principal Borrower furnished an 'OTS' proposal on 13.03.2014 for Rs. 50 Crores, which was not accepted by the 'Appellant' being a lower offer. Subsequently, the Principal Borrower gave several 'OTS' proposals, modified 'OTS' proposals and each such 'OTS' proposal tantamounted to fresh 'acknowledgment of debt' in terms of Section 18 of Limitation Act, 1963 and further this liability of the 'Respondent' was always coextensive with the Principal Borrower in terms of Section 128 of Indian Contract Act, 1872 and therefore a deemed acknowledgement of liability by the Guarantor/ Respondent herein. 12. The Counsel for the Appellant mentioned that a suit for recovery was filed by the 'Appellant' before the Debt Recovery Tribunal, Hyderabad, being OA No. 925/2014, inter-alia against the Principal Borrower and the 'Respondent'. The Counsel for the Appellant further stated that the 'Respondent' had categorically disclosed in its financial statement for the year 2015 that security has been furnished by the 'Respondent' in favour of the 'Appellant', which also tantamounted to fresh acknowledgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17. The Counsel for the Appellant emphasised that the 'Adjudicating Authority' has committed grave error in reckoning the limitation period taking date of default as 31.05.2012 and erroneously recording 'OTS' letter dated 06.10.2016 as acknowledgment of debt and ignoring various 'OTS' proposals of the Principal Borrower prior to acceptance of the 'OTS'. 18. The Counsel for the Respondent admitted that the 'Respondent' herein along with three Ex- Directors had extended the guarantee on behalf of the Principal Borrower M/s Victory Electrical Ltd. 19. The Counsel for the Respondent stated that the 'Appellant' filed an Application under Section 7 of the I & B Code, 2016 on 27.08.2019 against the 'Respondent' herein, prior to which the moratorium was declared in 'Corporate Insolvency Resolution Process' started against the Principal Borrower M/s Victory Electrical Ltd. under Section 9 of the I & B Code, 2016 in CP/1499/IB/2018 on 24.04.2019. The 'Corporate Insolvency Resolution Process' with regard to holding company M/s Victory Transformers and Switchgears Ltd. (in short 'VTSL') of the Principal Borrower- M/s Victory Electrical Ltd. was also initiated vide 'order' dated 01.05.2019 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s non est and nullity". 24. The Counsel for the Respondent emphasised that in view of the changed circumstances, the 'Respondent' modified its instance now denying, no objection to admission of the 'Application' filed under Section 7 of the 'Appellant' before the 'Adjudicating Authority' agreed earlier. 25. The Counsel for the Respondent submitted that this 'Appellate Tribunal' had also held in Bank of India Chennai vs. Coastal Oil Gas Infrastructure Pvt. Ltd. [(2020) SCC OnLine NCLAT 1095] dated 21.09.2020, where it had remanded case back to the 'Adjudicating Authority' to entertain the Application under Section 7 after issuing notice and examining all other aspects under Section 7 of the I & B Code, 2016. 26. The Counsel for the Respondent stated that in the present changed circumstances, the 'Respondent' requests this 'Appellate Tribunal' to remand the case back to the 'Adjudicating Authority' (NCLT Bench-II, Chennai) directing the 'Adjudicating Authority' to give a fresh opportunity to the 'Respondents' to file its detailed 'Reply Statement' and examine the facts therein, and for the better appreciation of the grievances of both the parties under the changed circumstances. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty against whom such right is claimed, a fresh period of limitation shall be computed from the time when the acknowledgement was signed. 28. This 'Appellate Tribunal' has gone through all the submissions made by the Counsel for the Parties as well as the 'impugned order' dated 06.01.2021. The 'Adjudicating Authority' has also taken cognizance of various judgments of this 'Appellate Tribunal' held in the matters of :- ➢ Laxmi Pat Surana vs. Union of India, [(2021) SCC OnLine SC 267] (Judgment dated 26.03.2021) ➢ Asset Reconstruction Company (India) Limited vs. Bishal Jaiswal, [(2021) SCC OnLine SC 321) (Judgment dated 15.04.2021) ➢ Manesh Agarwal vs. Bank of India & Anr. [Company Appeal (AT) (Insolvency) No. 1182 of 2019) (Judgment dated 28.02.2020) ➢ Ashish Kumar vs. Vinod Kumar Pukhraj Ambavat & Anr. [Company Appeal (AT) (Insolvency) No. 1411 of 2019) (Judgment dated 17.02.2020) The 'Corporate Insolvency Resolution Process' can be initiated simultaneously against the Corporate Guarantor or for that matter in relation to Principal Borrower and Corporate Guarantor as in present case and therefore there was no issue on proceeding against the Guar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e available that revival letter dated 01.06.2012 was executed by the Principal Borrower and the Respondent herein. It is also observed that various 'OTS' proposal was furnished by the Principal Borrower w.e.f 13.03.2014 till 18.05.2016 and the liability being admitted by the Principal Borrower and hence the deemed acceptance by the Guarantor/ Respondent herein in terms of provision of Section 128 of the Indian Contract Act, 1872. 33. This 'Appellate Tribunal' also takes into consideration that the 'Respondent' herein acknowledged the liability vis-à-vis guarantee furnished for the loans of the Principal Borrower in its financial statement for the year ending 31.03.2015. Similarly, the 'OTS' proposal was sanctioned by the 'Appellant' on 06.10.2016 (Duly accepted by the Principal Borrower and the Respondent herein) and subsequent cancellation of the same for non-payment vide Appellant's letter dated 03.05.2018. 34. In catena of the Judgments, it has been held that an application under I & B Code, 2016 would not be barred by limitation if there was acknowledgment of debt before expiry of the period of limitation of three years and in such case the period of limitation would g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the intent of the Code could not have been to give a new lease of life to debts which are already time-barred." (emphasis supplied) (c). In case of Jignesh Shah vs. Union of India, (2019) 10 SCC 750 (2020) 1 SCC (Civ) 48: 2019 SCC OnLine SC 1254 at page 764, the Hon'ble Supreme Court of India held that: "8. ... To my mind, there is a fallacy in this argument because the test that is required to be applied for purposes of ascertaining whether the debt is in existence at a particular point of time is the simple question as to whether it would have been permissible to institute a normal recovery proceeding before a civil court in respect of that debt at that point of time. Applying this test and dehors that fact that the suit had already been filed, the question is as to whether it would have been permissible to institute a recovery proceeding by way of a suit for enforcing that debt in the year 1995, and the answer to that question has to be in the negative. That being so, the existence of the suit cannot be construed as having either revived the period of limitation or extended it. It only means that those proceedings are pending but it does not give the party a legal rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to admit jural relationship may be implied from it. The admission in question need not be express but must be made in circumstances and in words from which the court can reasonably infer that the person making the admission intended to refer to a subsisting liability as at the date of the statement. ... Stated generally courts lean in favour of a liberal construction of such statements though it does not mean that where no admission is made one should be inferred, or where a statement was made clearly without intending to admit the existence of jural relationship such intention could be fastened on the maker of the statement by an involved or far-fetched process of reasoning. ... In construing words used in the statements made in writing on which a plea of acknowledgment rests oral evidence has been expressly excluded but surrounding circumstances can always be considered. 7. ...The effect of the words used in a particular document must inevitably depend upon the context in which the words are used and would always be conditioned by the tenor of the said document...." (emphasis supplied) (e). In the decision Lakshmirattan Cotton Mills Co. Ltd. vs. Aluminium Corpn. of India L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral relationship. Such an intention need not be in express terms and can be inferred by implication from the nature of the admission and the surrounding circumstances. Generally speaking, a liberal construction of the statement in question should be given...." (emphasis supplied) 36. In above cited judgments, the Hon'ble Supreme Court of India has held that for an 'Application' under Section 7 or 9 of I & B Code 2016 and Artticle 137 of the Limitation Act, 1963 will be applicable and this period of limitation can only be extended in the manner provided in the Limitation Act. For example, an acknowledgement of liability under Section 18 of the Limitation Act would certainly extend the limitation period. 37. This 'Appellate Tribunal' notes that in the present case, the date of default, would automatically get extended from the date of 'OTS' proposal submitted by the Principal Borrower which will also be deemed proposal by the 'Respondent'. Significantly and admittedly, the first 'OTS' proposal was submitted by the Principal Borrower on 13.03.2014, which was followed by modified OTS or submissions/ clarification on the 'OTS' to the 'Appellant' vide letters of the Principal Borrowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 'Respondent' herein before the 'Adjudicating Authority' whereby they have filed the counter and submitted as under :- Although, now the Respondent herein has taken a plea regarding changed circumstances of failure on part of the IRP/Liquidator in realising the dues and actionable claims of the Principal Borrowers and therefore has taken the stand that he is entitled to change his stand and further taken plea that it was fraud on part of the 'Interim Resolution Professional'/ 'Liquidator' in connivance with the Appellant herein which absorb him of any liability. Without going in detail examination of their submissions, prima-facie these submissions of the 'Respondent' herein do not stand on merit and in any case it is entitled to seek suitable remedy, if any, before the suitable `legal forum', in accordance with the `Law'. 41. This 'Appellate Tribunal', also takes note of the `Additional Notes of Submissions', filed on behalf of the 'Respondent' "This Hon'ble Tribunal had also held in Bank of India Chennai vs. Coastal Oil Gas Infrastructure Pvt. Ltd. [(2020) SCC OnLine NCLAT 1095] dated 21.09.2020, where it had remanded case back to thee 'Adjudicating Authority' to entertai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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