Cal. HC: POSH Committee to Re-Consider Complaint Dismissed for Being Barred by Limitation  ||  Financial Assistance Scheme for District Judiciary Employees Introduced by CJ of Madras HC  ||  MP HC: ?20 Lakh Minimum Threshold for Loan Recovery by NBFCs Not Applicable on HFCs  ||  Delhi High Court: Man Held Guilty of Criminal Contempt for Posting Video Defaming Judges  ||  Kar HC: State to Not Take Action Against Old Vehicles For High-Security Number Plates Till June 12  ||  Delhi High Court: Centenary Chance Exams of Delhi University Not a Matter of Right  ||  Delhi High Court: Centenary Chance Exams of Delhi University Not a Matter of Right  ||  Delhi High Court: Centenary Chance Exams of Delhi University Not a Matter of Right  ||  Ker. HC: To Seek Investigation u/s 156(3) of CrPC, Pre-Conditions Have to be Satisfied  ||  OBC Certificates Issued In West Bengal After 2010 Cancelled by Calcutta High Court    

Hussan Kadri Vs. Edelweiss Asset Reconstruction Co. Ltd. and Ors. - (NATIONAL COMPANY LAW APPELLATE TRIBUNAL) (22 May 2020)

The acknowledgment in the form of letters/OTS/Settlement terms made by 'Corporate Debtor' before expiry of period of limitation results in a fresh period of limitation

MANU/NL/0240/2020

Insolvency

The limited question involved in present appeal is whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("I&B Code") filed by Respondent No. 1-'Edelweiss Asset Reconstruction Company Limited'- ('Financial Creditor') is barred by limitation.

Application filed by the 'Financial Creditor' seeking initiation of 'Corporate Insolvency Resolution Process' in respect of Respondent No. 2 'M/s. K.K. Kadri Paper Mills Pvt. Ltd.' ('Corporate Debtor') for alleged default in discharge of liability in respect of financial debt to the tune of Rs. 44,51,74,964 came to be admitted in terms of the impugned order dated 25th July, 2019 passed by the Adjudicating Authority (National Company Law Tribunal), Ahmedabad Bench, Ahmedabad which is primarily challenged on the ground that the application is barred by limitation.

The 'Corporate Debtor' approached the Bank of Baroda in 2011 to extend credit facilities for promoting its business. The said Bank sanctioned loan in the form of Cash Credit, Letter of Credit and various Term Loan Facilities amounting to Rs. 14.80 Crores to the 'Corporate Debtor' vide Sanction Letter dated 6th January, 2011. The loan was secured by executing various documents by the 'Corporate Debtor'. However, the 'Corporate Debtor' failed to repay the loan amount despite demand by the 'Financial Creditor'.

It is by now well settled that an application under Section 7 of the 'I&B Code' is governed by Article 137 of the Limitation Act, 1963 prescribing three years' time for triggering of the 'Corporate Insolvency Resolution Process' and such period of limitation is to commence from the date the financial debt is declared as NPA.

The effect of Section 18 of the Limitation Act, 1963 is that an acknowledgment of liability in respect of a right made in writing and signed by the debtor before expiration of prescribed period for a suit or an application would result in a fresh period of limitation being computed from the time when acknowledgment was so signed. It is abundantly clear that such acknowledgment of liability must be made by the debtor in writing and signed by him before the expiration of prescribed period of limitation. Interpreting this provision in Hiralal vs. Badkulal, the Hon'ble Apex Court held that, an unqualified acknowledgment of liability by a party not only saves the period of limitation but also gives a cause of action to the Plaintiff to base its claim.

Section 19 of the Limitation Act, 1963 gets attracted if two conditions are satisfied: (a) payment must be made within prescribed period of limitation (b) such payment must be acknowledged either by writing of the person making such payment or signed by him. What extends the period of limitation is the payment made and not the writing but since such writing is construed as a mode of proof of such payment, such acknowledgment becomes relevant.

It further emerges from the record that the proposal for OTS was made by the 'Corporate Debtor' on 26th March, 2014 which is in the nature of first acknowledgment of liability and the period of limitation of three years would commence from such date. This was followed by the 'Corporate Debtor' further admitting its liability and making an offer to pay Rs. 9.5 Crores in settlement to the 'Financial Creditor'. It further emerges from record that in terms of letter/acknowledgment of payment of Rs. 1.5 Crores approximately in terms of OTS by the 'Corporate Debtor' on 9th February, 2017, the limitation period would further commence w.e.f. such date. Acknowledgment has also been made by the 'Corporate Debtor' in its letter dated 19th March, 2018.

It is, therefore, abundantly clear that, the acknowledgment in the form of letters/OTS/Settlement terms has been made by the 'Corporate Debtor' before expiry of period of limitation. The sequence of events is clearly demonstrated by the documents forming a chain of events and the application under Section 7 having been filed on 16th August, 2018 by the 'Financial Creditor' is clearly within the period of limitation.

Admittedly, application under Section 7 of the 'I&B Code' has been filed within three years of the last part payment of Rs. 1.5 Crore effected on 9th February, 2017. This factual position emerging from documentary evidence on record stares in the face of the Appellant who has preferred the appeal without substantial grounds. Appeal dismissed.

Tags : DEBT   APPLICATION   MAINTAINABILITY  

Share :        
Application file... For read more news from newsroom.manupatra.com"data-action="share/whatsapp/share" class="ic_wtsp-grid">

Disclaimer | Copyright 2024 - All Rights Reserved