Ramdas Dutta vs Idbi Bank Limited & Anr - (NATIONAL COMPANY LAW APPELLATE TRIBUNAL) (26 Apr 2023)

Acknowledgement of the debt for the purpose of extension of limitation has to be made during the period of three years

MANU/NL/0388/2023

Insolvency

Present appeal is filed by the Suspended Director of the Corporate Debtor (D.P. Agro Mills Pvt. Ltd) against the order passed by the Adjudicating Authority by which an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) read with Rule 4 of the Insolvency and Bankruptcy Rules, 2016 by the IDBI Bank Limited (Financial Creditor) has been admitted and Pankaj Kumar Tibrewal has been appointed as the Interim Resolution Professional ('IRP'). The issue involved in present appeal is as to whether the application filed under Section 7 of the IBC is within the period of limitation?

Article 137 of the Limitation Act, 1963, would apply for counting the period of limitation in respect of an application filed under Section 7 of the IBC. Article 137 of the Act provides three years from the date when the right to apply accrues. Right to apply accrues from the date of default as has been provided in Section 7 of the IBC itself.

Admittedly, the Bank did not mention the date of default in Part IV of Form 1 of the application filed under Section 7 of the IBC and disclosed the date of default as 30th June, 2011 only in the supplementary affidavit. The trigger date is thus 30th June, 2011 for the purpose of counting the period of three years which is up to 30th June, 2014. Meaning thereby, w.e.f 1st July, 2014 the limitation to apply under Section 7 of the IBC had expired. However, Section 18 of the Act deals with acknowledgement of the debt for the purpose of extension of limitation but it categorically provides that the acknowledgement has to be made during the period of three years and not beyond that.

In the present case, the Bank could not produce any evidence to prove that there has been acknowledgment in writing and signed by the Appellant for the purpose of extension of period of limitation except for the reply to the notice issued under Section 13(2) of the SARFAESI Act, 2002 in which the Appellant did not make any unambiguous and unequivocal acknowledgement which could extend the period of limitation. The Bank has also relied upon OTS offer dated 28th December, 2018 which is purported to have been approved and accepted by the Corporate Debtor on 21st January, 2019 but that too was not during the period of limitation and cannot be counted for the purpose of extension of period of limitation in terms of Section 18 of the Act.

Thus, the limitation counted from the date of default i.e. 30th June, 2011 had expired on 30th June, 2014 and there is no acknowledgement of debt during this period in terms of Section 18 of the Act. The Bank did not place on record the balance sheet prior to 2014 and the only balance sheets placed on record are from 31st March, 2015 to 31st March, 2018 and the OTS also took place on 21st January, 2019 much beyond the period of three years. The impugned order is set aside. Appeal allowed.

Tags : TIME PERIOD APPLICATION MAINTAINABILITY