Corporate Debtor's Acknowledgments Extend Limitation, Tribunal Upholds CIRP Admission; Appeal Dismissed.

Pawan Kumar Agarwal Versus Asset Reconstruction Company (India) Limited and Raigarh Properties Private Limited

Pawan Kumar Agarwal Versus Asset Reconstruction Company (India) Limited and Raigarh Properties Private Limited - TMI Issues Involved:
1. Whether the application under Section 7 of the Insolvency and Bankruptcy Code (IBC) was barred by limitation.
2. Whether the acknowledgments of debt by the Corporate Debtor extended the period of limitation.
3. Whether the Adjudicating Authority's decision to admit the application under Section 7 of the IBC was legally sound.

Issue-wise Detailed Analysis:

1. Whether the application under Section 7 of the Insolvency and Bankruptcy Code (IBC) was barred by limitation:

The Appellant argued that the application under Section 7 of the IBC was filed beyond the three-year limitation period as prescribed by Article 137 of the Limitation Act, 1963. The Corporate Debtor's account was declared as NPA on 31st December 2009, and the application was filed on 14th March 2019, which was beyond the limitation period. The Appellant cited the Supreme Court judgment in 'Babulal Vardharji Gurjar vs. Veer Gurjar Aluminium Industries Pvt. Ltd. & Anr.' to support their claim that the application was time-barred.

2. Whether the acknowledgments of debt by the Corporate Debtor extended the period of limitation:

The Respondent No. 1 contended that the Corporate Debtor had made several acknowledgments of debt, which extended the limitation period. These acknowledgments included letters dated 23rd July 2015, 14th August 2015, 1st September 2015, and 5th April 2016, among others, where the Corporate Debtor acknowledged the outstanding dues and requested rescheduling of payments. The Respondent No. 1 argued that these acknowledgments were sufficient to extend the limitation period under Section 18 of the Limitation Act, 1963. The Tribunal agreed with this argument, citing precedents where acknowledgments of debt had extended the limitation period.

3. Whether the Adjudicating Authority's decision to admit the application under Section 7 of the IBC was legally sound:

The Tribunal found that the Adjudicating Authority had considered all relevant aspects, including the acknowledgments of debt and the requests for rescheduling of payments made by the Corporate Debtor. The Tribunal noted that the Corporate Debtor had acknowledged the outstanding dues multiple times, which extended the limitation period. Consequently, the application under Section 7 of the IBC was filed within the extended limitation period. The Tribunal upheld the Adjudicating Authority's decision to admit the application and initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor.

Conclusion:

The Tribunal concluded that the application under Section 7 of the IBC was not barred by limitation due to the multiple acknowledgments of debt made by the Corporate Debtor, which extended the limitation period. The Adjudicating Authority's decision to admit the application was affirmed, and the appeal was dismissed as devoid of merit. The Tribunal directed the Committee of Creditors (CoC) to proceed with the resolution process and communicate its decision to the Adjudicating Authority. The time spent in pursuing the appeal was excluded from the CIRP period.