Tribunal Confirms IBC Application Timely, Debt Acknowledged via Balance Sheets and Proposal, Extending Limitation Period.

The Tribunal dismissed the appeal, ruling that the application under Section 7 of the IBC by SBI was not time-barred. It held that the balance sheets and the OTS proposal constituted acknowledgments of debt under Section 18 of the Limitation Act, thereby extending the limitation period. The Tribunal affirmed the applicability of Section 238A of the IBC, incorporating the Limitation Act's provisions, including Section 18, to IBC proceedings, thus validating the application's timeliness.

---

---

Issues Involved:
1. Whether the application filed under Section 7 of the Insolvency and Bankruptcy Code (IBC) by the State Bank of India (SBI) against the Corporate Debtor was time-barred.
2. Whether the balance sheets of the Corporate Debtor can be considered as an acknowledgment of debt under Section 18 of the Limitation Act, 1963.
3. Whether the application of Section 18 of the Limitation Act extends the limitation period for filing an application under Section 7 of the IBC.
4. The impact of the One-Time Settlement (OTS) proposal on the limitation period.
5. Applicability of Section 238A of the IBC and its interaction with the Limitation Act.

Detailed Analysis:

1. Time-Barred Application:
The Corporate Debtor argued that the application under Section 7 of the IBC was time-barred since the account was declared Non-Performing Asset (NPA) on 30.09.2012, and the application was filed on 03.10.2018, beyond the three-year limitation period stipulated under Article 137 of the Limitation Act, 1963. The Adjudicating Authority, however, considered the balance sheets and other documents, finding acknowledgments of debt, thus extending the limitation period under Section 18 of the Limitation Act.

2. Balance Sheets as Acknowledgment of Debt:
The Corporate Debtor contended that balance sheets should not be considered as acknowledgments under Section 18 of the Limitation Act. However, the Adjudicating Authority and the Appellate Tribunal relied on the Supreme Court judgment in "A.V. Murthy Vs. B.S. Nagabasavanna," which held that entries in balance sheets could amount to acknowledgments of debt. The Tribunal found that the balance sheets for the years ending 31.03.2015 and 31.03.2016, signed by the Director of the Corporate Debtor, contained entries of long-term borrowings, thus acknowledging the debt.

3. Application of Section 18 of the Limitation Act:
The Tribunal referred to several judgments, including "B.K. Educational Services Pvt. Ltd. vs. Parag Gupta and Associates" and "Babulal Vardharji Gurjar Vs. Veer Gurjar Aluminium Industries Pvt. Ltd. & Anr.," which clarified that Section 18 of the Limitation Act applies to applications under Section 7 of the IBC. The Tribunal concluded that the acknowledgment of debt in the balance sheets extended the limitation period, making the application filed on 03.10.2018 within the permissible time frame.

4. Impact of the One-Time Settlement (OTS) Proposal:
The Corporate Debtor's OTS proposal dated 20.01.2017 was considered by the Tribunal as an acknowledgment of debt. The Tribunal noted that the OTS proposal, which was rejected by the SBI, indicated an intention to settle the outstanding dues, further extending the limitation period under Section 18 of the Limitation Act.

5. Applicability of Section 238A of the IBC:
Section 238A of the IBC, which incorporates the provisions of the Limitation Act to proceedings under the IBC, was discussed extensively. The Tribunal referred to the Supreme Court's judgment in "Sesh Nath Singh & Anr. Vs. Baidyabati Sheoraphuli Co-operative Bank Ltd. & Anr." and "Laxmi Pat Surana Vs. Union Bank of India & Anr.," which affirmed that all provisions of the Limitation Act, including Section 18, apply to proceedings under the IBC. The Tribunal concluded that the application of Section 18 was valid and extended the limitation period.

Conclusion:
The Tribunal dismissed the appeal, affirming that the application under Section 7 of the IBC was not time-barred due to the acknowledgments of debt in the balance sheets and the OTS proposal. The Tribunal upheld the application of Section 18 of the Limitation Act, extending the limitation period and making the application filed by SBI within the permissible time frame. The Tribunal also confirmed that Section 238A of the IBC incorporates the provisions of the Limitation Act, including Section 18, to proceedings under the IBC.

---