Debt Acknowledgment Extends Limitation Period in Insolvency Case

The Tribunal dismissed the appeal in Company Appeal (AT)(CH)(INS) No.01 of 2021, as the application under Section 7 of the Insolvency and Bankruptcy Code filed by the Financial Creditor was found to be within the limitation period due to the acknowledgment of debt by the Corporate Debtor. The acknowledgment of debt and payment made extended the limitation period, as per Section 18 of the Limitation Act, 1963. The Tribunal held that there was no violation of natural justice principles, affirming the legality of the application.

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Issues Involved:
1. Whether the application under Section 7 of the Insolvency and Bankruptcy Code (I&B Code) filed by the Financial Creditor is barred by limitation.
2. Whether the acknowledgment of debt by the Corporate Debtor extends the period of limitation.
3. Whether the Adjudicating Authority violated principles of natural justice by not addressing the issue of limitation.

Issue-wise Detailed Analysis:

1. Whether the application under Section 7 of the I&B Code filed by the Financial Creditor is barred by limitation:
The Appellant contended that the application under Section 7 of the I&B Code filed by the Financial Creditor was barred by limitation. The date of default was cited as 30.03.2016, and the Non-Performing Asset (NPA) date was 30.06.2016. The Appellant argued that the limitation period of three years expired on 29.03.2019 and 29.06.2019, respectively. Since the application was filed on 18.07.2019, it was claimed to be beyond the limitation period.

2. Whether the acknowledgment of debt by the Corporate Debtor extends the period of limitation:
The Financial Creditor countered that the Corporate Debtor had acknowledged the debt through Balance and Security Confirmation Letters dated 20.02.2018, which extended the limitation period as per Section 18 of the Limitation Act, 1963. The Financial Creditor also pointed out a payment of Rs. 15,262.75 made by the Corporate Debtor on 15.10.2018, which further acknowledged the debt.

3. Whether the Adjudicating Authority violated principles of natural justice by not addressing the issue of limitation:
The Appellant argued that the Adjudicating Authority did not address the issue of limitation, thus violating the principles of natural justice. However, the Tribunal found that the acknowledgment of debt and the payment made by the Corporate Debtor were sufficient to extend the limitation period, making the application filed by the Financial Creditor within the permissible period.

Tribunal's Findings:

1. Acknowledgment of Debt:
The Tribunal referred to the Balance and Security Confirmation Letters dated 20.02.2018, which clearly acknowledged the debt. The Tribunal also noted the payment made by the Corporate Debtor on 15.10.2018. These acknowledgments extended the limitation period as per Section 18 of the Limitation Act, 1963.

2. Legal Precedents:
The Tribunal cited several judgments, including the Supreme Court decision in Babulal Vardharji Gurjar v Veer Gurjar Aluminium Industries Pvt. Ltd., which clarified that the limitation period for an application under Section 7 of the I&B Code is three years from the date of default, extendable by acknowledgment of debt.

3. Principles of Natural Justice:
The Tribunal found no violation of natural justice principles, as the issue of limitation was inherently addressed through the acknowledgment of debt by the Corporate Debtor.

Conclusion:
The Tribunal concluded that the application under Section 7 of the I&B Code filed by the Financial Creditor was within the limitation period due to the acknowledgment of debt. The appeal was dismissed, and the application was maintained as legally tenable.

Final Judgment:
The Company Appeal (AT)(CH)(INS) No.01 of 2021 was dismissed without costs, and the Stay Application (I.A.03 of 2021) was closed.

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