General power of attorney doesn't disqualify officer filing under Section 7; Section 18 acknowledgement tolls limitation, appeal dismissed

SC held that a general power of attorney executed by a financial institution authorising an officer to act on its behalf did not disqualify the officer from filing an application under Section 7. The Court found the application initially time-barred from the 2014 default date, but documents acknowledging the debt in 2018-2019 brought Section 18 of the Limitation Act into play, extending the limitation period. The Adjudicating Authority permissibly considered the corporate debtor's records; the financial creditor bears the burden to prima facie prove default and timeliness. Appeal dismissed.

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Issues Involved:
1. Maintainability of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (the Code) when filed by a power of attorney holder.
2. Limitation period for filing the application under Section 7 of the Code.

Issue-wise Detailed Analysis:

Maintainability of the Application under Section 7 by a Power of Attorney Holder:
The first issue pertains to whether an application under Section 7 of the Code can be filed by a power of attorney holder. The Appellants argued that the application filed by the Financial Creditor was based on a power of attorney, which is not permissible. They relied on the judgment in Palogix Infrastructure Private Limited v. ICICI Bank Limited, where it was held that a power of attorney holder is not competent to file an application under Section 7. The Financial Creditor countered that the power of attorney was executed in favor of Mr. Praveen Kumar Gupta, who was duly authorized to act on behalf of the Financial Creditor.

The Supreme Court examined the authorization given to Mr. Praveen Kumar Gupta, which included a broad mandate to manage the business and affairs of the Bank, including commencing legal proceedings. The Court approved the view taken by the NCLAT in Palogix Infrastructure, which held that general authorization given to an officer by means of a power of attorney would not disentitle such officer from acting as the authorized representative of the financial creditor. The Court concluded that Mr. Gupta was duly authorized to file the application under Section 7, thereby rejecting the Appellants' contention on this ground.

Limitation Period for Filing the Application under Section 7:
The second issue revolves around whether the application under Section 7 was barred by limitation. The Appellants contended that the date of default was 30.09.2014, and the application filed on 25.04.2019 was beyond the three-year limitation period. They argued that the only document extending the limitation period was a debit balance confirmation letter dated 07.04.2016, which was insufficient. The Financial Creditor argued that the application was within limitation due to acknowledgments of debt by the Corporate Debtor in subsequent years.

The Supreme Court reiterated that Section 18 of the Limitation Act applies to applications under Section 7 of the Code. If the debt is acknowledged in writing within the initial three-year period from the date of default, a fresh period of limitation commences. The Court noted that the Corporate Debtor had acknowledged the debt through various documents, including a letter dated 17.11.2018, which detailed the amount repaid and the outstanding amount. The NCLT and NCLAT had considered these acknowledgments and concluded that the application was within the limitation period.

The Court emphasized that the burden of proving that the application is within the limitation period lies on the Financial Creditor. In this case, the Corporate Debtor's acknowledgments provided sufficient material to justify the extension of the limitation period under Section 18 of the Limitation Act. The Court dismissed the appeal, affirming the decisions of the NCLT and NCLAT.

Conclusion:
The Supreme Court dismissed the appeal, holding that the application under Section 7 of the Code was maintainable when filed by a power of attorney holder and was within the limitation period due to acknowledgments of debt by the Corporate Debtor.

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