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of <h1>Supreme Court upholds timely petition under IBC, extends limitation period, secures creditor rights</h1> <h3>AXIS BANK LIMITED Versus NAREN SHETH & ANR.</h3> AXIS BANK LIMITED Versus NAREN SHETH & ANR. - TMI Issues Involved:1. Whether the petition under Section 7 of the Insolvency and Bankruptcy Code (IBC) was time-barred.2. Whether Respondent No. 2 (State Bank of India) was entitled to the benefit of Section 18 of the Limitation Act.3. Admissibility of additional documents submitted by Respondent No. 2 at the appellate stage.4. The rights of the appellant as an unsecured creditor versus the rights of Respondent No. 2 as a secured creditor.Summary:Issue 1: Time-Barred PetitionThe appellant argued that the petition under Section 7 of the IBC was time-barred as it was filed beyond the three-year limitation period from the date the Corporate Debtor was declared a Non-Performing Asset (NPA) on 28.06.2013. The appellant contended that the limitation period expired on 31.03.2016, and the petition filed on 22.01.2020 was thus barred by limitation.Issue 2: Benefit of Section 18 of the Limitation ActThe Supreme Court examined whether Respondent No. 2 was entitled to the benefit of Section 18 of the Limitation Act, which allows for a fresh period of limitation upon acknowledgment of debt. The Court noted that the Corporate Debtor had acknowledged the debt in its balance sheet for the financial year ending 31.03.2015, and had made several One-Time Settlement (OTS) proposals on 16.03.2017, 01.01.2018, and 16.05.2019. These acknowledgments extended the limitation period, making the petition filed on 22.01.2020 within the permissible time frame.Issue 3: Admissibility of Additional DocumentsThe appellant challenged the admissibility of additional documents submitted by Respondent No. 2 at the appellate stage. The Supreme Court referred to its previous judgment in Dena Bank (supra), which allowed for the introduction of additional documents at the appellate stage, provided they are relevant and made before the expiry of the limitation period. The Court found that the additional documents, including balance sheets and OTS proposals, were admissible and relevant for calculating the limitation period.Issue 4: Rights of Unsecured vs. Secured CreditorsThe appellant, an unsecured creditor, argued against the petition filed by Respondent No. 2, a secured creditor. The Court held that Respondent No. 2, being a secured creditor with a larger claim, had the right to initiate insolvency proceedings under the IBC. The Court emphasized that the acknowledgments of debt by the Corporate Debtor extended the limitation period, and the petition was validly filed within this extended period.Conclusion:The Supreme Court dismissed the appeal, holding that the petition under Section 7 of the IBC was not time-barred due to the valid acknowledgments of debt by the Corporate Debtor, which extended the limitation period under Section 18 of the Limitation Act. The additional documents submitted by Respondent No. 2 were deemed admissible, and the rights of the secured creditor were upheld. The applications filed by Ruby Mills Ltd. were disposed of, allowing them to pursue their remedies before the appropriate forum.
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