TaxTMI 
TaxTMI 
2020 (2) TMI 916
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....status in the company petition for the sake of convenience. The Appellant has filed this appeal mainly on two grounds, firstly on limitation; secondly, the order has been passed ex-parte; which is illegal, arbitrary, and passed mechanically through a non-speaking order. 2. Brief facts of the case are as follows: The 'Corporate Debtor' was granted a loan by the Allahabad Bank in 2008. The loan amount was extended/increased until the year 2010. The account was declared NPA by the Bank on 29th August 2012. Notice under Section 13(2) of the SARFAESI Act was issued against the Corporate Debtor on 03rd October 2012, after that, the notice under Section 13(4) of the SARFAESI Act was issued on 05th December 2012. The Adjudicating Authority has observed that: "the Respondent/Corporate Debtor was served notice. However, there were no representations. Notice was also taken by way of publication dated 20th August 2019 in English newspaper "Central Chronicle" and Hindi newspaper "Swadesh". However, there was no representation for the Corporate Debtor. Hence, called absent & set ex-parte on 04th September 2019." (Quoted verbatim) 3. It is stated that the Appellant had ava....
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....in the newspaper, when no response was received from the Corporate Debtor, the Adjudicating Authority proceeded ex-parte against the Corporate Debtor. 7. The Corporate Debtor/Appellant had taken the plea that the impugned order was passed Ex-parte. But we find that the Adjudicating Authority had proceeded ex-party, when the Corporate Debtor made no representation, despite, service of notice. 8. Regarding the limitation issue, the Appellant contends that the 'Loan Facility' from Allahabad Bank was availed by the Corporate Debtor in 2008. The account of the Corporate Debtor was classified NPA on 29th August 2012. Therefore, the petition should have been filed within three years from the date, when the account was declared NPA. Since the petition has been filed beyond the statutory period of limitation, as per Art 137 of the Limitation Act 1963, therefore petition is time-barred. 9. The counsel for the Appellant has placed reliance on the following cases of the Hon'ble Supreme Court. In the case of Vashdeo R. Bhojwani v. Abhyudaya Coop. Bank Ltd., (2019) 9 SCC 158: 2019 SCC OnLine SC 1159 at page 159 Hon'ble Supreme Court has held that: "3. Having heard the ....
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.... and relied upon Sections 60 and 61 of the Contract Act, which are set out hereunder: "60. Application of payment where debt to be discharged is not indicated.-Where the debtor has omitted to intimate, and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits. 61. Application of payment where neither party appropriates.-Where neither party makes any appropriation, the payment shall be applied in discharge of the debts in order of time, whether they are or are not barred by the law in force for the time being as to the limitation of suits. If the debts are of equal standing, the payment shall be applied in discharge of each proportionately." These sections also recognise the fact that limitation bars the remedy but not the right. In the context in which Section 60 appears, it is interesting to note that Section 60 uses the phrase "actually due and payable to him...." whether its recovery is or is not barr....
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....ication that is filed in 2016 or 2017, after the Code has come into force, cannot suddenly revive a debt which is no longer due as it is time-barred." In case of Jignesh Shah vs. Union of India, (2019) 10 SCC 750: (2020) 1 SCC (Civ) 48: 2019 SCC OnLine SC 1254 at page 764 Hon'ble Supreme Court held that: "8. ... To my mind, there is a fallacy in this argument because the test that is required to be applied for purposes of ascertaining whether the debt is in existence at a particular point of time is the simple question as to whether it would have been permissible to institute a normal recovery proceeding before a civil court in respect of that debt at that point of time. Applying this test and dehors that fact that the suit had already been filed, the question is as to whether it would have been permissible to institute a recovery proceeding by way of a suit for enforcing that debt in the year 1995, and the answer to that question has to be in the negative. That being so, the existence of the suit cannot be construed as having either revived the period of limitation or extended it. It only means that those proceedings are pending but it does not give the party a l....
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....r, the CD has expressed his commitment and resolve to pay the outstanding dues and regularize the account. 215 01.08.2013 and 04.09.2013 The CD had filed SA No.123/2013 in DRT, Jabalpur. On 01.08.2013, the DRT had granted an opportunity to the CD to liquidate 25% of the dues of the Bank within 15 days and the remaining dues in 5 equal instalments of 45 days each. On 04.09.2013, the said SA was dismissed for non-appearance and non-appearance of the order dated 01.08.2013. 219 and 221 25.10.2013 The CD submitted a letter for OTS offering the payment of Rs. 13.75 Crores. 293 25.05.2014, 05.06.2014 and 20.06.2014 The CD had submitted these cheques to the Bank under settlement offer. These cheques also amount to an acknowledgement of their respective dates. 294 13.09.2016 The CD filed SA No.263/2016 on 13.09.2016 in DRT, Jabalpur. In para 5.5 of the said SA, the CD has stated that they had approached the Bank vide letter dated 25.10.2013 giving their offer to pay the dues of the Bank under OTS. They had offered to pay Rs. 13.75 Crores towards a full and final settlement of their liability and had also submitted three post-dated cheques of Rs. 5.00 ....
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.... yet come or is accompanied by refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set off, or is addressed to a person other than a person entitled to the property or right, (b) the word "signed" means signed either personally or by an agent duly authorised in this behalf, and (c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right. Notes: Introduction. -The section correspondents to Section 19 of the repealed Act IX of 1908 in all respects. It lays down the law as to effect of acknowledgement in writing on the computation of the period of limitation for institution of a suit or making an application." 12. Learned Counsel for the Respondent has further relied on the case-law of Hon'ble Supreme Court in case of J.C. Budhraja vs. Chairman, Orissa Mining Corpn. Ltd., (2008) 2 SCC 444: (2008) 1 SCC (Civ) 582 on page 456 has held that: "20. Section 18 of the Limitation Act, 1963 deals with the effect of acknowledgement in writing. Sub-section (1) thereof provides that where, before the expiration of the prescribed period for....
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....an involved or far-fetched process of reasoning. ... In construing words used in the statements made in writing on which a plea of acknowledgment rests oral evidence has been expressly excluded but surrounding circumstances can always be considered. 7. ...The effect of the words used in a particular document must inevitably depend upon the context in which the words are used and would always be conditioned by the tenor of the said document...." 13. It is now well settled that a writing to be an acknowledgment of liability must involve an admission of a subsisting jural relationship between the parties and a conscious affirmation of an intention of continuing such relationship in regard to an existing liability. The admission need not be in regard to any precise amount nor by expressed words. If a defendant writes to the plaintiff requesting him to send his claim for verification and payment, it amounts to an acknowledgement. But if the defendant merely says, without admitting liability, it would like to examine the claim or the accounts; it may not amount to acknowledgement. In other words, a writing, to be treated as an acknowledgement of liability should consciously a....
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....owledgment for a new additional claim for damages." (Quoted verbatim) Section 18 of the Limitation Act, 1963 deals with the effect of acknowledgement in writing. Sub-section (1) thereof provides that where, before the expiration of the prescribed period for a suit or application in respect of any right, an acknowledgement of liability in respect of such right has been made in writing signed by the party against whom such right is claimed, a fresh period of limitation shall be computed from the time when the acknowledgement was so signed. The explanation to the section provides that an acknowledgement may be sanctioned though it omits to specify the exact nature of the right or avers that the time for payment has not yet come or is accompanied by a refusal to pay, or is coupled with a claim to set off, or is addressed to a person other than a person entitled to the right. Interpreting Section 19 of Limitation Act, 1908 (corresponding to Section 18 of 1963) this Court in Shapoor Freedom Mazda Vs. Durga Prasad Chamaria (AIR 1961 SC 1238) held that "...... acknowledgement as prescribed by Section 19 merely renews debt; it does not create a new right of action. It is a mere acknow....
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.... 1908, provides that where, before the expiration of the period prescribed for a suit in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, a fresh period of limitation shall be computed from the time when the acknowledgement was so signed. The expression 'signed' here means not only signed personally by such a party, but also by an agent duly authorised in that behalf. Explanation 1 to the section then provides that an acknowledgment would be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment has not yet come, or is accompanied by a refusal to pay or is coupled with a claim to a set-off, or is addressed to a person other than the person entitled to the property or right. The new Act of 1963, contains in Section 18 substantially similar provisions. 9. It is clear that the statement on which the plea of acknowledgment is founded must relate to a subsisting liability as the section requires that it must be made before the expiration of the period prescribed under the A....
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....mount to an acknowledgment. Such an admission is not subject to the condition that before the agreement should operate as an acknowledgment, the liability must be ascertained by the arbitrator. The acknowledgment operates whether the arbitrator acts or not. (See Tejpal Saraogi vs. Lallanjee Jain [CA No. 766 of 1962, decided on February, 8, 1965], approving Abdul Rahim Oosman & Co. v. Ojamshee Prushottamdas & Co. [1928 ILR 56 Cal 639]). 10. The letter (Exh. 1) relied on as an acknowledgment was written to the appellant company by Subramanyam signing it "for Aluminium Corporation of India Ltd.". It consists of several paragraphs dealing with diverse items relating to different amounts claimed by the appellant-company in a statement of claim previously sent by it to the corporation, some of which are refuted by the writer, while the others are accepted. The penultimate paragraph, which is said to contain the admission, reads as follows: "After all the above adjustments, the position will be as per statement attached. Interest has been provided on some balances and on others it has not been provided. We request you to confirm the balance of Rs. 1,07,477,13.11, s....
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....e 2014; 20th June 2014; 13th September 2016; 22nd September 2016; 04th March 2018; 15th October 2018; 30th October 2019 and 01st November 2019. Thus, it is clear that by the OTS described above/letters, the Corporate Debtor had offered the payment of varying amounts to Allahabad Bank/Respondent No.2 for full and final settlement liability and thereby admitted the jural relationship of Debtor- Creditor between them and the bank. 16. Given the provision of Section 18 of the Limitation Act and the law laid down by Hon'ble Supreme Court in case J.C. Budhraja the letters of acknowledgement/OTS created fresh period of limitation with effect from the date when the OTS/letter of acknowledgement was signed. 17. Since the account of Corporate Debtor was classified as NPA on 29.08.2012 and after that three years period was available as the provision of Article 137 of Limitation Act and within that period on different dates, the Corporate Debtor submitted the OTS letter and acknowledged the liability, on different dates. The chart showing the acknowledgement is given in para 14 of this judgement. The OTS proposal/acknowledgement of debt was given regarding the subsisting liability of the....