TaxTMI 
TaxTMI 
TaxTMI 
2020 (5) TMI 65
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...., the Appellant - 'Gouri Prasad Goenka' - Ex-Chairman of the Corporate Debtor, who also appears to have filed I.A. No.1277/MB/2018 seeking intervention in the Company Petition (IB) 1886/MB/2018 filed by the Financial Creditor, has assailed the impugned order of admission on several grounds incorporated in the Memo of Appeal, relevant whereof may be described as relating to existence of default, quantification of debt and default, rectification of defects, competence of the person triggering the Corporate Insolvency Resolution Process and the claim being barred by limitation. 2. The genesis of initiation of Corporate Insolvency Resolution Process at the instance of Financial Creditor lies in advancement of loan by the Financial Creditor in favour of the Corporate Debtor in the form of working capital fund based limit of Rs. 13.75 Crores, non-fund based limit of Rs. 11.75 Crores and Corporate Term Loan of Rs. 20 Crores on 23rd February, 2005 coupled with Short Term Loan of Rs. 10 Crores on 2nd February, 2006. The facilities extended were further renewed on 2nd May, 2006 with Short Term Loan enhanced to Rs. 40 Crores while other components except the Corporate Term Loan were kept int....
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....heme/ revival proposal/ OTS were in fact pending when the Financial Creditor filed application for initiation of Corporate Insolvency Resolution Process against the Corporate Debtor. It is further submitted that the Financial Creditor enjoys a sum of Rs. 41.21 Crores in a non-lien account held by it for the benefit of Corporate Debtor and its stakeholders which was not even disclosed before the Adjudicating Authority. It is submitted further that the Financial Creditor failed to quantify either the debt or its default. It is further submitted that the application lacked material information in regard to occurrence of default. It is further submitted that despite directions by the Adjudicating Authority, the Financial Creditor failed to rectify the defects pointed out. Per contra, learned counsel for the Financial Creditor submitted that the application was complete in all respects and the impugned order came to be passed on application of mind by the Adjudicating Authority who found the objections raised being factually incorrect. It is submitted that there was no dispute in regard to status of parties, advancement of loan and allied facilities and acknowledgement of outstanding in....
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....on the claim itself. If the claim is barred by limitation, the debt will cease to be recoverable and it will not be payable in law or in fact. In such an eventuality, the Corporate Debtor cannot be held to have committed default in respect of the outstanding debt. 8. The legal proposition that the exceptions to the issue of limitation include the legal exceptions, exemptions, legal disabilities, exclusion of time of proceeding bonafide before a wrong forum, cases of continuing breach and cases covered under different eventualities as embodied in Sections 4 to 24 (Supra) cannot be disputed. Besides an acknowledgment of liability made in writing by the Debtor before the expiration of period of limitation has the consequence of infusing a fresh lease of life to the outstanding debt and a fresh period of limitation has to be computed from the date of signing of such acknowledgement by the Debtor. This proposition of law is specifically embodied in Section 18(1) of the Limitation Act which reads as under:- "18. Effect of acknowledgment in writing. - (1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgme....
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....declared as Sick Industrial Unit, is reproduced hereunder:- "5. In computing the period of limitation for the enforcement of any right, privilege, obligation or liability, the period during which it or the remedy for the enforcement thereof remains suspended under this section shall be excluded" On a plain reading of these provisions it is manifestly clear that the remedy for the enforcement of right by the Creditor to recover the outstanding debt from the Debtor through the medium of a suit for recovery of money remains suspended for the period during the pendency of inquiry under Section 16, 17 or appeal under Section 25 of SICA. Admittedly, in the instant case the Corporate Debtor was declared as a Sick Industrial Unit by BIFR vide order dated 16th July, 2009 which passed direction under Section 22(1) of SICA to Secured Creditors not to take any coercive action against it without prior permission of BIFR. While SICA came to be repealed, Section 7 of I&B Code was enforced w.e.f. 1st December, 2016. It is therefore crystal clear that on account of statutory bar the period commencing from 16th July, 2009 to 1st December, 2016 stood excluded under the aforesaid provisions renderi....
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....er Section 7 was incomplete and despite orders of Adjudicating Authority same was not completed/ amended/ rectified. Learned counsel for Appellant also tried to emphasise that the application was not filed by duly authorized person. Some more technical issues were raised. We have considered these aspects and it is noticed that the Adjudicating Authority has taken every relevant factor into consideration. It found that the Form 1 was signed by the Chief Manager of the Financial Creditor who was the duly authorized person to file the same. Contention raised by Appellant that the power of attorney was executed prior to enactment of I&B Code and could not extend the authority to file application under Section 7 of I&B Code is bereft of merit both in technique as also in substance. Once the authority was given, inter alia, to file litigation pertaining to recovery of the outstanding debt of the Financial Creditor, it becomes irrelevant whether the law governing such recovery or providing for a mechanism like the resolution process contemplated under I&B Code was or was not in force on the date when the authority was given. Any interpretation to the contrary would be absurd. In so far ....