2020 (8) TMI 336

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....e sake of convenience. 2. The brief facts of the case are as follows: The Applicant/Financial Creditor is a Debenture Holder by virtue of a Master Facility Agreement and Debenture Subscription Agreement dated 21st May 2007 executed between the Respondent No.1 and 2 (R-1 and R-2). Based on these Agreements, a sum of Rs. 15 crores was disbursed to the R-2 Company, and the R-1 Company subscribed to two series of fully convertible debentures with each of it for 84 months. As per Clause 1 of Schedule-V of the Debenture Subscription Agreement, during the subsistence of the Agreement and until the date on which fully convertible debentures are converted into equity shares, the fully convertible debentures shall earn interest quarterly @ 12% per annum and additional 6% per annum in the event of delay in payment of the amount due. 3. The Respondent No.1, herein claims that it has been the debenture holder all along and that the said debentures were never converted into equity. R-1 is shown as Debenture Holder in the balance sheet of R-2/ Corporate Debtor for Financial Year 2016-17 and under the heading "long term borrowings" reflecting the debt repayable to the R-1. 4. The impugned Orde....

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....stablishes that a "Financial Debt" is due to the Financial Creditor. 10. Based on the above observation, the Adjudicating Authority has admitted the Application of the Respondent/Financial Creditor under Section 7 of the Code, which is under challenge before this Tribunal. 11. The Impugned Order is assailed mainly on the ground of limitation. However, the Adjudicating Authority has not given any finding concerning the issue of limitation. 12. On perusal, it is noticed that the Form-1 of the Application, (Part 4 at serial No.2) records the date of default as 31st December 2007. This Application under Section 7 is filed on 26th February 2019, i.e. after more than 11 years. The Financial Creditor has also admitted in the statutory Form-1 that the consequence of default is that all the interest amount became due and payable forthwith. Hence, the period of limitation admittedly started on 31st December 2007. 13. It is further submitted by the Appellant that even if the contention of the Respondent/Financial Creditor is accepted, the amount becomes due on 20th May 2014. Even in such a scenario, the present Insolvency Application is time-barred, since it is filed on 26th February 2019....

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....at where the same word occurs in a similar context, the draftsman of the statute intends that the word bears the same meaning throughout the statute (see Bhogilal Chunilal Pandya v. State of Bombay [Bhogilal Chunilal Pandya v. State of Bombay, 1959 Supp (1) SCR 310: AIR 1959 SC 356: 1959 Cri LJ 389], Supp SCR at pp. 313-14). It is thus clear that the expression "default" bears the same meaning in Sections 7 and 8 of the Code, making it clear that the corporate insolvency resolution process against a corporate debtor can only be initiated either by a financial or operational creditor in relation to debts which have not become time-barred." The legislature did not contemplate enabling a creditor who has allowed the period of limitation to lapse to allow such delayed claims through the mechanism of the Code, and the expression "debt due" in the definition section of the Code would obviously only refer to debts "due and payable" in law, i.e., the debts are that not time-barred. 18. Admittedly, in this case, the Applicant/Financial Creditor has stated that default started from 31st December 2007 and the Application for initiation of Corporate Insolvency Resolution Process is filed on 2....

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....Vs. Assam State Cooperative Marketing & Consumer Federation Limited (2004) 12 SCC 360 on page 366. In the above case, Hon'ble, the Supreme Court of India has held: "14. According to Section 18 of the Limitation Act, an acknowledgement of liability made in writing in respect of any right claimed by the opposite party and signed by the party against whom such right is claimed made before the expiration of the prescribed period for a suit in respect of such right has the effect of commencing a fresh period of limitation from the date on which the acknowledgement was so signed. It is well settled that to amount to an acknowledgement of liability within the meaning of Section 18 of the Limitation Act, it need not be accompanied by a promise to pay either expressly or even by implication." 21. In the abovementioned case, Hon'ble the Supreme Court has clearly held that if an acknowledgement of liability is made in writing before the expiration of the period of limitation, then the limitation period gets extended as per statutory provision under Section 18 of Limitation Act. In this case, since default first started in December 2007 and after a lapse of 11 years, acknowledgement of liab....