TaxTMI 
TaxTMI 
2020 (8) TMI 496
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....that the application under Section 7 filed by the 'Bank of Baroda' is barred by limitation as default took place on 1st June, 2015 and recorded as NPA on 28th October, 2015. 3. Learned counsel appearing on behalf of the Respondents submitted that the claim is not barred by limitation. The equitable mortgage has already been detailed in the Affidavit under the head 'collateral security'. Therefore, Article 62 of the Limitation Act, 1963 would apply. As admittedly period of limitation 12 years would remain there, the claim cannot be held to be barred by limitation. Reliance has been placed on the decision of this Appellate Tribunal in "A. Maheshwaran v. Stressed Assets Stabilization Fund & Anr.− IV (2019) BC 171 (NCLAT)". 4. The 'Dena Bank' (now 'Bank of Baroda') by letter dated 27th September, 2012 sanctioned cash credit hypothecation facility of Rs. 9,00,00,000/- in the favour of the 'Corporate Debtor'. Further, the Respondent Bank sanctioned another cash credit hypothecation facility of Rs. 1,50,00,000/- to the 'Corporate Debtor'. 5. As per the account statement filed by the Respondent Bank, the 'Corporate Debtor' defaulted in repayment of the loan facility on 31....
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..... Union of India and another - (2019) 10 SCC 750", the Hon'ble Supreme Court taking into consideration the fact of filing of an application under Sections 433 and 434 of the Companies Act, 2013 observed as follows: "13. Dr Singhvi relied upon a number of judgments in which proceedings under Section 433 of the Companies Act, 1956 had been initiated after suits for recovery had already been filed. These judgments have held that the existence of such suit cannot be construed as having either revived a period of limitation or having extended it, insofar as the winding-up proceeding was concerned. Thus, in Hariom Firestock Ltd. v. Sunjal Engg. (P) Ltd., a Single Judge of the Karnataka High Court, in the fact situation of a suit for recovery being filed prior to a winding-up petition being filed, opined: "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....
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....t for recovery based upon a cause of action that is within limitation cannot in any manner impact the separate and independent remedy of a windingup proceeding. In law, when time begins to run, it can only be extended in the manner provided in the Limitation Act. For example, an acknowledgment of liability under Section 18 of the Limitation Act would certainly extend the limitation period, but a suit for recovery, which is a separate and independent proceeding distinct from the remedy of winding up would, in no manner, impact the limitation within which the winding-up proceeding is to be filed, by somehow keeping the debt alive for the purpose of the winding-up proceeding. xxx xxx xxx 28. A reading of the aforesaid provisions would show that the starting point of the period of limitation is when the company is unable to pay its debts, and that Section 434 is a deeming provision which refers to three situations in which a company shall be deemed to be "unable to pay its debts" under Section 433(e). In the first situation, if a demand is made by the creditor to whom the company is indebted in a sum exceeding one lakh then due, requiring the company to pay the sum so....
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....al holding that the OAs filed before it were not maintainable for the reasons given therein. 2. As against the aforesaid judgment, Special Civil Application Nos. 10621-622 were filed before the Gujarat High Court which resulted in the High Court remanding the aforesaid matter. From this order, a special leave petition was dismissed on 27- 3-2017. 3. An independent proceeding was then begun by Respondent 1 on 3-10-2017 being in the form of a Section 7 application filed under the Insolvency and Bankruptcy Code in order to recover the original debt together with interest which now amounted to about 124 crores of rupees. In Form-I that has statutorily to be annexed to the Section 7 application in Column II which was the date on which default occurred, the date of the NPA i.e. 21- 72011 was filled up. The NCLT applied Article 62 of the Limitation Act which reads as follows: "Description of suit Period of limitation Time from which period begins to run 62. To enforce payment of money secured by a mortgage or otherwise charged upon immovable property Twelve years When the money sued for becomes due." Applying the aforesaid Article, the NCLT rea....
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....eady time-barred. 7. This being the case, we fail to see how this para could possibly help the case of the respondents. Further, it is not for us to interpret, commercially or otherwise, articles of the Limitation Act when it is clear that a particular article gets attracted. It is well settled that there is no equity about limitation - judgments have stated that often time periods provided by the Limitation Act can be arbitrary in nature. 8. This being the case, the appeal is allowed and the judgments of the NCLT and NCLAT are set aside." 12. Therefore, it will be evident that for triggering application under Section 7 the date of default is to be noticed for counting the period of limitation under Article 137 of the Limitation Act, 1963. 13. Application in Form-1 (under Section 7) was filed by the Bank on 19th October, 2018. Therein the date of default has been shown as 28th October, 2015 i.e. the date of NPA. This is apparent from the relevant extract of Part IV of Form-1, which reads as follows: "Part-IV 2. AMOUNT CLAIMED TO BE IN DEFAULT AND THE DATE ON WHICH THE DEFAULT OCCURRED (ATTACH THE WORKINGS FOR COMPUTATION OF AMOUNT AND DAYS OF DEFAUL....
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....Act." 16. From the aforesaid fact, it will be evident that Section 13(2) notice was issued on 3rd September, 2014 as the 'Corporate Debtor' (Defendant No.1) committed default in repayment of the said cash credit facilities after the said facility has been declared as NPA. 17. In paragraph 7(v) of the appeal, the Appellant has specifically pleaded that the date of default as per the Respondent's own statement of account is (i) A/c No. 14111331015- 31.05.2015 and (ii) A/c No. 141113031020- over due on 30.09.2015. In reply Affidavit, the Bank has merely disputed the aforesaid fact and pleaded that the credit facility has already NPA and the same has correctly been declared so. 18. In the year 2016, before the Debt Recovery Tribunal, the Bank had already pleaded that the cash credit facility has been declared as 'NPA' on 30th January, 2014. Such plea has been taken as back as in the year 2016. It emerges from perusal of O.A. No. 239 of 2016 filed before the Debt Recovery Tribunal No.II at Ahmedabad that the aforesaid cash credit facility has been declared as NPA culminating in issuance of notice under Section 13(2) of the SARFAESI Act, 2002 on 3rd September, 2014. It is abunda....