TaxTMI 
TaxTMI 
2020 (8) TMI 697
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....s: The Applicant/Respondent herein filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process against the corporate Debtor - Company M/s B.B. Food Private Limited. 3. The Petitioner submits that on the request of the Corporate Debtor - Financial Creditor - Bank of India has granted various credit limits of an aggregate amount of Rs. 28,00,00,000/- (Rupees twenty-eight crores only). The Corporate Debtor defaulted in repayment of dues of the applicant bank. The Financial Creditor classified the account of the Corporate Debtor as NPA on 29th January 2013 under the guidelines issued by RBI, and the total amount claimed to be in default is Rs. 40,33,04,620/- (Rupees forty crore thirty-three lacs four thousand six hundred twenty only) but after that, the Corporate Debtor had executed the document dated 13th April 2015 and thereby acknowledge the debt. 4. In reply to the petition, the Corporate Debtor submitted that the petition filed by the Financial Creditor is not maintainable and is barred by Limitation. It is stated that on the advice of the Financial Creditor, the Corporate Debtor had already submitte....
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....iance on the law laid down by the Hon'ble Supreme Court in case of Gaurav Hargovindbhai Dave Vs. Asset Reconstruction Company, wherein the Hon'ble Supreme Court has held that the limitation period shall start running from the date of NPA mentioned in Form-1. 11. Appellant further contends that the Hon'ble Supreme Court in Jignesh Shah Vs. Union of India (2019) 13 SCALE 61 has held that other proceedings for distinct remedies under the law, and their continuation in a separate forum, cannot be allowed to serve as a ground to defeat the intention of the law of limitation. 12. It is further emphasised by the Appellant Counsel that each of the alleged events of acknowledgement relied upon by the bank in the counter affidavit are beyond the prescribed three years period of limitation, that ended on 29th January 2016, or in alternative 13th April 2018. 13. The Learned Counsel for the Appellant further emphasised that the balance sheet of the Corporate Debtor cannot be treated as a document of acknowledgement in terms of Section 18 of the Limitation Act. The Learned Counsel has placed reliance on the judgment of this Tribunal in Company Appeal No.407 of 2019 C. Shivkumar Reddy Vs. Dena....
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....tanding debt. In the circumstances, the Respondent No.1 - Bank claim is within limitation. 16. We have heard the arguments of the Learned Counsel for the parties and perused the record. 17. The Learned Counsel for the Respondent - Financial Creditor contended that Hon'ble Supreme Court in case of Gaurav Hargovindbhai Dave Vs. ARC India Limited (2019) 2 SCC 572 and Sagar Sharma Vs. Phoenix ARC (2019) 10 SCC 353 has laid down the law that for an Application under Section 7 or 9 of the Insolvency and Bankruptcy Code, 2016 Article 137 of the Limitation Act shall apply from the time of coming into force of the Code. 18. Hon'ble Supreme Court in case of B.K. Educational Services Vs. Parag Gupta (2018) SCC OnLine SC 1921 has held that Article 137 of the Limitation Act, 1963 applies to Applications filed under Section 7 or 9 of the Code. 19. Hon'ble Supreme Court in case of J.C. Budhraja v. 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 effect of acknowledgment in writing. Sub-section (1) thereof provides that where, before the expiration of the prescribed period for a sui....
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....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...." 21. 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 acknowledgment. But if the defendant merely says, without admitting liability, it would like to examine the claim or the accounts, it may not amount to acknowledgment. In other words, a writing, to be treated as an acknowledgment of liability should consciously admit his liability to p....
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.... for damages." (Quoted verbatim) 20. Based on the above judgment of the Hon'ble Supreme Court, it is apparent that Section 18 of the Limitation Act, provides that where before the expiration of the prescribed period of limitation for a suit or application in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made in writing then fresh periods of limitation shall be computed from the time when acknowledgement was so signed. In the case of J.C. Budhraja (supra) Hon'ble Supreme Court has specified that explanation to Section 18 provides that an acknowledgement may be sufficient though it omits to specify the exact nature of the right are 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 address to a person other than a person entitled to the right. 21. In the case mentioned above, Hon'ble Supreme Court has relied on its earlier judgment passed in Shapoor Freedom Mazda Vs. Durga Prasad Chamaria AIR 1961 SC 1236. In the said case, Hon'ble Supreme Court has clarified that acknowledgement as prescribed by Section 19 merely renews debt; it does not ....
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.... suit for recovery based upon a cause of action that is within limitation cannot in any manner impact the separate and independent remedy of a winding-up 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." 23. Thus in the case mentioned above, the Hon'ble Supreme Court has held that the limitation can only be extended in the manner provided U/S 18 of the Limitation Act. For example, an acknowledgement of liability under Section 18 of the Limitation Act would certainly extend the limitation period. 24. In this case, admittedly the account of the Corporate Debtor was classified of NPA on 29th January 2013. Therefore, as per the law laid down by the Supreme Court case of Gaurav Hargovindbhai Dave (supra), the....