TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 1105
X X X X Extracts X X X X
X X X X Extracts X X X X
....er the Companies Act, 1956 and registered as a Securitisation and Asset Reconstruction Company, pursuant to Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI). 3. The Respondent M/s Hotel Poonja International Pvt. Ltd., hereinafter referred to as the "Corporate Debtor", was granted credit/loan facilities inter alia by Vijaya Bank, hereinafter referred to as the "Assignor Bank". Pursuant to an agreement executed between the Assignor Bank and the Appellant on or about 3rd May 2011, the Assignor Bank has assigned its dues from the Corporate Debtor to the Appellant. 4. By a letter dated 20th May 1986, the Assignor Bank, along with Corporation Bank, sanctioned a term loan of Rs. 40 Lakhs to the Corporate Debtor. Loan documents were duly executed by the Corporate Debtor through its authorized directors and guarantors, in favour of the Assignor Bank and Corporation Bank, for securing the loan as aforesaid, availed by the Corporate Debtor. 5. By a pari pasu agreement executed by and between the Assignor Bank, Corporation Bank, and the Corporate Debtor on 23rd November 1987, a pari pasu charge was created on th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ry of outstanding dues, but could only be invoked to initiate CIRP for just reasons. 12. The NCLT, Bengaluru took note of the following relevant facts: "In the instant case, it is not in dispute that Vijaya Bank had sanctioned loan of 40 lakhs to Corporate Debtor on 20.05.1986 and it has defaulted in making payment of the loan as per the terms of the loan agreement. The account of the Corporate Debtor was classified as NPA on 1.04.1993. Vijaya Bank also filed original application OA No.547/1998 before DRT, Bangalore and DRT has decreed and issued a recovery certificate by issuing an order dated 9th April, 2001. Further, due to non-repayment of the amount as per the order dated 9th April, 2001, DRT, Bangalore issued another recovery certificate vide DCP no.2691 dated 27.03.2003 directing the Recovery Officer to recover the amount of debt as stated therein. Subsequently, Vijaya Bank assigned the loan disbursed in favour of the Corporate Debtor to the Petitioner/Financial Creditor herein vide Assignment Agreement dated 3rd May, 2011. Consequently, an amended recovery certificate dated 13th May, 2011 was issued by the DRT, Bangalore recognizing the assignment to the petitioner/Finan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f Part V of the application before the DRT. 17. The Appellant also relied on the Assignment Agreement dated 3rd May 2011 (Serial No.5 of Part V); a Statement of Accounts of the Appellant as on 8th July 2018 along with Certificate under the Bankers Books Evidence Act, 1891 (Serial No.7 of Part V); a memo of the Recovery Officer dated 3rd June 2011 in the DRT, regarding assignment of the decretal dues of the judgment debtor in favour of the Appellant, and an amended Recovery Certificate dated 13th December 2012 (Serial No.8 of Part V). 18. Admittedly, as stated in Part IV of the application filed by the Appellant in the NCLT under Section 7 of the IBC, the account of the Corporate Debtor was declared as Non Performing Asset on 1st April, 1993, that is, over 15 years before the application under Section 5 was filed in the NCLT. 19. It is well settled by a catena of decisions of this Court, that Article 137 of the Limitation Act gets attracted to applications filed under Sections 7 and 9 of the IBC. The right to sue accrues when a default occurs, and if that default has occurred over three years prior to the date of filing of an application under Section 7 of the IBC, the applicatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e claim is apparently barred by limitation. Even the judgment of the DRT in OA No.547/98 was dated 09.04.2001 and the Recovery Certificate was dated 27th March 2003. The Appellant's own statement of accounts as on 18th July 2018 is not material to the question of limitation for making an application under Section 7 of the IBC, which is three years from the date of accrual of the right to sue. 24. Under Section 18 of the Limitation Act, 1963, the acknowledgement of liability in writing, signed by a party in respect of any right or property claimed by such party within the prescribed period of limitation to file a suit and/or application, leads to computation of the period of limitation afresh, from the time when the acknowledgement is so signed. 25. In this case, the Corporate Debtor has not signed any acknowledgement in writing after the settlement of 30th June 2001, on the basis of which, a Recovery Certificate was issued by the DRT on 27th March 2003. An arrangement between the Assignor Bank and the Appellant and the consequential substitution of the Appellant as party to the Execution/Recovery proceedings in the DRT does not save limitation to initiate proceedings under Sectio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he respective dates of those documents as acknowledgement of liability. Reliance is placed upon Section 18 of the Limitation Act. 30. As per Section 18 of Limitation Act, an acknowledgement of present subsisting liability, made in writing in respect of any right claimed by the opposite party and signed by the party against whom the right is claimed, has the effect of commencing a fresh period of limitation from the date on which the acknowledgement is signed. Such acknowledgement need not be accompanied by a promise to pay expressly or even by implication. However, the acknowledgement must be made before the relevant period of limitation has expired. 31. In Khan Bahadur Shapoor Freedom Mazda v. Durga Prasad Chamaria and Others, reported in AIR 1961 SC 1236, this Court held :- "6. It is thus clear that acknowledgment as prescribed by Section 19 merely renews debt; it does not create a new right of action. It is a mere acknowledgment of the liability in respect of the right in question; it need not be accompanied by a promise to pay either expressly or even by implication. The statement on which a plea of acknowledgment is based must relate to a present subsisting liability thoug....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the independent auditor at page 86 of the paper book reads: "d) Note No. 28 Claims against the Company under adjudication not acknowledged as debts for reasons stated in point (b) and (c) above. Our opinion is not modified in respect of these matters." Point (d) quoted above read with the immediately preceding subparagraph (point c) makes it clear that the Balance Sheet cannot be treated as an acknowledgment of liability. This is also clear from the last sub-heading of Note 27 and Note 28 of the Balance Sheet at page 147 of the paper book, set out hereinbelow: "As on the date of this report the matter is pending before the Hon'ble High Court of Karnataka, Bangalore. The Board of Directors have decided that no interest be provided in the books of account for the year ended 31st March 2017. The Board is also of the opinion based on legal advice obtained by it in the matter that no interest be provided in the books till the matter acquires clarity and the entire amount demanded by Reliance except for a sum of Rs. 40.00 lakhs be treated as "contingent liability not provided for". The Board is also of the opinion that developments subsequent to the decree of the DRT Bangalore ....