TaxTMI 
TaxTMI 
2021 (4) TMI 583
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....sing of principal amount of Rs. 3,25,82,265/- and interest and liquidated damages of Rs. 520,45,23,073/-. II. The Petitioner submits as below: a. Initially Tourism Finance Corporation of India (TFCI), on 24.09.1996, sanctioned a term loan of Rs. 5,00,00,000/- to the Corporate Debtor, repayable in 20 quarterly instalments of Rs. 25,00,000/- each. However, the actual amount disbursed was Rs. 4,75,00,000/-. The Corporate Debtor executed a deed of hypothecation and other security documents in favour of TFCI. b. On 14.01.2003, TFCI issued a demand notice under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act) to the Corporate Debtor, demanding a sum of Rs. 17,09,00,000/- and on 09.08.2012 TFCI took symbolic possession of the Corporate Debtor's water park. c. On 27.09.2013, TFCI (Assignor) executed an Assignment Agreement in favour of the Petitioner herein and assigned the debt of the Corporate Debtor. The Corporate Debtor and Mr. Paresh Shah (as Mortgagor) were confirming parties to the Assignment Agreement. d. On 13.12.2014, the Petitioner issued Demand Notice under SARFAESI Act to the....
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....t in Sampuran Singh vs. Niranjan Kaur [(1999) 2 SCC 679], it is submitted that the acknowledgment has to be prior to the expiration of the prescribed period of limitation for filing the Petition. g. Relying on the judgment in V. Hotels Limited vs. Asset Reconstruction Company (India) Limited [2019 SCC Online NCLAT 911], it is submitted that the acknowledgment of liability in books of accounts of the Corporate Debtor for the year 2013-14 is of no avail to the Petitioner. h. The Petitioner's reliance on Section 25(3) of the Indian Contract Act, 1872 (the Contract Act) is not tenable for the following reasons: i. Assuming while denying, the Assignment Agreement dated 27th September 2013 constitutes fresh agreement or give rise to fresh cause of action even then the present Petition filed on 4th March 2019 after a period of three years from the date of execution of Assignment Agreement, is barred by law of limitation. ii. Bare perusal of the Petition would demonstrate that the Petition is filed on the basis of default dated 23rd June 1998 and not on the basis of any subsequent Assignment Agreement dated 27th September 2013 or any default on the basis of any alleged subsequent a....
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....ed the Judgement of the Hon'ble Supreme Court in Babulal Vardharji Gurjar vs. Veer Gurjar Aluminium Industries Pvt. Ltd. (2020 SCC Online SC 647) and its judgement in the case of Jagdish Prasad Sarada vs. Bank of Allahabad (MANU/NL/0234/2020) and held that: "the requirement of Section 18 and 19 of the Limitation Act are independent and not cumulative" [Para 29] and that, "...Section 18 of the Limitation Act, 1963 is applicable both for 'Suit' and 'Application' involving 'Acknowledgment of Liability', creating a fresh period of limitation, which shall be computed form the date when the 'Acknowledgement' was so signed." [Para 36]. Based on such finding the NCLAT ultimately dismissed the appeal by holding that, "...In view of the fact, that ingredients of Section 18 of the Limitation Act, 1963 are quite applicable both for 'Suit' and 'Application' and the debit confirmation letters in the instant case were duly acknowledged in accordance with Law laid down on the subject the instant Appeal deserves to be dismissed..." [Para 38.] The aforesaid issue directly affects the present case. vi. The only argument made on behalf of the Corporate Debtor, basing reliance on principle ....
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....This being the case, the expression "debt due" in the definition Sections of the Code would obviously only refer to debts that are "due and payable" in law, i.e., the debts that are not timebarred. .... ... 36. The definition of "default" in Section 3(12) uses the expression "due and payable" followed by the expression "and is not paid by the debtor or the corporate debtor...". "Due and payable" in Section 3(12), therefore, only refers to the whole or part of a debt, which when referring to the date on which it becomes "due and payable", is not in fact paid by the corporate debtor. The context of this provision is therefore actual non-payment by the corporate debtor when a debt has become due and payable. ... 42. It is thus clear that since the Limitation Act is applicable to applications filed under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted. "The right to sue", therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases whe....
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....Court undoubtedly restated principles laid down in B.K. Educational Services and reaffirmed that the right to sue under the Code accrues on the date when default occurs and if the default occurred 3 years prior to the date of filing of the Application, the same would not amount to debt due and payable under the Code.) v. Jignesh Shah and Anr. vs. Union of India and Anr. (Supra) (Para 28:( It was held that under Section 433(e) r/w Section 434 of the Companies Act, 1956 would show that a trigger point for the purpose of limitation for filing of winding up Petition under Section 433(e) would be the date of default in payment of the debt in any of the three situations mentioned in Section 434 of the Companies Act, 1956) (Para 31: Wherein it was held that the winding up Petition filed on 21.10.2016 being beyond the period of 3 years from date of default is barred by limitation, and cannot therefore be proceeded with any further.) vi. Vashdeo R. Bhojwani vs. Abhyudaya Co-Op Bank Limited and Another (MANU/SC/1213/2019) (In this case NPA was declared on 23/12/1999 and Section 7 Petition was filed on 21/07/2017, saying that the default continued and no period of limitation would attac....
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....default occurs; (f) that default referred to in the Code is that of actual non-payment by the corporate debtor when a debt has become due and payable; and (g) that if default had occurred over three years prior to the date of filing of the application, the application would be time-barred save and except in those cases where, on facts, the delay in filing may be condoned; and (h) an application Under Section 7 of the Code is not for enforcement of mortgage liability and Article 62 of the Limitation Act does not apply to this application. Whether Section 18 Limitation Act could be applied to the present case 31. While the aforesaid principles remain crystal clear with the consistent decisions of this Court, the only area of dispute, around which the contentions of learned Counsel for the parties have revolved in the present case, is about applicability of Section 18 of the Limitation Act and effect of the observations occurring in paragraph 21 of the decision in Jignesh Shah (supra). 32. We have noticed all the relevant and material observations and enunciations in the case of Jignesh Shah hereinbefore. Prima facie, it appears that illustrative reference to Section 18 of th....
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.... that the principles relating to acknowledgement as per Section 18 of the Limitation Act are applicable for extension of time for the purpose of the application Under Section 7 of the Code, in our view, neither the said provision and principles come in operation in the present case nor they enure to the benefit of Respondent No. 2 for the fundamental reason that in the application made before NCLT, the Respondent No. 2 specifically stated the date of default as '8.7.2011 being the date of NPA'. It remains indisputable that neither any other date of default has been stated in the application nor any suggestion about any acknowledgement has been made. As noticed, even in Part-V of the application, the Respondent No. 2 was required to state the particulars of financial debt with documents and evidence on record. In the variety of descriptions which could have been given by the Applicant in the said Part-V of the application and even in residuary Point No. 8 therein, nothing was at all stated at any place about the so called acknowledgment or any other date of default. 33.1. Therefore, on the admitted fact situation of the present case, where only the date of default as '....
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....he Limitation Act while referring to Para No. 21 of the decision in Jignesh Shah case (supra) categorically held that the same relates to the suits or other proceedings wherever it could apply and where the period of limitation gets extended because of acknowledgement of liability. This is not a suit for recovery and hence Section 18 of the Limitation Act will in no manner impact the limitation within which winding up proceedings is to be filed. It has also been held that it is difficult to read observations in the aforesaid Para No. 21 of the Jignesh Shah to mean that the ratio laid down in B. K. Educational Services (supra) has, in any manner, been altered by the Court. It was further held that limitation period for an Application under Section 7 of the Code is 3 years as provided by Article 137 of the Limitation Act which commences from the date of default and is extendable only by Application of Section 5 of the Limitation Act, if any, for condonation of delay is made out. vii. Even assuming that Section 18 of Limitation Act is applicable, the letter of acknowledgement dated 05/12/2016 is beyond three years from 27/09/2013, the date of Assignment Agreement. The sine qua non fo....