TaxTMI 
TaxTMI 
2021 (12) TMI 628
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.... Financial Creditor submitted that the following documents prove the debt: (a) Sanction Letter dated 17.02.2010, (b) Loan Agreements dated 04.03.2010, (c) Personal Guarantees of the promoters dated 02.03.2010, (d) Deeds of Hypothecation dated 04.3.2010, (e) Statement of Dues of the Loans in tabular computation of outstanding dues (page 401). 9. We have heard the arguments advanced by the learned counsel for both the sides, perused the documents on record and the authorities cited before us. 10. As regards the issue of limitation raised by the respondent/Corporate Debtor, it is observed that there was OTS proposal dated 28.02.2018 (page 389) between the FC and the CD. From the said proposal it appears that the proposal was sent by the CD on 19.02.2018 for one time settlement of the financial debt. It was considered and accepted by the FC with regard to the existing liability subject to the terms and conditions as contained in the Annexure to the said OTS Proposal dated 28.02.2018. This OTS proposal has been accepted along with all the terms and conditions by the authorised signatory of the CD. The record also has another letter dated 07.06.2018 issued by the FC ....
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....'OTS') in the year constitute 'An Acknowledgment of Liability' as per Section 18 of the Limitation Act, 1963, especially when the same was made after expiry of three years period from the date on which the 'Demand' was made. 6. According to the Learned Counsel for the Appellant, even if the Director's Report, which was signed on 01.09.2017 is taken into account, still the Application filed by the Respondent/Financial Creditor is beyond three years of limitation. Besides this, the OTS Application indicates that the same was signed on 28.02.2018 beyond four years and therefore, these documents cannot be relied upon to come to a conclusion that there was 'Acknowledgment of Liability' within three years w.e.f. 04.04.2013 and the Notice under Section 13(2) of SARFAESI Act, 2002 was issued and the Account was classified as 'NPA' on 30.06.2012. 7. The Learned Counsel for the Appellant refers to the Judgment of the Hon'ble Supreme Court in the matter of "Dena Bank (Now Bank of Baroda) V. C. Shivakumar & Anr." (vide Civil Appeal No. 1650 of 2020 dated 04.08.2021) wherein at paragraph it was held that the IBC 206 is designed to ensure that the business/or commercial Activities of the 'Corp....
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....ion of the Secured Creditors and that the invocation of the IBC is nothing but an abuse of the process of law. 14. The Learned Counsel for the Appellant projects an argument that the 'Adjudicating Authority' had failed to appreciate that the documents were executed beyond three years and not within three years. As such, the same do not constitute an 'Acknowledgment of Liability'. RESPONDENT'S CONTENTIONS: 15. The Learned Counsel for the Respondent contends that the instant Appeal revolves round only one issue i.e., Limitation Period and further that as per Section 18 of the Limitation act, 'An Acknowledgment of Liability' may be sufficient although it omits to specify the exact nature of the property or right or averse that time for payment, delivery, performance, enjoyment, has not arrived or is accompanied to refusal to pay, deliver, perform or permit to enjoy or is coupled with claim to set off or is addressed to a person other than a person who is entitled or right. 16. The Learned Counsel for the Respondent submits averse to the decision of the Hon'ble Kerala High Court in 'P.D.Pillai v. Mrs. Kaliyani Kutty Amma' (1994 SCC Online Ker 139) wherein the full Bench of the Hig....
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....ent obtained 'Assignment of Debt' for restructuring of the outstanding dues as per letter dated 09.04.2013. In reality, it is the stand of the Respondent that the 'Corporate Debtor' had proposed 'One Time Settlement' and addressed a letter to the Respondent on 30.03.2016 which was replied by the Respondent on the same date. Besides these, the 'Corporate Debtor' also addressed a letter dated 19.02.2018 and in favour of the Respondent for 'One Time settlement' of the 'Loan Accounts' which was granted by the Respondent, of course subject to the terms and conditions made mention of, in the Sanction Letter dated 28.02.2018. Furthermore, the 'Corporate Debtor' depending upon said settlement, made an upfront payment as seen in the 'One Time Settlement' letter by agreeing all the terms and conditions of the sanctioned, signed the said sanctions. 21. The Learned Counsel for the Respondent points out that the Appellant had acknowledged its liability in a consistent manner from the year 2013 upto 2018, during which years, the Application was filed, within the limitation period as specified under Article 137 of the Limitation Act, 1963. 22. The Learned Counsel for the Respondent brings out t....
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....Adjudicating Authority was well within the period of limitation. 27. The Learned Counsel for the Respondent cites the decision of the Hon'ble Supreme Court in the matters (1) "H.R. Basavaraj v. Canara Bank" [(2010) 12 SCC 458], (2) "Sasan Power Ltd. v. North American Coal Corporation (India) Pvt. Ltd." [(2016) 10 SCC 813] and "Delhi Development Authority & Anr. V. Joint Action Committee Allottee of SFS Flats" [(2008) 2 SCC 672] wherein it is held: "Section 62 gives statutory form to the common law principle of novation. The basic principle behind the concept of novation is the substitution of a contract by a new one only through the consent of both the parties to the same. Such consent may be expressed as in written agreements or implied through their actions or conduct. In other words, the novation of contract compromised of two elements. First is the discharge of one debt or debtor and the second is the substitution of a new debt or debtor. The novation is not complete unless its results in substitution, rescission or extinguishment of the previous contract by the new contract. The terms and conditions therefore were, therefore required to be complied with by both the parties.....
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....ly the market value of such transaction shall be taken into account; (h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution; (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) to (h) of this clause;" 29. While summing up, the Learned Counsel for the Respondent contends that the 'Adjudicating Authority', after analysing the facts and circumstances of the case, had admitted the Application filed by the Respondent/'Corporate Debtor' by passing the Impugned Order which suffers no infirmity in law. 30. ACKNOWLEDGMENT OF LIABILITY: It is relevantly pointed out that 'An Acknowledgment of Liability' points out that an individual who acknowledges has some kind of interest, which is undoubtedly bound by his statement. No wonder 'An Acknowledgment of Liability ought to involve an admission of a subsisting jural relationship between the parties and further that an intention to continue such a relationship till it comes to end in legal manner. Moreover, kind of jural relationship that ....
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....re renewed to the 'Corporate Debtor'. 35. It comes to known that the 'Debt' in question, along with all the rights, title and interest in the underlying 'Securities' and Guarantees were assigned by the Lender to the Financial Creditor based on 'Assignment Agreement' executed between the IDBI Bank and the Financial Creditor. 36. In fact, the computation of the due amount payable by the 'Corporate Debtor' to the Respondent/Financial Creditor (acting in its capacity as Trustee of EARC Trust SC-130) is described in the Tabular Column as under: Facility Principal Total as on 31.10.2014 Additional interest Additional Penal Interest Repayment Total dues as on 31.08.2018 Cash credit 6,49,96,454.72 10,29,94,086.70 7,77,32,482.49 1,05,39,685.42 62,29,106.90 18,50,37,147 LC (devolve d) 2,46,83,476.50 4,14,97,874.50 3,70,47,540.49 44,23,434.37 36,80,987,97 7,92,87,861.39 Expense s 50,000.50 51,584.00 38,321.14 - 89,505.10 - Total 8,97,29,931.32 14,45,43,545.20 11,48,18,348.12 1,49,63,119.79 1,00,00,000.00 26,43,25,009.11 37. In short, the amount claimed to be in default in Part-IV of the Application in Serial No. 2 is Rs. 26,43,25,009.11 as on 31.....
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....'One Time Settlement' made by 'Corporate Debtor'. Continuing further, it is to be remembered that the Respondent/Financial Creditor had addressed Reply letter to the 'Corporate Debtor' dated 19.02.2018 for 'One Time Settlement' of the loan amount which was accepted by the Respondent based on Terms and Conditions specified in the Sanction Letter dated 28.02.2018. Apart from this, based on the said settlement, 'Corporate Debtor' had paid an upfront amount as seen from the 'One Time Settlement' letter by agreeing to abide by the Terms and Conditions of the 'Sanction Letter' and signed it. 45. It cannot be gainsaid that the Respondent/Financial Creditor, after considering the proposal of the Appellant for 'One Time Settlement' through its letter dated 19.02.2018 granted said settlement in and by which the 'Corporate Debtor' was required to pay Rs. 2 Crores as against its liability of Rs. 17.12 Crores as on 01.12.2015. As such it is crystalline clear that the new contract had come into play on 19.02.2018 and further that the Application was filed by the Respondent/Applicant (under Section 7 of IBC) on 25.10.2018 which is within period of limitation. 46. There is not two opinion of the....