2022 (5) TMI 349

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....cation filed by 'M/s. Bank of India'/ the 'Financial Creditor' under Section 7 of the Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as 'The Code'), for initiating Corporate Insolvency Resolution Process (CIRP) against 'M/s. AEON Manufacturing Private Limited'/the 'Corporate Debtor'. 2. Briefly put, the facts in the instant case are that the 'Financial Creditor' has sanctioned limits of Rs.70 Crs./- vide Sanctioned Letter dated 20/07/2012 and thereafter the 'Corporate Debtor' had committed defaults and was declared as an NPA. It is the case of the 'Financial Creditor' that the 'Corporate Debtor' was classified as NPA on 30/06/2016, whereas it is the case of the Appellant herein that the Adjudicating Authority has erroneously recorded the 'date of default' to be 30/06/2016, based on the date mentioned in the Application when the correspondence on record shows that the 'date of default' is 30/09/2014. Despite the Demand Notice dated 08/02/2018, the 'Corporate Debtor' had failed to pay a sum of Rs.74,28,51,444.72/- and hence the 'Financial Creditor' filed an Application seeking to initiate the CIRP Proceedings. 3. Learned Counsel for the Appellant/'Corporate Debt....

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....'Dena Bank (now Bank of Baroda)' Vs. 'C. Shivkumar Reddy & Anr.', (2021) 10 SCC 330, in which it is held that when there is a jural relationship between the parties, an acknowledgement of debt in within three years of the 'date of default', between such parties would amount to acknowledgement under Section 18 of the Limitation Act, 1963. In his Written Submissions, the Counsel also relied on paras 8-11 of 'The Bijnor Urban Co-operative Bank Ltd, Bijnor & Ors.' Vs. 'Meenal Agarwal & Ors.', (2021) SCC OnLine SC 1255, in support of his arguments. 5. The main point which arises for consideration is whether the Section 7 Application filed by the 'Financial Creditor' is 'barred by Limitation'. 6. The letter dated 02/12/2015 shows that the dues were classified as NPA on 30/09/2014 and the Section 7 Application was filed on 24/04/2018. Admittedly, there was communication and correspondence between the parties wherein several proposals for Restructuring an OTS were attempted. The Restructuring Proposals dated 08/10/2014, 09/10/2014 and 02/12/2014 are on record apart from the OTS Proposals made between the parties on 03/03/2018, 13/03/2018, 11/06/2018, 13/06/2018 and 07/11/2018 and the....

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.... alternative right and without concession to the other application" and had nothing to do with settlement. There are circumstances in which the correspondence is initiated with a view to settlement but the parties do not intend that the correspondence should be without prejudice. It may be that the parties positively want any subsequent court to see the correspondence and always had in mind that it should be open correspondence. It may be a nice point whether negotiations at which no one mentioned the words "without prejudice" should be admitted in evidence: for example at an early meeting between the parties when the dispute first developed. There is no easy rule here. On the other hand, even when a letter is sent as the "opening shot" in negotiations, and is not preceded by any previous correspondence, it may be without prejudice. There are authorities in both directions on this and it will depend on the facts. It has been said that if one is seeking to change the basis of the correspondence from without prejudice to open it is incumbent on that person to make the change clear, although that may be more a pointer than a rule. There is no reason why every letter ....

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.... NPA, there were an acknowledgment of the debt by the corporate debtor before expiry of the period of limitation of three years, in which case the period or limitation would get extended by a further period of three years." 10. The aforenoted observations made by the Hon'ble Supreme Court clearly establishes that any acknowledgement under Section 18 of the Limitation Act, 1963 within the three years period, of the date of default, extends the date of Limitation giving rise to a fresh period of an additional three years. Further, it is not in dispute that the Financial Statements for the year ending 31/03/2016 reflect the loan amounts owed to the 'Financial Creditor'. The Hon'ble Supreme Court in 'Asset Reconstruction Company (India) Limited' Vs. 'Bishal Jaiswal & Anr.', (2021) 6 SCC 366and also in para 139 of the aforementioned 'Dena Bank' (Supra), has laid down that the Balance Sheets and Financial Statements of the 'Corporate Debtor', construe acknowledgement of liability which extend the Limitation by three years. The Hon'ble Supreme Court also observed that 'there is no reason why an offer of One Time Settlement of a live claim made within a period of Limitation, should also....