AI Drafter 
TaxTMI 
TaxTMI 
2022 (7) TMI 1037
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....ember 2006. According to the appellant, as on 24 June 2013, the outstanding under the credit facilities extended to the respondent totaled to Rs 102.4 crores. In lieu of these credit facilities, the respondent (along with other persons) provided securities in favor of the appellant. The respondent allegedly failed to honor the terms of these credit facilities and defaulted on their repayments. Hence, the respondent's account with the appellant was classified as a Non-Performing Asset "NPA" on 10 June 2014. 3 Thereafter, at various junctures, the appellant aimed to seek recourse to Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 and Recovery of Debts Due to Banks and Financial Institutions Act 1993, while continuing to engage in negotiations with the respondent. Thereafter, the respondent issued letter dated 19 January 2016 to the appellant offering a one-time settlement "OTS" of Rs 61 crores in lieu of its debts, which was conditionally accepted by the appellant. However, by a letter dated 18 September 2017, the respondent unilaterally revised the OTS to Rs 40.6 crores, which was refused by the appellant. 4 The application f....
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....n Reddy, senior counsel, while Mr Shyam Divan, senior counsel, has appeared on behalf of the respondent. 8 The NCLT placed reliance on the judgment in V Padmakumar (supra). The decision in the above case has been specifically overruled in a judgment of a three-Judge Bench of this Court in Asset Reconstruction Company (India) Limited v Bishal Jaiswal and Another (2021) 6 SCC 366 ("Asset Reconstruction Company"), where Justice R F Nariman, speaking for the Bench, held: "46. It is, therefore, clear that the majority decision of the Full Bench in V. Padmakumar is contrary to the aforesaid catena of judgments. The minority judgment of Justice (Retd.) A.I.S. Cheema, Member (Judicial), after considering most of these judgments, has reached the correct conclusion. We, therefore, set aside the majority judgment of the Full Bench of NCLAT dated 12-3-2020" 9 Apart from the above decision, it is also necessary to note that the provisions of Section 18 of the Limitation Act were held applicable to IBC proceedings by a two-Judge Bench of this Court in Sesh Nath Singh v Baidyabati Sheoraphuli Coop. Bank Ltd. (2021) 7 SCC 313 ("Sesh Nath Singh"). 10 While the observation in Sesh ....
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....icate them from the renewed limitation accruing due to the effect of Section 18 of the Limitation Act. Section 18 of the Limitation Act gets attracted the moment acknowledgment in writing signed by the party against whom such right to initiate resolution process under Section 7 IBC enures. Section 18 of the Limitation Act would come into play every time when the principal borrower and/or the corporate guarantor (corporate debtor), as the case may be, acknowledge their liability to pay the debt. Such acknowledgment, however, must be before the expiration of the prescribed period of limitation including the fresh period of limitation due to acknowledgment of the debt, from time to time, for institution of the proceedings under Section 7 IBC. Further, the acknowledgment must be of a liability in respect of which the financial creditor can initiate action under Section 7 IBC." (emphasis supplied) 11 An acknowledgement in a balance sheet without a qualification can be relied upon for the purpose of the proceedings under the IBC. This principle also emerges from the decision in Asset Reconstruction Company (supra), which noted the decisions in Sesh Nath Singh (supra) and Laxmi Pat ....
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....judicating Authority is not barred from examining the material that is placed on record by the corporate debtor to determine that such application is not beyond the period of limitation. Undoubtedly, there is sufficient material in the present case to justify enlargement of the extension period in accordance with Section 18 of the Limitation Act and such material has also been considered by the Adjudicating Authority before admitting the application under Section 7 of the Code. The plea of Section 18 of the Limitation Act not having been raised by the Financial Creditor in the application filed under Section 7 cannot come to the rescue of the Appellants in the facts of this case. It is clarified that the onus on the financial creditor, at the time of filing an application under Section 7, to prima facie demonstrate default with respect to a debt, which is not time-barred, is not sought to be diluted herein. In the present case, if the documents constituting acknowledgement of the debt beyond April, 2016 had not been brought on record by the Corporate Debtor, the application would have been fit for dismissal on the ground of lack of any plea by the Financial Creditor before the Adju....