AI Drafter 
TaxTMI 
TaxTMI 
2022 (8) TMI 329
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.... Debtor carries on business of manufacture of tempo and tractor components. In or about 2012-2013, the Corporate Debtor decided to expand its business and operations and entered into negotiations with bankers for finance for the proposed expansion. 3. According to the Corporate Debtor, some-time in July- August 2012, some employees of the Appellant Financial Creditor approached the Corporate Debtor, offering financial assistance at lesser rate of interest than the then existing bankers of the Corporate Debtor, and better facilities and business support. 4. The Appellant Financial Creditor has, since November 2012 sanctioned loan facilities to the Corporate Debtor from time to time. At the meeting of the Board of Directors of the Corporate Debtor held on 29th November 2012 and on 15th March 2013, resolutions were adopted, inter alia, authorizing Mr. Munish Kumar Bhunsali to execute loan and security documents on behalf of the Corporate Debtor. 5. On or about 29th November, 2012, necessary documents with regard to the loans/credit facilities were executed by and between the Appellant Financial Creditor and the Corporate Debtor. Between 23rd November, 2012 and 31st December, ....
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....eferred to as the SARFAESI Act. 12. On 12th December 2018, the Corporate Debtor admitted its liability to the Appellant Financial Creditor and offered a one time settlement for a sum of Rs.15,00,00,000/- (Rupees fifteen crores only) to be paid within 31st December, 2018. On 19th December 2018, the Corporate Debtor again admitted its liability to the Appellant Financial Creditor and offered a one time settlement for a sum of Rs.20,00,00,000/- (Rupees twenty crores only) to be paid within 31st December, 2018. On 20th December, 2018, the Corporate Debtor revised its offer for one time settlement. The Corporate Debtor offered to settle the outstanding dues at a lumpsum amount of Rs.24,55,00,000/- (Rupees twentyfour crores and fifty five lakhs only). The offer was accepted by the Appellant Financial Creditor. 13. On the same day, i.e., 20th December, 2018, terms of settlement were signed and executed by the Corporate Debtor and the Appellant Financial Creditor in terms whereof a sum of Rs.24,55,00,000/- (Rupees twenty four crores and fifty five lacs only) was to be paid on or before 31st December, 2018. 14. The Corporate Debtor alleges that there were deficiencies in the bankin....
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....lant Financial Creditor was, however, relying on the proposal for one time settlement given by the Corporate Debtor on 12th December, 2018 to contend that the existence of financial debt had been admitted by the Corporate Debtor. 19. From the order dated 6th September, 2019 of the Adjudicating Authority, it appears that the Financial Creditor had been relying on Article 62 of the Limitation Act, 1963, under which suits relating to immoveable property to enforce payment of money secured by a mortgage, or otherwise charged upon immoveable property, is 12 years from the time when the money sued for, becomes due. 20. The Adjudicating Authority found :- "Given the facts and circumstances that the Corporate Debtor vide its letter dated 12.12.2018 approached the Financial Creditor for one time settlement of an amount of Rs.15 Crore, thereby admitting its default, there is a finding that there is a continuous cause of action. As per the averments of the petition no payment has been made by the Corporate Debtor after the default occurred in June, 2015 and as on dated 27.11.2018, an amount of Rs.46,63,35,337.31 is due and outstanding. The present petition being filed ....
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....le 113 pertains to the 'Suits', the Article 137 relates to 'Applications'. The language of Article 137 clearly postulates that the applicability of the said article will be restricted to the applications not mentioned in the 3rd division of the schedule to the Limitation Act, 1963. xxx xxx xxx 41. In so far as Section 18 of the Limitation Act 1963 pertaining to the effect of acknowledgement in writing under Limitation Act is concerned, it is to be taken note of that an acknowledgement of liability must be in writing and also to be signed by a party against whom the property or right is claimed and that too, the same must be within the Limitation period. It cannot be gainsaid that an acknowledgement given after the expiry of the usual period is not sufficient to keep the 'debt' alive. If a claim is barred, the fact that there was an acknowledgement of liability will not resuscitate a barred claim because of the reason that in any Law, there can only be an acknowledgement of an existing / subsisting liability. 42. In law, the onus is always on the Creditor to establish that an acknowledgement was made within time. Further, the acknowledgement does not creat....
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..... Executive Officer Town Panchayat AIR 1999 Mad37, it is observed that just sending a letter to the higher authorities to settle the issues does not amount to an 'Acknowledgement'." 24. The operative part of the judgment and order is set out hereinbelow : "54. In the result, the 'Corporate Debtor' 'M/s Kew Precision Parts Pvt. Ltd.' is released from the rigour of the 'Corporate Insolvency Resolution Process'. All actions taken by the 'Interim Resolution Professional' / 'Resolution Professional' and 'Committee of Creditors', if any, are declared illegal and set aside. The 'Resolution Professional' is directed to hand over the records and assets of the 'Corporate Debtor' to the promoter/Directors of the 'Corporate Debtor' forthwith. 55. The matter is remitted to Adjudicating Authority ('National Company Law Tribunal') New Delhi Bench to determine the 'Fee and Cost' of 'Corporate Insolvency Resolution Professional' as incurred by him, which is to be borne and paid by 1st Respondent / Bank('Financial Creditor'). Before parting with the case, it is made crystal clear that the dismissal of the application filed by the 1st Respondent / Bank before the Adjudicating Aut....
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....ment without consideration, void, unless it is in writing and registered or is a promise to compensate for something done or is a promise to pay a debt barred by limitation law.-An agreement made without consideration is void, unless-An agreement made without consideration is void, unless-" (1) It is expressed in writing and registered under the law for the time being in force for the registration of documents, and is made on account of natural love and affection between parties standing in a near relation to each other; or unless (2) It is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do; or unless. (3) It is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits. In any of these cases, such an agreement is a contract. Explanation 1.-Nothing in this section shall affect the validity, as between the donor and do....
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....Section 25(3), a debtor can enter into an agreement in writing, to pay the whole or part of a debt, which the creditor might have enforced, but for the limitation of a suit in law. A written promise to pay the barred debt is a valid contract. Such a promise constitutes novation and can form the basis of a suit independent of the original debt, for it is well settled that the debt is not extinguished, the remedy gets barred by passage of time as held by this Court in Bombay Dyeing and Manufacturing Company Limited vs. State of Bombay AIR 1958 SC 328. 32. Section 25(3) applies only where the debt is one which would be enforceable against the defendants, but for the law of limitation. Where a debt is not binding on the defendant for other reasons, and consequentially not enforceable against him, there is no question of applicability of Section 25(3). 33. There is a distinction between acknowledgment under Section 18 of the Limitation Act, 1963 and a promise within the meaning of Section 25 of the Contract Act. Both promise and acknowledgment in writing, signed by a party or its agent authorised in that behalf, have the effect of creating a fresh starting of limitation. The diffe....
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....I pertains to particulars of the proposed Interim Resolution Professional. Parts IV and V which require particulars of Financial Debt with Documents, Records and Evidence of default, is extracted hereinbelow:- PART IV PARTICULARS OF FINANCIAL DEBT 1 TOTAL AMOUNT OF DEBT GRANTED DATE(S) OF DISBURSEMENT 2 AMOUNT CLAIMED TO BE IN DEFAULT AND THE DATE ON WHICH THE DEFAULT OCCURRED (ATTACH THE WORKINGS FOR COMPUTATION OF AMOUNT AND DAYS OF DEFAULT IN TABULAR FORM) PART V PARTICULARS OF FINANCIAL DEBT [DOCUMENTS, RECORDS AND EVIDENCE OF DEFAULT] 1 PARTICULARS OF SECURITY HELD, IF ANY, THE DATE OF ITS CREATION, ITS ESTIMATED VALUE AS PER THE CREDITOR. ATTACH A COPY OF A CERTIFICATE OF REGISTRATION OF CHARGE ISSUED BY THE REGISTRAR OF COMPANIES (IF THE CORPORATE DEBTOR IS A COMPANY) 2 PARTICULARS OF AN ORDER OF A COURT, TRIBUNAL OR ARBITRAL PANEL ADJUDICATING ON THE DEFAULT, IF ANY (ATTACH A COPY OF THE ORDER) 3 RECORD OF DEFAULT WITH THE INFORMATION UTILITY, IF ANY (ATTACH A COPY OF SUCH RECORD) 4 DETAILS OF SUCCESSION CERTIFICATE, OR PROBATE OF A WILL, OR LETTER OF ADMINISTRATION, OR COURT DECREE (AS MAY BE APPLICABLE), ....
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....ion professional, it may, by order, reject such application, provided that the Adjudicating Authority shall, before rejecting the application under sub-section (b) of Section 5, give notice to the applicant, to rectify the defects in his application, within 7 days of receipt of such notice from the Adjudicating Authority. 41. The Corporate Insolvency Resolution Process commences on the date of admission of the application under sub-section (5) of Section 7 of the IBC. Section 7(7) casts an obligation on the Adjudicating Authority to communicate an order under clause (a) of sub-section (5) of Section 7 to the financial creditor and the corporate debtor and to communicate an order under clause (b) of sub-section (5) of Section 7 to the financial creditor within seven days of admission or rejection of such application, as the case may be. Sections 8 and 9 of IBC pertain to Insolvency Resolution by an operational creditor and are not attracted in the facts and circumstances of this case. Section 10 pertains to initiation of Corporate Insolvency Resolution Process by the Corporate Debtor itself, and is also not attracted in the facts and circumstances of the case. 42. The IBC is n....
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....by revival of the Corporate Debtor through the entrepreneurial skills of persons other than those in its management, who failed to clear the dues of the Corporate Debtor to its creditors. It only segregates the interests of the Corporate Debtor from those of its promoters/persons in management. 47. In construing and/or interpreting any statutory provision one must look into the legislative intent of the statute. The intention of the statute has to be found in the words used by the legislature itself. In case of doubt it is always safe to look into the object and purpose of the statute or the reason and spirit behind it. Each word, phrase or sentence has to be construed in the light of the general purpose of the Act itself, as observed by Mukherjea J., in Popatlal Shah v. State of Madras AIR 1953 SC 274 and a plethora of other judgments of this Court. 48. When a question arises as to the meaning of a certain provision in a statute, the provision has to be read in its context. The statute has to be read as a whole. The previous state of the law, the general scope and ambit of the statute and the mischief that it was intended to remedy are relevant factors. 49. In Dena Bank (....
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....ty against whom the right is claimed, has the effect of commencing of a fresh period of limitation, from the date on which the acknowledgment is signed. However, the acknowledgment must be made before the period of limitation expires. 65. As observed above, Section 238-A IBC makes the provisions of the Limitation Act, as far as may be, applicable to proceedings before NCLT and Nclat. The IBC does not exclude the application of Sections 6 or 14 or 18 or any other provision of the Limitation Act to proceedings under the IBC in NCLT/Nclat. All the provisions of the Limitation Act are applicable to proceedings in NCLT/Nclat, to the extent feasible. 66. We see no reason why Section 14 or 18 of the Limitation Act, 1963 should not apply to proceeding under Section 7 or 9 IBC. Of course, Section 18 of the Limitation Act is not attracted in this case, since the impugned order [Sesh Nath Singh v. Baidyabati Sheoraphuli Coop. Bank Ltd., 2019 SCC OnLine NCLAT 928] of Nclat does not proceed on the basis of any acknowledgment. *** 89. Legislature has in its wisdom chosen not to make the provisions of the Limitation Act verbatim applicable to proceedings in NCL....
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....rt speaking through Nariman, J. held:- "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 where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application." 58. In Jignesh Shah v. Union of India (2019) 10 SCC 750 this Court speaking through Nariman, J. reiterated the proposition that the period of limitation for making an application under Section 7 or 9 of the IBC was three years from the date of accrual of the right to sue, that is, the date of default. 59. In Dena Bank (supra), this Court relied upon the dictum of P.B. Gajendragadkar, J. in Balakrishna Savalram Pujari Waghmare v. Shree Dhyaneshwar Maharaj Sansthan AIR 1959 SC 798, and held:- "31. ... Section 23 refers not to a continuing ....
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.... to pay expressly or even by implication. However, the acknowledgement must be made before the relevant period of limitation has expired. 63. In Khan Bahadur Shapoor Fredoom Mazda v. Durga Prasad Chamaria and Others 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 though the exact nature or the specific character of the said liability may not be indicated in words. Words used in the acknowledgment must, however, indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the intention to admit such jural relationship. Such intention can be inferred by implication from the nature of the admission, and need not be expressed in words. If the statement is fairly clear then the intention to admit jur....
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....t is accompanied by 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 entitled to the property or right. "Signed" is to be construed to mean signed personally or by an authorised agent. 66. An acknowledgement made in writing within the period of limitation extends the period of limitation. In this case, there was no acknowledgement of debt within three years from the period on which the account of the Corporate Debtor was declared NPA or within three years from the date on which the loan facilities were recalled. 67. The Adjudicating Authority proceeded on the basis that the offer of settlement made by the Corporate Debtor on 12th December 2018 and rejection thereof by the appellate showed the Corporate Debtor had conceded that there was a continuous cause of action. It is, however, the case of the Appellant Financial Creditor in this appeal that terms of settlement were executed on 20th December 2018 whereby the Corporate Debtor agreed to repay the amount of Rs.24,55,00,000/- within 31st December 2018. The Adjudicating Authority, however, did not refer to any settlement. Nor did it address....