TaxTMI 
TaxTMI 
2023 (4) TMI 1138
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....n 7 of the Insolvency and Bankruptcy Code, 2016 r/w Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (in short 'Code') by the IDBI Bank Limited (Financial Creditor) has been admitted and Pankaj Kumar Tibrewal has been appointed as the Interim Resolution Professional (in short 'IRP'). However, at the time of preliminary hearing of this appeal on 20.12.2022, notice was issued to the Respondents and Interim order was granted to the effect that "no further steps shall be taken in pursuance of the impugned order". 2. Brief facts of this case are that the IDBI Bank Limited (in short 'Bank') filed an application under Section 7 of the Code before the Adjudicating Authority on 01.11.2019 for the resolution of the defaulted amount of Rs. 31,57,17,939.56 calculated as on 08.01.2019 which includes interest @10.75%. According to the Bank, it sanctioned cash credit limit of the Corporate Debtor to the tune of Rs. 5,00,00,000/- which later on enhanced to Rs. 7,50,00,000/-. The Bank had allegedly issued a loan recall notice on 26.02.2013 and also issued notice on 17.08.2013 invoking personal guarantee of the directors of the Corporate Debtor, namely, ....
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....Para 26 which read as under:- "26. A statement showing the series of events for the accounts maintained of the Corporate Debtor maintained with the Applicant Bank:- D.P. Agro Mills Pvt. Ltd. Sl. No. Particulars Date 1. Date of Default 30.06.2011 2. Date of NPA 28.09.2011 3. Recourse under SARFAESI Act, 2002 10.10.2013 4. Date of Representation /s 13(3) of SARFAESI Act, 2002 04.12.2013 5. Balance Sheet of the CD showing loan 31.03.2015 6. Balance Sheet of the CD showing loan 31.03.2016 7. Balance Sheet of the CD showing loan 31,03.2017 8. Balance Sheet of the CD showing loan 31.03.2018 9. Letter issued by the Applicant Bank for OTS under SKBY 01.11.2018 10. OTS Offer under SKBY accepted and signed by the CD 28.12.2018 11. Letter of Approval of OTS under SKBY accepted and duly signed again by the Corporate Debtor 21.01.2019 12. Letter from the CD regarding acknowledgement of debt due to the Applicant Bank and acceptance of offer to replay in terms of the SKBY Yojna 19.04.2019 6. However, it is made clear that the dates given in Para 18 of the impug....
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....orporate Debtor for the Financial Balance sheet for year ending 2011, 2012, 2013 & 2018 of the Corporate Debtor, which would extend the limitation period from time to time. 26. Further, it is seen from the record that the date of default has been mentioned as 30 June, 2011, which stood revived with the acceptance of the OTS proposal by the Corporate Debtor on 28 December, 2018. Moreover, upon perusal of the records at page 231 and 232 of the Petition, it is apparent that the Corporate Debtor also made part payment of the OTS proposed amount. Further, the settlement proposal under the SARAL KARJ BHUGTAN YOJNA provided for the payment of the balance amount within 31 March, 2019." 8. Counsel for the Appellant has vehemently argued that an application under Section 7 of the Code can be filed for initiation of Corporate Insolvency Resolution Process (in short 'CIRP') only on the occurrence of the default. In this regard, Section 7(1) of the Code has been referred to which is reproduced as under:- "7. Initiation of corporate insolvency resolution process by financial creditor. (1) A financial creditor either by itself or jointly with 2[other financial credit....
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....s to be counted from 30.06.2011 to 30.06.2014 for the purpose of further extending the limitation. It is further submitted that as per Section 18 of the Act the acknowledgement of a debt has to be unambiguous and unequivocal which would further extend the period of limitation from the date of acknowledgment. She has referred to Section 18 of the Code which is reproduced as under:- "18. Effect of acknowledgment in writing.-(1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. (2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received. Explanation.-For the purposes of this section,- ....
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....pplication filed under Section 7 of the Code. Article 137 of the Act provides three years from the date when the right to apply accrues. Right to apply accrues from the date of default as has been provided in Section 7 of the Code itself. 16. Admittedly, the Bank did not mention the date of default in Part IV of Form 1 of the application filed under Section 7 of the Code and disclosed the date of default as 30.06.2011 only in the supplementary affidavit. The trigger date is thus 30.06.2011 for the purpose of counting the period of three years which is up to 30.06.2014. Meaning thereby, w.e.f 01.07.2014 the limitation to apply under Section 7 of the Code had expired. However, Section 18 of the Act deals with acknowledgement of the debt for the purpose of extension of limitation but it categorically provides that the acknowledgement has to be made during the period of three years and not beyond that. In the present case, the Bank could not produce any evidence to prove that there has been acknowledgment in writing and signed by the Appellant for the purpose of extension of period of limitation except for the reply to the notice issued under Section 13(2) of the SARFAESI Act, 2002 ....