TaxTMI 
TaxTMI 
2023 (9) TMI 1259
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....he Application is within the period of Limitation. Submissions of the Appellant : 2. Mr. D. Srinivasa Rao, the Promoter and Suspended Vice Chairman and Director of the Corporate Debtor Company, preferred this Appeal and also argued in person. It is submitted by Mr. D. Srinivasa Rao that the Application dated 19/08/2019 is barred by limitation since admittedly the default was committed on 01/04/1997 and it is argued that no acknowledgements were made before the expiry of the limitation of three years and therefore, Section 18 of the Limitation Act, 1963 is not attracted; that the decision of this Tribunal in the matter of 'Ramdas Dutta Vs. IDBI Bank Limited & Anr.' dated 26/04/2023 in Company Appeal No. 1286/2022, is applicable to the facts of the case, in which matter this Tribunal has observed that 'Thus, the limitation counted from the date of default i.e. 30.06.2011 had expired on 30.06.2014 and there is no acknowledgement of debt during this period in terms of Section 18 of the Act. The Bank did not place on record the balance sheet prior to 2014 and the only balance sheets placed on record are from 31.03.2015 to 31.03.2018 and the OTS also took place on 21st January, 201....
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....'Admittedly, in this case, the account of the Appellant/Corporate Debtor was classified as NPA on 29th August, 2012 thereafter, demand notice under Section 13(2) of the SARFAESI Act, was issued on 03rd October, 2012. In view of the law laid down by Hon'ble Supreme Court in case of Jignesh Shah (supra), it is clear that period of limitation will be computed from the date when the account of the Corporate Debtor was classified as NPA. Thus, the limitation available for initiation of CIRP under Section 7 or 9 of the I&B Code was available up to 02nd October, 2015...' 5. It is also strenuously argued by Mr. Srinivasa Rao that the letters of acknowledgement cannot be considered as acknowledgement under Section 18 of the Limitation Act, 1963, because they are not 'concluded contracts' as the 'offer' made by the Corporate Debtor Company was not accepted by the Financial Creditor and vice versa. Therefore, the additional offer / proposals sent between 2008 and 2022, specifically on 22/11/2008, 17/12/2008, 25/12/2008, 27/12/2008, 12/04/2010, 15/11/2012, 02/04/2013, 03/07/2017, 08/09/2017, 27/10/2017, 11/12/2017, 17/02/2018, 28/04/2018, 06/04/2019, 02/07/2019, 16/08/2019, 26/08/2019, 17/0....
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....ported in R/First Appeal No. 2623/2018 in which it is held that '...This was thus, a conditional offer and not an unconditional promise to pay. In terms of this offer, if the plaintiff had accepted the terms only then the same would result into a concluded contract. In any case, the offer for payment was not unconditional and therefore, could not be seen as a promise...' and also referred to the decision of the Hon'ble Andhra Pradesh High Court in 'MNMR Cotton Industries Vs. Jyothi Chit Fund Company', dated 04/05/2022 reported in Appeal Suit No. 742/2006 in which it is observed that '...There is no separate agreement between the parties in connection with payment of balance amount. Thus, even the 'part payment' made under Ex A-9 without any specific agreement may not be useful to the plaintiff in saving limitation'. It is the case of the Appellant that even a 'part payment' cannot be construed as acknowledgment of debt in the light of the aforenoted Judgment of the Hon'ble Andhra Pradesh High Court. It is also the case of the Appellant that the OTS proposals were signed by unauthorised personnel of the Company who are not the Directors of the Company and therefore no jural relation....
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....FR reference was abated as the Corporate Debtor did not modify the pending reference therefore the deemed date of abatement of reference relates back to 13.08.2015. Section 22(5) of SICA, 1968 is not attracted to the present case since the period of limitation i.e. 3 years had already expired before the BIFR reference was made by the Corporate Debtor. Any reference before the BFIR is abated, if secured creditors have taken measures under Section 13(4) of the SARFAESI Act, 2002 as provided for under Section 41 of the SARFAESI Act, 2002. The period between 25.04.2006 when the Corporate Debtor was declared sick by BIFR under SICA and 04.05.2016 when the reference was dismissed cannot be excluded form computing the limitation period." 9. This was upheld by the Hon'ble Supreme Court vide Order dated 25/04/2022 in Civil Appeal No. 3033/2022, in which the Hon'ble Apex Court has held as follows:- "The Appellate Tribunal has inter alia, pointed out that as per the averments and allegations, right to sue accrued when the default occurred way back on 28.02.2002; and that the material on record does not evidence any acknowledgment of liability in terms of Section 18 of the Limitati....
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.... was last listed, but no Order was passed. On 01/12/2016, SICA was repealed. Since the cause of action accrued to the Financial Creditor on 19/11/2009 during the SICA Moratorium, the Limitation commenced afresh from 01/12/2016. There was a continuous acknowledgement of debt by way of OTS proposals on 10/01/2017, 03/07/2017, 08/09/2017, 27/10/2017. On 10/11/2017, the Financial Creditor rejected the OTS proposal offered by the Corporate Debtor. On 11/12/2017, once again, Executive Vice Chairman acknowledged the payment and sought for granting of 3 months time and on 17/02/2018, once again a letter was addressed requesting the Financial Creditor to accept the OTS offer of Rs. 5,00,000/-. On 07/05/2018, the Financial Creditor had rejected the OTS offer. On 06/04/2019, a letter was addressed by the Appellant suggesting Rs. 9,00,00,000/- as the OTS amount. It is submitted by the Learned Counsel Mr. Ravichandran that the Company Petition was filed by the Respondent on 19/08/2019 and is therefore, within the Limitation period considering the ex-chequered history of the Appellant and the continuous letters on OTS proposals which even continued after the expiry of the Section 7 Application, ....
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....ion or where an appeal under Section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956) or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof [and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company] shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the appellate authority." Section 22 (5) SICA is also to be seen for excluding a certain period for limitation. "22. Suspension of legal proceedings, contracts, etc.- (1)-(4) (5) In computing the period of limitation for the enforcement of any right, privilege, obligation or liability, the period during which it or the remedy for the enforc....
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....praying, inter alia, to permit it under Section 22 of SICA to approach a civil court of appropriate jurisdiction for recovery of the abovementioned dues along with interest; that the said application was disposed of only on 9-9-2015, as per Annexure A-40 proceedings, that too, only with a direction to the respondent company to incorporate the dues of the applicant in the DRS and that as per Annexure A-40, Case No. 13 of 2010 and MA No. 292 of 2014 filed thereon, were then, posted for hearing. 24. In short, Case No. 13 of 2010 was pending before BIFR when SICA was repealed w.e.f. 1-12-2016 and Sections 8 and 9 IBC took its effect from 1-12-12016. Thus, obviously, proceedings under SICA were then pending before BIFR when the default from the part of the respondent allegedly occurred and by virtue of Section 22(1) SICA and the decisions referred above, the appellant could not have, then, resorted to any legal proceedings for enforcing any right which may result in recovery from the properties of the respondent company. For the same reasons, the contention of the respondent that pending the proceedings before BIFR the appellant could have resorted to arbitration proceedings al....
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....l proceeding for recovering the outstanding dues without the permission of BIFR and even on application permission therefor was not given, the period of suspension of legal proceedings is excludable in computing the period of limitation for the enforcement of such right in terms of Section 22(5) SICA. In the absence of provisions for exclusion of such period in respect of an application under Section 9 IBC, despite the combined reading of Section 238-A IBC and the provisions under the Limitation Act what is legally available to such a party is to assign the same as a sufficient cause for condoning the delay under Section 5 of the Limitation Act. In such eventuality, in accordance with the factual position obtained in any particular case viz. the period of delay and the period covered by suspension of right under Section 22(1) SICA, etc. the question of condonation of delay has to be considered lest it will result in injustice as the party was statutorily prevented from initiating action against the industrial company concerned. The first question formulated hereinbefore is accordingly answered." (Emphasis Supplied) 15. In the instant case, BIFR, vide Order dated 22/12/2....
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....ah Alloys Ltd.' (Supra) under the IBC Code, 2016 is squarely applicable to the case on hand. 17. Now, the next issue which is being addressed to is with respect to the contention of the Appellant that the OTS proposals being 'conditional' cannot be taken into consideration and also that they do not extend the period of limitation as they were given beyond three years from the date of default. The question of applicability of Section 8 of the Limitation Act, 1963 under IBC, 2016 is to be examined on the touch stone of the ratio laid down by the Hon'ble Apex Court in the matter of 'Dena Bank Vs. C. ShivaKumar Reddy' reported in [(2021) 10 SCC 330] wherein it was held that issuance of a Recovery Certificate in favour of a Financial Creditor would rise to a fresh cause of action to initiate proceedings under Section 7 of the Code. The Hon'ble Court thus observed in paras 136 and 141 as follows: "27. This Court further went on to observe thus: (Dena Bank case, SCC pp. 387-88, paras 136 & 141) "136. A final judgment and order/decree is binding on the judgment debtor. Once a claim fructifies into a final judgment and order/decree, upon adjudication, and a certificate ....
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....f OTS Proposals even prior to 19/11/2009, were exchanged between the Corporate Debtor Company and the Financial Creditor on 04/11/2008, 22/11/2008, 17/12/2008, 25/12/2008, 26/12/2008 and 27/12/2008. For ready reference, the Letter dated 27/12/2008 written by the Corporate Debtor to the Financial Creditor discussing the OTS Proposal given on 04/11/2008 and the payments to be made thereof, is detailed as hereunder:- 20. From the aforenoted letter, it is clear that there is a clear acknowledgement of the Debt together with the terms of payment. Even on 16/02/2010 an amount of Rs. 37,50,000/- was remitted to the bank in pursuance of the OTS settlement proposal. The said Letter is detailed as hereunder: 21. For the sake of brevity only those OTS letters are being reproduced here where there is a 'promise' to pay and there is also a reference to a part payment made. The next letter dated 15/11/2012 refers in paragraph 2, the earlier OTS letters dated 27/06/2007, 31/08/2007, 02/01/2008 and 19/03/2008, thereby establishing that even prior to the issuance of Debt Recovery Certificate there were several attempts made to discharge the loan, thereby acknowledging the Debt. The letter dat....
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....ent made without a specific agreement may not be useful to the Plaintiff in saving limitation. At this instance, we find it apt to rely on the Judgment of the Hon'ble Supreme Court in the matter of 'Kotak Mahindra Bank Ltd. Vs. KEW Precision Parts Pvt. Ltd. And Ors.' reported in [(2022) 9 SCC 364] in which the Hon'ble Apex Court addressed to the validity and effect of Section 25 (3) of the Contract Act, 1872 and the acknowledgement under Section 18 of the Limitation Act, 1963 and held as follows: "31. Under 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 & Mfg. Co. Ltd. v. State of Bombay [Bombay Dyeing & Mfg. Co. Ltd. v. State of Bombay, AIR 1958 SC 328] . 32. Section 25(3) applies only where the debt is one which would be enforceable....
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....with a promise to pay and part payments being made thereafter, positively construes an 'acknowledgment of Debt' as defined under Section 18 of the Limitation Act, 1963. At this point, it is significant to note the observations made by the Hon'ble Apex Court in the matter of 'Kotak Mahindra Bank Ltd. Vs. KEW Precision Parts Pvt. Ltd. And Ors.' (Supra) which is detailed as hereunder: "62. As per Section 18 of the Limitation Act, an acknowledgment of present subsisting liability, made in writing in respect of any right claimed by the opposite party and signed by the party against whom the right is claimed, has the effect of commencing a fresh period of limitation from the date on which the acknowledgment is signed. Such acknowledgment need not be accompanied by a promise to pay expressly or even by implication. However, the acknowledgment must be made before the relevant period of limitation has expired. 63. In Khan Bahadur Shapoor Fredoom Mazda v. Durga Prasad Chamaria [Khan Bahadur Shapoor Fredoom Mazda v. Durga Prasad Chamaria, AIR 1961 SC 1236] , this Court held : (AIR p. 1238, para 6) "6. It is thus clear that acknowledgment as prescribed by Section 19 ....
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.... alia, of Bengal Silk Mills Co. v. Ismail Golam Hossain Ariff [Bengal Silk Mills Co. v. Ismail Golam Hossain Ariff, 1961 SCC OnLine Cal 128 : AIR 1962 Cal 115] and in Pandam Tea Co. Ltd., In re [Pandam Tea Co. Ltd., In re, 1973 SCC OnLine Cal 93 : AIR 1974 Cal 170] , the judgment of the Delhi High Court in South Asia Industries (P) Ltd. v. General Krishna Shamsher Jung Bahadur Rana [South Asia Industries (P) Ltd. v. General Krishna Shamsher Jung Bahadur Rana, 1972 SCC OnLine Del 185 : ILR (1972) 2 Del 712] and the judgment of Karnataka High Court in Hegde & Golay Ltd. v. SBI [Hegde & Golay Ltd. v. SBI, 1985 SCC OnLine Kar 428 : ILR 1987 Kar 2673] and held that an acknowledgment of liability that is made in a balance sheet can amount to an acknowledgment of debt. In this case, the appellant financial creditor has not relied on any books of accounts or balance sheets of the corporate debtor. 65. Section 18 of the Limitation Act speaks of an acknowledgment in writing of liability, signed by the party against whom such property or right is claimed. Even if the writing containing the acknowledgment is undated, evidence might be given of the time when it was signed. The Explanat....
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....the Limitation Act, 1963, placing reliance on Dena Bank (Supra) held that the three OTS proposals were within the period of limitation under Law. To reiterate, though the question of acknowledgment in balance sheets has not been raised by the Respondent herein, the OTS proposals dated 22/11/2008, 17/12/2008, 25/12/2008, 27/12/2008, 12/04/2010, 15/11/2012, 02/04/2013, 03/07/2017, 06/04/2019, 02/07/2019, 16/08/2019, 26/08/2019 are factually found to be within the period of limitation under Law. Even post filing of the Section 7 Application, OTS proposals dated 17/09/2019, 21/09/2019, 11/10/2019, 18/12/2019, 20/02/2021, 07/08/2021, 02/10/2021, 23/04/2022, 15/06/2022 and 27/08/2022 are part of the record filed. At the cost of repetition, keeping in view, the ratio of the Hon'ble Apex Court in the aforenoted Judgments under IBC, 2016 in the matters of 'Dena Bank Vs. C. Shivakumar Reddy (Supra), Kotak Mahindra Vs. A. Balakrishnan' (Supra), 'Kotak Mahindra Vs. KEW Precision Parts' (Supra), 'Sabarmati Gas Limited Vs. Shah Alloys' (Supra), the Judgments relied upon by the Appellant herein are not germane to the issues raised in this Appeal. 30. Further, the second Respondent / the Resolu....
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....nistrative Office: Fiat No. 101, KOR Residency B-3-966/16, Nagarjuna Nagar Anterpol, Hyderabad. 73 Tel: 040-23745400 Fax 040-23756094 dt. February 16, 2010 Το Stressed Assets Stablization Fund, 23 floor, IDBI Tower, Cuffe parade, Mumbal, 400 005 Fax No. 022-2218 2056 Dear Sir, Sub: OTS of dues to SASF SASF CELL 18 FEB 20 *WARD NO: 4027A- In continuation of the discussions we had with your officials on 11.2.2010 at Mumbal. We have today remitted from our associates the following amounts. Amount remitted In IDBI Bank Cuddapah Branch to the account No. 00/640 Amount remitted In SBH Cuddapah through RTGS in UTR No. 12,50,000 10047300545 10047300531 Total 10,00,000 15,00,000 37,50,000 Please acknowledge receipt. We are separately organizing to get the debt of IDBI and IFCI assigned to an ARC the particulars of which will ve Inform shortly. Thanking you, Yours faithfully For Priyaranjani Fibres Ltd (K. Ranganathan) Authorized Signatory SED ASSE STAL SASF MUMBAI FUND Fegd. Office & Factory: Rayapole (Village), Ibrahimpatnam (Mandal), R.R. Dist. (AP) Pin 501 5....
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....s recognized the undersigned as representative of the company in its orders dated 01.07.2008 and 10.07.2008. ii) However, for obvious reasons the IDBI/SASF have invited Proposals for revival of the Unit (Priyadarabjaai Fibres Ltd.,) from the undersigned as well as Mr.K. Sivananda Reddy and accordingly the undersigned subunitted proposal for revival of the Unit initially for Rs.247.00 lakhs as OTS, which was improved time and again on the Insistence of the OA/SASF to Rs.400.00 lakhs, as detailed below: a. Our letter Dt.27.06.2007- We offered Rs.247.00 lakhs as OTS. b. IDBI, Chennai letter No.2293/SASF/PRIYA, Dt.17.07.2007 Requesting the undersigned to improve the offer. c. Our letter Di,31.08.2007-We further enhanced our offer from Rs.247.00 laklis to Rs.260.00 lakhs as OTS. d. IDBI, Chennai letter No.4992/SASF/PRIYA, DL06.12.2007 undersigned to improve the offer. Requesting the e. Our letter Dt.02.01.2008 - We once again enhanced our offer from Rs.260.00 lakhs to Rs.325.00 lakhs as OTS. f.. IDBI, Chennai letter No.6162/SASF/PRIYA, DL13.02.2008 Requesting the undersigned to Improve the offer. g. Our letter Dt. 19.03.2008....
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....e therefore now request you to kindly keep open the OTS offer accepted by you with the amounts already paid by the Company without cancelling the same as wo and our shareholders are ready to settle the dues by way of ono tine settlement. We are agreeable to pay the balance amount on mutually accepted terms of payment after discussions with you. Yours faithfully, For PRIYARANJANI FIBRES LTD., (D.SRINIVASA RAO) Executive Vice Chairman TRESSED STAB AVONAL Copy submitted to: 1. BIFR, New Delhi 2. AAIFR, New Delhi Document 7 TO RIYARANJANI FIBRES LIMITED 100% Export Oriented Unit Shree Rakesh Sharma Anyone GMIÃSI DGM 401 Admn. Office: 7-1-79/A, Dharam Karan Road, Amearpot Hyderabad-500 016. T.S. India CGM-SAS /10/4/2019. Date: 06-04-2019 ₤10/4/19 memiteon) please Kos Managing Director & CEO Stressed Assets Stabilization Fund, Industrial Development Bank of India Ltd., IDBI Towers, 10 floor. WTC Complex, Cuffee Parade, Mumbai-4000os Respected Sir Sub: M/S.PRIYARANJANI FIBRES LTD PAYMENT OF AMOUNT UNDER OTS SCHEME- REQUEST FOR KIND INTERVENTION-Reg. Ref. SASF ....
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....to submit revised improved OTS with supported documents. After consultation with share holders of the company, share holders have come forward to revive the unit and to give the Evelihood by restoring the employment to hapless company workers and employees. Shareholders hereby agreed to pay 9.00 crores minus amount already paid towards OTS and minus upfront fee towards one time settlement. Therefore it is humble requested to intervene in the matter in accepting our aforesaid offer for revitalize the company providing employment to the Rural people in and around of Ralpole Village, Telangana State. Thanking you Sir.. Yours sincerely. (D. SRINIVASA RAO) V.C & M.D. M/s. PRIYARANJANI FIBRES LTD... ASSETS CITABILIZAL BILIZATION FL FUND R. R.. RY GREATER MUMBAI ( MAHARASHTRA) Regd: No. 10487 DI-30/ 10/2023 GOVT OF * INDIA Document 10 PRIYARANJANI FIBRES LIMITED Administrative Office: Flat No. 101: KOR Resic 8-3-966/16, Nagarjuna N Ameerpet, Hyderabad-i Tel: 040-23745400 Fax: 040-23756094 Dt: 2.07.2019 Ta Dy Gen.manager, Stressed assets stabilization fund, 3d fro....
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....h ROC. 9. In the last 16 years the management has spent nearly Rs 12 crores as under by increasing the paid capital to Rs 23 crores by bringing in Rs 11.30 crores of fresh equity shares. a) QTS to IFCI b) OTS to SASF (part payment) c) reconditioning of machinery & buildings (Rs in lakhs) 263 113 340 d) dues to statutory liability like arrears of PF, exit from 100% EOU status,electricity dues, dues to employes etc. 120 working capital 364 total 1200 10. The SASF has recognized us as the management and settled the OTS with us 11. As per letter dt: 15.6.2009 of the SASF it has also agreed to assaing the assets to our nominees (to over come the litigation of management dispute Annexure-5) 12. However based as the reports of the independent company secretary report (copy enclosed) appointed by SASF. The SASF recommended to the Honourable BIFR to approve the revival/COM to us (vide status reports Dt: 11.2.2009 of SASF Annexure-6 & Annexure-7) SSETS RESS SAS MUNKAT Regd. Office & Factory: Rayapole (Village), Ibrahimpatnam (andal), R.R. Dist. (Telangana) PIN: 501 Document 12 1 PRIYARANJANI FIBRES LIMIT....