AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 69
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....ng a new integrated knitted garments, unit in Kovilpalayam Village near Pollachi, Coimbatore District. 2. Consequent to this, IDBI has sanctioned a loan of Rs. 600 Lakhs on 15.02.2000 under the scheme called as 'Technology Upgradation Fund Scheme', in consortium with State Bank of India (SBI) and State Bank of Hyderabad (SBH), who provide committed to Rs. 200 Lakhs each. In addition, working capital of Rs. 15 Crores was also sanctioned, and the documents in relation thereto were executed for loan disbursement. 3. It is a case of the Appellant, that the actual disbursement, of the loan by IDBI was only of Rs. 420 Lakh as against the sanctioned amount of Rs. 600 Lakhs. Other consortium banks also refused to disburse their share of financial assistance as a result of which the Corporate Debtor was unable to complete the unit and commence production, which resulted in the operations of the company coming to a standstill and erosion of the entire net worth of the company. 4. Subsequently, IDBI declared the account of the Corporate Debtor as Non- performing Asset (NPA) on 29.05.2002 and recalled its loan by its letter of 31.10.2002. It also invoked the guarantee furnished by the....
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.... of the I & B Code, 2016, after lapse of five years would be barred by limitation owing to the so-called default, which was reckoned as to be 22.06.2018, as a consequence of the projected loan agreement of 02.03.2000, which was said to have been defaulted. 8. Apart from the question of limitation, no other question has come into play, nor it has been pressed upon by the Ld. Counsel for the Appellant, for the admitted facts, that in pursuance of the notice issued under Section 13(2) of the SARFAESI Act, 2002, on 09.03.2011 and issuance of the Recovery Certificate on 31.08.2009. 9. According to Part IV of the application preferred under Section 7 of the I & B Code, 2016, the amount debt defaulted to be due was shown as Rs. 76,64,72,470/- (Seventy-Six Crore Sixty-Four Lakh Seventy-Two Thousand Four hundred Seventy) which was shown to be standing in the books of accounts of Corporate Debtor as on 01.04.2019. 10. While opposing the motion of the instant company appeal, as taken by the Appellant, while questioning the impugned order of 01.07.2022, the Ld. Counsel for the Respondents had submitted that in fact as of now, nothing much material survives to be argued in the instant ....
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....orporate Debtor to enter into a one-time settlement with a Financial Creditor. 14. It is only, because of the fact that the Corporate Debtor, in the various processes adopted by it for the purposes of submission of the one-time settlement, had referred to various documents on record for the purposes to show the financial liability due to be paid. The offer of one-time settlement was a conscious decision of the Corporate Debtor which would be amounting to be an admission of liability payable to the Financial Creditor. 15. The Appellant tried to carve out a case, that the cause of action for the purposes of drawing the proceedings under Section 7 of the I & B Code, 2016, would stand vitiated for the reason being that there was an issuance of a Recovery Certificate by DRT-II, Chennai on 31.08.2009. It's this cut-off, which has been taken by the Corporate Debtor, is to determine the aspect of limitation, contending thereof that, if at all the limitation for filing the proceedings under Section 7 of the I & B Code, 2016, would stand initiated would be determined with effect from 31.08.2009, that is in the light of the provisions contained under Article 137 of the Limitation Ac....
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.... light of the provisions contained under Section 18 of the Limitation Act. Even if we read the email communication, which has been extracted in the impugned order, the same inference could be drawn from it. 19. The Ld. Tribunal, in the light of the observation made in Para 142 and 143, of the judgment of Dena Bank (Supra) has observed that once the debt and default, is an aspect that has been admitted and the Corporate Debtor has voluntarily after the proclaimed date of default, has proposed a one-time settlement on 27.09.2018 as referred to herein above, filing of an application under Section 7 of the I & B Code, 2016, on 11.07.2019 would not be barred by limitation. Para 142 and 143 are extracted hereunder: - "142. To sum up, in our considered opinion an application under Section 7 of the IBC would not be barred by limitation, on the ground that it had been filed beyond a period of three years from the date of declaration of the loan account of the Corporate Debtor as NPA, if there were an acknowledgement of the debt by the Corporate Debtor before expiry of the period of limitation of three years, in which case the period of limitation would get extended by a further ....
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....iation of the proceedings, before the Ld. Tribunal. 23. Although the question of limitation was an exclusive aspect which was harped upon and which was also confined to be argued by the Appellants counsel before this Appellate Tribunal. But owing to the consistent opinion, which has been laid down by the Principal Bench as well as by the Hon'ble Apex Court, laying down the parameters as to what would be the guiding factors for the purposes of determining the aspect of limitation, even if the default as chanced, on a date much prior to the date of admission of the liability, because any subsequent admission of default will provide an extension for determining the limitation under Section 18 of the Limitation Act. 24. In the instant case, the principles, as laid down in Dena Bank's judgment, particularly that as contained in para 142, will come into play. Because of the admitted communication made by the Appellant in its email communication of 27.09.2018, there is an apparent admission of default and a liability to pay. In that eventuality, where the admission of default is an aspect accepted by the Appellant, the recuse to Section 18 of the Limitation Act will come int....
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....n, are almost akin to the provisions contained under Order XXII of the CPC, and it is by adopting the aforesaid principles Rule 53 has been incorporated under the NCLT Rules 2016, which prescribes for a right to a party to the proceedings, to substitute the legal heir or a party to whom the right to sue is devested upon a death of a party to the proceedings, to whom a right to litigate subsists or where the right of the deceased Appellant is required to be preserved by carrying out the proceedings further at their behest by his heirs. It's exercising those powers under Rule 53 of the NCLT Rules 2016, which almost happens to be akin provisions to be applied in appeal, to protect a right to sue upon death of a party. The substitution was permitted to be carried by an order passed by us on 24.12.2024, in the order thus passed by this Appellate Tribunal on 24.12.2024, while recording the objection taken by the Respondents counsel, as to whether at all a right to sue survived to the proposed heirs of the deceased Appellant, that is the present substituted heir Mrs P. Radhakumari was an aspect considered by this Appellate Tribunal in the order passed on 24.12.2024 and we permitted th....