NCLAT ( 2019.12.18) in C. Shivakumar Reddy Former MD of Kavveri Telecom Infrastructure Limited Vs. Dena Bank [Company Appeal (AT) (Insolvency) No. 407 of 2019] held as under ;
a). Any dues payable, even if acknowledged after three years of limitation period, cannot be taken into consideration for the purpose of deriving conclusion under Section 18 of the Limitation Act.
b). The aforesaid facts also suggest that the application under Section 7 of the I&B Code was filed for the purpose of execution of the Decree passed by the Debts Recovery Tribunal in favour of the ‘Financial Creditor’ for the purpose other than for the resolution of insolvency, or liquidation and is covered by Section 65.
c). The application moved by ‘Corporate Debtor’ to restructure the debt or payment of the interest, does not amount to acknowledgement of debt.Excerpts of the order;
Dena Bank (‘Financial Creditor’) preferred application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the ‘I&B Code’) to initiate ‘Corporate Insolvency Resolution Process’ in respect of M/s. Kavveri Telecom Infrastructure Limited. The Adjudicating Authority (National Company Law Tribunal), Bengaluru Bench by impugned order dated 21st March, 2019 admitted the application and appointed ‘Interim Resolution Professional’. The Appellant, Shareholder of ‘Corporate Debtor’ has challenged the same on the ground that the application under Section 7 of the I&B code was barred by limitation.
# 2. The Learned Counsel for the Appellant submitted that the ‘Corporate Debtor’ defaulted to pay the debt since 30th September, 2013 and the Respondent – Dena Bank classified the debt as NPA on 31st December, 2013. The date of default being 30th September, 2013 and the classification as NPA on 31st December, 2013, the application under Section 7 was barred by limitation.
# 3. The learned Counsel appearing on behalf of the Respondent-Dena Bank submitted that the application under Section 7 of the I&B Code is saved by Section 18 of the Limitation Act, 1963, in as much, even if the time, is taken from the date of default, i.e., 30th September, 2013, in view of the acknowledgement of liability given by the ‘Corporate Debtor’, the application filed by the Respondent cannot be termed as barred by time.
# 5. It is not in dispute that the Respondent has accepted that the ‘Corporate Debtor’ defaulted to pay the debt on 30th September, 2013. The account was classified as NPA with effect from 31st December, 2013.
# 7. In the present case, there is nothing on record to suggest that the ‘Corporate Debtor’ acknowledged the debt within three years and agreed to pay the debt. The application moved by ‘Corporate Debtor’ to restructure the debt or payment of the interest, does not amount to acknowledgement of debt. There is nothing on record to suggest that the ‘Corporate Debtor’ or its authorized representative by its signature has accepted or acknowledged the debt within three years from the date of default or from the date when the account was declared NPA, i.e., on 31st December, 2013. The Balance Sheet of the ‘Corporate Debtor’ for the year 2016-2017 filed after 31st March, 2017 cannot be termed to be a document of acknowledgement in terms of Section 18 of the Limitation Act.
# 8. Any dues payable, even if acknowledged after three years of limitation period, cannot be taken into consideration for the purpose of deriving conclusion under Section 18 of the Limitation Act.
# 11. Admittedly, the ‘Corporate Debtor’ the defaulted in making payments on 20th September, 2013 and the Dena Bank declared the account as NPA on 31st December, 2013. Therefore, we hold that the application filed under Section 7 of the I&B Code by the Bank is barred by limitation.
# 12. From the record, we find that the Respondent Bank (‘Financial Creditor’) has already filed one OA No.16 of 2015 before the Debts Recovery Tribunal Bengaluru. The ‘Corporate Debtor’ has already appeared before the Debts Recovery Tribunal. The Debts Recovery Tribunal has allowed the said original application OA No.16 of 2015 (TA No.634 of 2017) and recovery certificate was issued on 25th May, 2017. Infact, for non-payment, an FIR dated 26th July, 2017 was also lodged by the Bank against the ‘Corporate Debtor’ and by notice dated 20th February, 2018, it has been declared as a willful defaulter.
# 13. The aforesaid facts also suggest that the application under Section 7 of the I&B Code was filed for the purpose of execution of the Decree passed by the Debts Recovery Tribunal in favour of the ‘Financial Creditor’ for the purpose other than for the resolution of insolvency, or liquidation and is covered by Section 65.
# 14. For the reason(s) aforesaid, we set-aside the impugned order dated 21st March, 2019 passed by the Adjudicating Authority (National Company Law Tribunal), Bengaluru Bench in CP (IB) No.244/BB/2018 and dismiss the application under Section 7 of the I&B code filed by the Dena Bank.
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