Edelweiss Asset Reconstruction Company Limited vs. Octaga Green Power and Sugar Company Limited - Application U/s 7 is within Limitation, as action was initiated in DRT within Limitation.

 NCLT Mumbai (02.07.2019) in Edelweiss Asset Reconstruction Company Limited v/s Octaga Green Power and Sugar Company Limited [CP 2987 (IB) /MB /2018] held that the FC moved DRT within limitation period and the same is still pending before DRT, hence the application filed before the bench under section 7 is within the limitation period.

Excerpts of the order;

# 4. The Corporate Debtor entered into the Master Restructuring Agreement dated 31.3.2012 and Addendum to Master Restructuring Agreement dated 22.6.2012 with UCO Bank and State Bank of India for restructuring its credit facilities. The Corporate Debtor also executed with its Financial Creditors a Trust and Retention Agreement dated 22.2.2012, Inter-se Agreement 22.2.2012, Working Capital Consortium Agreement dated 22.6.2012 and a Common Loan Agreement dated 22.6.2012. The said agreements are annexed to the Petition.

 

# 5. The Petitioner has stated that the loan facilities granted to the Corporate Debtor were secured by a various security interest as an equitable mortgage over the immoveable property, hypothecation of the whole of the moveable properties, fixed assets and current assets including stocks. The Additional and Third Supplement Memorandum of Entry dated 22.6.2012 and the Extension of Charge of Hypothecation dated 22.6.2012 are annexed to the Petition. Further, the Petitioner has also annexed the Pledge of Share Agreement dated 22.6.2012 created in favour of the Financial Creditors of the Corporate Debtor.

 

# 10. The Corporate Debtor has submitted its Affidavit in reply dated 21.12.2018 stating that the present Petition is barred by Limitation as its account was classified NPA on 31.3.2013 and the Petitioner has filed the present Petition on 7.8.2018 that is after five years. The Corporate Debtor has also stated that the UCO Bank had filed the proceedings before the Debt Recovery Tribunal for recovery of alleged dues in the year 2014 which is still pending.

 

# 13. The Petitioner is an Assignee of debt of the original lender, UCO Bank that has assigned its debt to the Petitioner vide Deed of Assignment dated 8.7.2014. The Corporate Debtor entered into the Master Restructuring Agreement dated 31.3.2012 for an amount of ₹20.26 crores owed to the Assignor. The Corporate Debtor entered into the Addendum to Master Restructuring Agreement dated 22.6.2012 for an amount of ₹5.49 crores owed to the Assignor.

 

# 17. It is an admitted fact that the Petitioner has initiated proceedings before the Ld. DRT in the year 2014 and the same has still pending adjudication. The date of default, as stated by the Petitioner in Form 1, is 31.3.2013, i.e. the date of classification of account of the Corporate Debtor as NPA. The Corporate Debtor has also acknowledged this date as the date of default. Therefore, it cannot be disputed that the proceedings before the Ld. DRT for the impugned debt was filed within the limitation period. Given the pending proceedings before the Ld. DRT, the right of the Petitioner to claim the impugned debt before a Court of Law cannot be said to be time-barred. Therefore, the contention of the Corporate Debtor about the claim being time-barred is not maintainable.

 

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