As per the case facts, an application under Section 7 of the IBC was admitted by the Adjudicating Authority, and this decision was upheld by the National Company Law Appellate ...
2023INSC820 Civil Appeal No.2085 of 2022 Page 1 of 32
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2085 OF 2022
AXIS BANK LIMITED …APPELLANT(S)
VERSUS
NAREN SHETH & ANR. …RESPONDENT(S)
J U D G M E N T
VIKRAM NATH, J.
This appeal, under Section 62 of the Insolvency
and Bankruptcy Code, 2016,
1 has been filed assailing
the correctness of judgment and order of National
Company Law Appellate Tribunal
2 dated 04.01.2022,
whereby the Company Appeal (AT) (Insolvency)
No.930 of 2021 filed by the appellant was dismissed
1
In short, “IBC”
2
NCLAT
Civil Appeal No.2085 of 2022 Page 2 of 32
upholding the judgment and order dated 22.09.2021,
passed by the Adjudicating Authority, admitting the
application under Section 7 of the IBC after
condoning the delay.
2. Relevant facts giving rise to the present appeal are
briefly summarized as under:
2.1. The appellant entered into a leave and license
agreement with Universal Premise s and Textiles
Private Limited
3 for the premises being Ground to
10
th floor in the building named Solaris “C”. A
security deposit of Rs. 87,56,24,381/- was furnished
by the appellant between the period 23.06.2007 to
03.11.2008. Universal Premises executed a simple
mortgage without possession in favour of the
appellant for seven floors on 06.11.2008.
2.2. On 02.05.2011, Universal Premises executed a
sale deed in favour of Rajput Retail Ltd.
4. The sale
deed was for the land admeasuring 5123.90 sq.
meters which included the land beneath the aforesaid
building - Solaris “C” also. The Leave and License
Agreements in favour of the appellant were duly
3
The Universal Premises
4
RRL
Civil Appeal No.2085 of 2022 Page 3 of 32
acknowledged, reserved, and protected under the
sale deed.
2.3. RRL, having availed credit facilities from the
State Bank of India
5 (Respondent No.2), created an
equitable mortgage on 29.06.2011 with respect to the
land underneath the building-Solaris “C” to secure
the said credit facilities.
2.4. In 2012, Universal Premises was merged with
RRL under the orders of the High Court of Bombay
and it was renamed as Shreem Corporation Limited
6,
which is the Corporate Debtor. Between June, 2012
and 17.10.2013, the appellant issued notices for the
refund of Security Deposit under the Leave and
License agreement. However, as the said amount was
never paid, the appellant filed eight summary suits
before the Bombay High Court for refund of the
Security Deposit, along with interest, during the
period from 14.12.2012 to 24.12.2013.
2.5. In the meantime, Respondent No.2 declared the
Corporate Debtor as Non-Performing Asset
7 in view of
the default as on 31.03.2013, vide communication
dated 28.06.2013.
5
In short, “State Bank of India”
6
In short, “SCL”
7
In short, “NPA”
Civil Appeal No.2085 of 2022 Page 4 of 32
2.6. The High Court of Bombay on 27.07.2015
passed a common conditional order in all the
Summary Suits granting leave to defend to the
Corporate Debtor subject to deposit of the Security
Deposit. Later, the suits were decreed on 02.12.2015
and 15.12.2015.
2.7. According to the appellant, the Corporate
Debtor was shown as an inactive Company since
2016 and the date of last Annual General Meeting
8
was shown to be 26.09.2016.
2.8. The appellant had applied before the High Court
of Bombay for recovery of its dues in which objections
were filed by respondent No.2. However, the same
were rejected on 18.03.2019 and a proclamation of
sale was ordered in favour of the appellant.
2.9. In the meantime, the respondent No.2 moved
separate applications at different times for lifting of
attachment from ground floor and 2
nd to 5
th floors in
Solaris “C”, which was withdrawn in October 2016.
2.10. On 08.11.2019, respondent No.2 filed fresh
interim applications again seeking lifting of
8
AGM
Civil Appeal No.2085 of 2022 Page 5 of 32
attachment orders on the 11 floors of Solaris “C” and
also for stay of the sale process for the seven floors.
2.11. Respondent No.2 filed a Company Petition
No.1382/MB/2021 under Section 7 IBC against the
Corporate Debtor on 22.01.2020 without intimating
or making the appellant a party to the said
proceedings. Application under Section 5 of the
Limitation Act was also filed along with the petition
for condoning delay of 1392 days. Later on,
respondent No.2 filed an additional affidavit stating
that the delay was only of 662 days in view of the
acknowledgement in the Balance Sheet of the
Corporate Debtor for the financial year ending
31.03.2015.
2.12. On 22.09.2021, the Adjudicating Authority
condoned the delay of 662 days and passed an order
of admission and appointment of Interim Resolution
Professional (IRP).
2.13. The IRP on 05.10.2021 published a notice as
required under the IBC for commencement of the
resolution process.
2.14. Before the Bombay High Court on 20.10.2021,
the counsel for the Respondent No.2 filed a copy of
the order dated 22.09.2021 admitting its petition
Civil Appeal No.2085 of 2022 Page 6 of 32
under Section 7 IBC passed by the Adjudicating
Authority.
2.15. The appellant, aggrieved by the order of
admission dated 22.09.2021, preferred an appeal
before the NCLAT under Section 61 of IBC which was
registered as Company Appeal (AT) (Ins.) No.930 of
2021. By the impugned order dated 04.01.2022,
NCLAT dismissed the said Company Appeal , giving
rise to the present Civil Appeal.
3. This Court, while entertaining the appeal, issued
notices on 01.04.2022 and passed an order of status
quo. Pleadings have been exchanged and we have
heard the learned counsel for the parties and perused
the material on record.
4. Before proceeding further with the respective
submissions, certain dates which were not
mentioned by the appellant, however, the same
having been disclosed by the respondent No.2, needs
to be referred to.
4.1. The change in the number of days for which
delay had been caused from 1392 to 662 days by
Civil Appeal No.2085 of 2022 Page 7 of 32
the Respondent No.2 was based upon the Balance
Sheet for the Financial year ending 31.03.2015,
wherein the debt of Respondent No.2 was
acknowledged in the Balance Sheet of the
Corporate Debtor.
4.2. Before this Court, Respondent No.2 has placed
certain documents to further justify the delay by
referring to two One-Time Settlement
9 proposals
submitted by the Corporate Debtor which were
duly considered. The first proposal of OTS is dated
16.03.2017 and the second proposal is dated
01.01.2018. Copies of both the proposals have
been filed as Annexures-A1 and A2 along with I.A.
No.26982 of 2023 seeking permission to place
additional documents on record.
4.3. Respondent No.2 relies upon these two OTS
proposals as also the Balance Sheet for the
Financial Year closing 31.03.2015 to plead that the
limitation would start running from each of these
three dates and would be three years
corresponding to each date.
9
OTS
Civil Appeal No.2085 of 2022 Page 8 of 32
4.4. In brief, although NPA was declared on
28.06.2013, but within three years thereof, the
Corporate Debtor acknowledged the debt in its
Balance Sheet for the Financial Year ending
31.03.2015, which was within three years from the
date of NPA.
4.5. Again, before the expiry of three years, an OTS
proposal was submitted within three years by the
Corporate Debtor on 16.03.2017 and again before
expiry of three years from the said date, a fresh OTS
proposal was submitted on 01.01.2018. Taking the
last date of OTS proposal dated 01.01.2018
acknowledging the debt, the limitation for initiating
Insolvency proceedings would run up to
31.12.2020. The petition under Section 7 IBC
having been filed on 22.01.2020, which was well
within time.
5. The arguments advanced on behalf of the appellant
by Shri Sanjiv Sen, learned Senior Counsel are
summarized as under:
Civil Appeal No.2085 of 2022 Page 9 of 32
a) Respondent No. 2 admitted in its Section 7
petition that there was a delay of 1392 days.
According to it, the Corporate Debtor was
declared as NPA on 28.06.2013, with effect from
31.03.2013, as per the Balance Sheet.
Accordingly, applications seeking condonation
of delay were filed by State Bank of India. The
period of limitation, which is three years, would
thus expire on 31.03.2016.
b) As per the website of the Ministry of Corporate
Affairs, the Corporate Debtor was shown as an
inactive company since 2016 with the last date
of the AGM being 26.09.2016.
c) Respondent No. 2 relied upon the Balance Sheet
of the financial year ending 31.03.2015, in
which the date was acknowledged by the
Corporate Debtor and as such the limitation
would run up to three years from the said date
of the balance sheet, which would extend up to
31.03.2018, and it was on this premise that
Respondent No. 2 made an application stating
that the actual delay was not 1392 days but 662
days.
Civil Appeal No.2085 of 2022 Page 10 of 32
d) Respondent No. 2, apart from declaring the
Corporate Debtor as NPA on 28.06.2013, had
further participated before the High Court of
Bombay by moving applications objecting to the
said proceedings, where it had failed. Section 7
petition was filed thereafter on 22.01.2020.
e) Before the NCLAT, the Respondent No. 2 further
improved its case by referring to an OTS
proposal dated 16.02.2019 as an
acknowledgement of the debt. However, this
was objected to on the ground that even if it is
assumed that the Corporate Debtor
acknowledged the debt as per the Balance Sheet
of the financial year ending 31.03.2015, the
period of limitation from the said date having
expired on 31.03.2018, the OTS proposal dated
16.05.2019 would be beyond the period of
limitation and, as such, would be of no
assistance to the Respondent No. 2.
f) The Respondent No. 2, before this Court, filed
documents which were not presented either
before the National Company Law Tribunal
10 or
10
NCLT
Civil Appeal No.2085 of 2022 Page 11 of 32
the NCLAT, relating to two other OTS proposals
dated 16.03.2017 and 01.01.2018. These
documents were introduced for the first time by
way of additional evidence before this Court.
However, such documents as additional
evidence should not be entertained nor were
admissible before this Court in a Civil Appeal.
g) The Respondent No. 2, from time to time, had
been improving its case , which is not
permissible under law and amounted to an
abuse of process of law and the same needs to
be deprecated.
h) The additional documents filed cannot be relied
upon having been introduced at such a late
stage and for the following reasons:
i. Veracity of documents unknown;
ii. Documents are inconsistent;
iii. No unequivocal acknowledgement by
Corporate Debtor;
iv. No mention of quantum of debt;
v. No identification/ company seal of Corporate
Debtor;
vi. No proper board resolution in support;
Civil Appeal No.2085 of 2022 Page 12 of 32
vii. Address of Corporate Debtor wrongly
mentioned in the Board Resolution;
viii. No separate arrangement vis-à-vis Corporate
Debtor was made;
ix. Debt is disputed by the Corporate Debtor;
and
x. OTS was never accepted by State Bank of
India itself.
6. Shri Sanjiv Sen, learned senior counsel, further
placed reliance upon the following authorities for the
propositions. (i)Firstly, that Section 7 application was
not maintainable for time -barred claims; (ii)
Secondly, Section 14 of the Limitation Act is
applicable only if the first forum lacks the jurisdiction
to entertain the proceedings; and (iii) Lastly,
acknowledgment has to be made before the expiry of
the period of limitation as per Section 18 of the
Limitation Act:
i. Jignesh Shah & Anr. vs. Union of India &
Anr.
11
,
11
2019(10) SCC 750
Civil Appeal No.2085 of 2022 Page 13 of 32
ii. M/s Invent Asset Securitisation &
Reconstruction Pvt. Limited vs. M/s Girnar
Fibres Ltd.
12
,
iii. Invent Assets Securitization and
Reconstruction Private Limited vs. Xylon
Electrotechnic Private Limited
13
,
iv. Vashdeo R. Bhojwani vs. Abhyudaya Co -
Operative Bank Limited and Another
14
,
v. B.K. Educational Services Private Limited vs.
Parag Gupta and Associates
15
,
vi. Babulal Vardharji Gurjar vs. Veer Gurjar
Aluminium Industries Pvt. Limited & Anr.
16
,
vii. Ome Prakash Verma vs. Amit Jain & Anr.
17
,
viii. Insolvency Law Report March 2018,
ix. Rajendra Narottamdas Sheth and Another vs.
Chandra Prakash Jain and Another
18
,
x. Gopal Sardar vs. Karuna Sardar
19
, and
xi. Serish Maji vs. Nishit Kumar Dolui
20
.
12
2022 SCC Online SC 808
13
Civil Appeal No. 3783 of 2020
14
2019 (9) SCC 158
15
2019(11) SCC 633
16
2020(15) SCC 1
17
In CA(AT) (Insolvency) No. 827 of 2020 passed by NCLT, (Principal Bench, Delhi).
18
(2022) 5 SCC 600
19
(2004) 4 SCC 252
20
1999 SCC Online Cal 58
Civil Appeal No.2085 of 2022 Page 14 of 32
7. On the other hand, Shri N. Venkataraman, learned
Additional Solicitor General appearing for
Respondent No. 2, in addition to the list of dates
mentioned by the appellant, referred to the short list
of dates in support of his arguments. Some of these
dates are in addition to the list of dates mentioned
and already incorporated in the earlier part of this
order. A brief reference to the said dates relied upon
by the Respondent No. 2 are as follows:
a) The Corporate Debtor was classified as NPA by
Respondent No.2 on 28.06.02013.
b) Notice under Section 13(2) of the Securitization
and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002
21
was issued on 02.07.2013.
c) Notice under Section 13(4) of the SARFAESI Act
was issued on 23.11.2013.
d) Respondent No.2 filed an Original Application
before the Debt Recovery Tribunal (DRT),
Mumbai registered as Original Application No.
726 of 2014 on 03.06.2014.
21
In short, “SARFAESI Act”
Civil Appeal No.2085 of 2022 Page 15 of 32
e) Corporate Debtor acknowledged their liability in
the balance sheet dated 04.09.2015 for the
financial year ending 31.03.2015.
f) An order under Section 14 of the SARFAESI Act
was passed by the competent Magistrate on
09.03.2017.
g) The Corporate Debtor admitted a one -time
settlement offer on 16.03.2017 (additional
document before this Court).
h) The Corporate Debtor once again admitted their
liability and made a fresh compromise/one-time
settlement offer dated 01.01.2018 (additional
document before this Court).
i) The Corporate Debtor again admitted their
liability while submitting a fresh
compromise/one-time settlement offer dated
16.05.2019 (additional document before
NCLAT).
j) The mortgaged property was put on auction sale
on 12.12.2019, and again on 26.02.2020 .
However, no bids were received.
k) Respondent No.2 filed an application under
Section 7 of the IBC along with application
Civil Appeal No.2085 of 2022 Page 16 of 32
under Section 5 of the Limitation Act on
22.01.2020.
l) Referring to the above sequence of events, it was
submitted by the learned senior counsel that at
no point in time did Respondent No.2 lose its
right to initiate the insolvency proceedings. It
being a Secured Creditor/Financial Creditor
with dues of more than Rs. 681 crores at the
time of filing the Section 7 petition, cannot be
non-suited by an unsecured creditor (appellant)
having a liability of approx. Rs. 87 crores as on
30.11.2019. The total facilities provided are of
Rs. 395 crores, and the principal outstanding
amount as on 31.05.2013 was Rs. 283 crores.
m) The limitation, in fact, never expired, and the
petition filed under Section 7 of IBC was well
within time. Even if the date of declaring the
NPA is taken as the base for counting the
limitation, the same continued to be extended
in view of the developments subsequent to the
said declaration of NPA, which entitled the
Respondent No.2 to the benefit of Sections 5,
14 and 18 of the Limitation Act.
Civil Appeal No.2085 of 2022 Page 17 of 32
n) There being repeated acknowledgments, not
only by way of the debt being reflected in the
balance sheet, but also repeated proposal for
one-time settlement by the Corporate Debtor,
which extended the limitation, Respondent No.2
would be entitled to the benefit of Section 18 of
the Limitation Act.
o) The NCLT as also the NCLAT rightly rejected
the objection taken by the appellant regarding
the petition being time-barred and further
rightly proceeded to admit the petition under
Section 7 of the IBC by initiating the CIRP. The
appeal, being devoid of merits is liable to be
dismissed.
p) Reliance was placed upon the following
judgements by learned senior Counsel
appearing for Respondent No.2, in support of
his submissions:
(i). Kotak Mahindra Bank Limited vs. Kew
Precision Parts Private Limited and Ors
22
,
(ii). Asset Reconstruction Company (India)
Limited vs. Bishal Jaiswal and Another
23
,
22
(2022) 9 SCC 364
23
(2021) 6 SCC 366
Civil Appeal No.2085 of 2022 Page 18 of 32
(iii). Dena Bank (Now Bank of Baroda) vs. C.
Sivakumar Reddy and Another
24
, and
(iv). Sesh Nath Singh and Another vs.
Baidyabati Sheoraphuli Co -Operative Bank
Limited and Another
25.
8. We have considered submissions advanced by
learned counsels for the parties as also the materials
placed on record.
9. Before dealing with the arguments advanced, it
would be appropriate to refer to the statutory
provisions. Section 3(1) of the Limitation Act creates
bar for the institution of any suit, appeal, or
application made after the prescribed period of
limitation to be dismissed, even though limitation
has not been set up as a defence. The said Section
reads as follows:
“3. Bar of limitation.—(1) Subject to the provisions
contained in sections 4 to 24 (inclusive), every suit
instituted, appeal preferred, and application made
after the prescribed period shall be dismissed,
although limitation has not been set up as a
defence. ”
24
(2021) 10 SCC 330
25
(2021) 7 SCC 313
Civil Appeal No.2085 of 2022 Page 19 of 32
10. Section 5 of the Limitation Act provides for an
extension for the prescribed period in certain cases
where sufficient cause for not preferring the appeal
or where the application could not be made within
the prescribed time. Section 5 reads as follows:
“5. Extension of prescribed period in certain
cases.—Any appeal or any application, other than
an application under any of the provisions of Order
XXI of the Code of Civil Procedure, 1908 (5 of 1908),
may be admitted after the prescribed period if the
appellant or the applicant satisfies the court that
he had sufficient cause for not preferring the appeal
or making the application within such period.
Explanation.—The fact that the appellant or the
applicant was misled by any order, practice or
judgment of the High Court in ascertaining or
computing the prescribed period may be sufficient
cause within the meaning of this section.”
11. Section 18 of the Limitation Act provides that where
acknowledgment in writing of the liability is made by
a party against whom any right is claimed, a fresh
period of limitation shall be computed from the time
when the acknowledgment is so signed. The said
Section is reproduced hereunder:
“18. Effect of acknowledgment in writing.—
(1) Where, before the expiration of the prescribed
period for a suit or application in respect of any
Civil Appeal No.2085 of 2022 Page 20 of 32
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,—
(a) an acknowledgment may be sufficient though it
omits to specify the exact nature of the property or
right, or avers that the time for payment, delivery,
performance or enjoyment has not yet come or is
accompanied by a refusal to pay, deliver, perform or
permit to enjoy, or is coupled with a claim to set off,
or is addressed to a person other than a person
entitled to the property or right,
(b) the word “signed” means signed either personally
or by an agent duly authorised in this behalf, and
(c) an application for the execution of a decree or order
shall not be deemed to be an application in respect of
any property or right.”
12. The question in the present case is primarily
whether Respondent No.2 would be entitled to the
benefit of Section 18 of the Limitation Act and
whether Section 5 of the Limitation Act thereof
Civil Appeal No.2085 of 2022 Page 21 of 32
would also be applicable. Although Section 14 of the
Limitation Act has also been referred to, but in our
opinion, Section 14 will have no application
inasmuch as the proceedings under the SARFAESI
Act before the DRT cannot be said to be before a
Court or Tribunal having no jurisdiction.
Respondent No.2, being a Secured Creditor, would
definitely have a right to invoke the power under the
SARFAESI Act and the said proceedings cannot be
said to be without jurisdiction. Therefore, no benefit
under Section 14 would be admissible to
Respondent No.2 in the present case.
13. Coming back to the benefit available under Section
18 of the Limitation Act, the following sequence of
events and the law thereon would be relevant. The
State Bank of India declared the Corporate Debtor
as an NPA on 28.06.2013. Therefore, the limitation
period would be three years from the last date of the
financial year previous to the declaration of NPA,
which would be 31.03.2013, and would run up to
31.03.2016. If there were no further intervening
circumstances or developments relating to
acknowledgment, the contention raised by the
Civil Appeal No.2085 of 2022 Page 22 of 32
appellant that the petition under Section 7 of IBC
having been filed much beyond 31.03.2016, in 2020
to be specific on 22.01.2020, the petition would be
clearly barred by limitation.
14. However, there are four major acknowledgments
made by the Corporate Debtor after the declaration
of the NPA and within the expiry of three years from
the said date, details of which have already been
mentioned in the previous paragraphs. However ,
briefly the same are being referred to again.
a) The Corporate Debtor, in its balance sheet for the
financial year 2014-15, which came to an end on
31.03.2015, had acknowledged the debt in its
balance sheet for the said year. This
acknowledgment of debt in the balance sheet has
been held to be a valid acknowledgment for the
benefit of Section 18 of the Limitation Act. From
the above date the period of three years would run
up to 31 March, 2018.
b) The first OTS proposal is dated 16 March, 2017,
within a period of three years of the date of
acknowledgment of debt in the balance sheet.
Civil Appeal No.2085 of 2022 Page 23 of 32
c) The second OTS proposal is dated 1
st January,
2018, again within a period of three years from
the date of the first OTS proposal.
d) The third OTS proposal is dated 16
th May, 2019,
once again within a period of three years from the
date of the second OTS proposal.
15. The petition under Section 7 was filed on 22nd
January, 2020 within three years from the date of the
first, second and the third OTS proposals.
16. The question for consideration would be
whether the debt acknowledged in the balance sheet
of the financial year would end on 31
st March, 2015
and whether the three OTS proposals would give a
fresh life of limitation of three years from each of the
respective dates. Section 18 of the Limitation Act is
the provision on which strong reliance has been
placed upon by the Respondent No.2 for seeking such
extension of limitation.
17. A plain reading of Section 18(1) of the Limitation
Act would reflect that where any acknowledgment of
a liability has been made in writing by the party
against whom any right is claimed, a fresh period of
limitation would be computed from the time when the
acknowledgment was so signed, subject to such
Civil Appeal No.2085 of 2022 Page 24 of 32
acknowledgment being made before expiry of the
prescribed period for filing a suit or application in
that respect.
18. Section 18(2) of the Limitation Act may not be
applicable in the present case inasmuch as all the
acknowledgements in the present case have a date
and, therefore, there would be no question of leading
any oral evidence to establish the date of the
acknowledgement.
19. Learned Senior counsel for the appellant has
strongly contended that all the acknowledgments
were firstly, not filed along with the petition under
Section 7 of the IBC but were subsequently filed one
at the stage of appeal before the NCLAT and two of
such acknowledgements have been filed before this
Court, as such the same should not be entertained.
This argument of the appellant may not have much
force to disentitle a financial creditor from claiming
its right to recover the dues and initiate proceedings
under the IBC.
20. Further, learned Senior counsel for the
appellant also expressed doubt and apprehension
about the correctness and genuineness of such
acknowledgments but we are afraid to accept such a
Civil Appeal No.2085 of 2022 Page 25 of 32
contention inasmuch as the same could be objected
regarding its correctness by the Corporate Debtor
and not by an unsecured creditor. It would be for the
Adjudicating Authority to consider such a plea, if so
raised by the Corporate Debtor.
21. Reference may be made to a recent judgement
of this Court in the case of Dena Bank (supra) where
facts were similar. The documents relating to
acknowledgement claiming benefit of Section 18 were
introduced at appellate stage, and such documents
being balance sheets and settlement offers. It was
held that the same could be accepted even at the
appellate stage and a settlement offer akin to an OTS
proposal would be an acknowledgment of debt for the
purpose of Section 18 of Limitation Act. The only
caveat was that such acknowledgme nts should be
before the expiry of limitation prescribed under law.
Para 22 of the said judgement refers to the facts in
brief which are similar to the facts of the present case
where the balance sheet and one-time settlement
proposal were introduced. The same is reproduced
herein:
Civil Appeal No.2085 of 2022 Page 26 of 32
“22. In other words, the main question involved
in this appeal is, whether a petition under
Section 7 IBC would be barred by limitation, on
the sole ground that it had been filed beyond a
period of 3 years from the date of declaration of
the loan account of the corporate debtor as NPA,
even though the corporate debtor might
subsequently have acknowledged its liability to
the appellant Bank, within a period of three
years prior to the date of filing of the petition
under Section 7 IBC, by making a proposal for a
one-time settlement, or by acknowledging the
debt in its statutory balance sheets and books of
accounts.”
22. Ultimately, in paragraph 142 of the report, it
was held that additional documents could be
introduced at the stage of appeal also. The said para
is reproduced hereunder:
“142. There is no bar in law to the amendment
of pleadings in an application under Section 7
IBC, or to the filing of additional documents,
apart from those initially filed along with
application under Section 7 IBC in Form 1. In the
absence of any express provision which either
prohibits or sets a time-limit for filing of
additional documents, it cannot be said that the
adjudicating authority committed any illegality
or error in permitting the appellant Bank to file
additional documents. Needless however, to
mention that depending on the facts and
circumstances of the case, when there is
inordinate delay, the adjudicating authority
might, at its discretion, decline the request of an
applicant to file additional pleadings and/or
documents, and proceed to pass a final order. In
Civil Appeal No.2085 of 2022 Page 27 of 32
our considered view, the decision of the
adjudicating authority to entertain and/or to
allow the request of the appellant Bank for the
filing of additional documents with supporting
pleadings, and to consider such documents and
pleadings did not call for interference in appeal.”
23. The above discussion takes care of the
arguments raised by the appellant regarding
admissibility of documents in appeal to be without
any merit. The judgement in the case of Dena Bank
(supra) has been later on relied upon in the case of
Kotak Mahindra Bank Ltd.(supra).
24. A balance sheet acknowledging debt is also a
document relevant for calculating the limitation. This
has already been held in case of Asset
reconstruction Company India Ltd. (supra). In all
the above cases, what has been elaborately discussed
is the ‘purposive interpretation of the statute’ to
advance the cause of justice.
25. The argument advanced on behalf of the
appellant regarding the improvement made by
Respondent No. 2- State Bank of India from stage to
stage also is of no assistance inasmuch as if the OTS
proposals are found to have been made by the
Corporate Debtor and the balance sheet reflected the
Civil Appeal No.2085 of 2022 Page 28 of 32
debt in the financial year ending 31
st March, 2015,
then in fact, there would be no delay on the part of
the Respondent No. 2- State Bank of India in
initiating the proceeding as the same would be within
the extended period of limitation provided under
Section 18 of the Limitation Act.
26. Another argument raised by the counsel for the
appellant was with respect to the genuineness of the
OTS proposals giving several reasons to discard the
same. All the said reasons will be tested in the
proceedings before the Adjudicating Authority as and
when raised by the Corporate Debtor or any other
party having locus to raise such plea. Presently in
this appeal the said issue cannot be taken up for two
reasons: firstly, the Adjudicating Authority as well as
NCLAT have accepted the explanation of Respondent
No.2 for the delay caused in filing the Section 7 IBC
petition to be satisfactory and have condoned the
same. Secondly, in view of the first and second OTS
proposals by the Corporate Debtor being not
questioned by the suspended Directors, there is no
reason to disbelieve or to cast any doubt on the said
documents at the instance of the appellant.
Civil Appeal No.2085 of 2022 Page 29 of 32
27. The case laws relied upon on behalf of the
appellant are on three points as already noted above.
The same are briefly discussed hereunder:
(a) First point on which case laws have been
referred to is that a time barred application
cannot be entertained under Section 7 IBC.
The same would not be relevant or of any
help to the appellant as it has already been
held that the application of Respondent
No.2 would be entitled to benefit of Sections
5 and 18 of the Limitation Act and, therefore,
was within time.
(b) The second point on which case laws have
been referred to was that no benefit could be
claimed under Section 14 of the Limitation
Act. These case laws are also not of any
relevance as it has been held above that no
benefit could be claimed by Respondent No.2
under the said provision.
(c) The third point on which case law is relied
upon is that for benefit under Section 18 of
the Limitation Act, the acknowledgment
should be made within expiry of the
limitation provided under law. On this point
Civil Appeal No.2085 of 2022 Page 30 of 32
it has been factually found that taking the
date of acknowledgment of debt in Balance
Sheet and the three OTS proposals the same
were within the limitation under law or the
extended limitation due to
acknowledgments. Thus the case laws relied
upon would have no relevance in the facts of
the present case.
28. For all the reasons recorded above, we do not
find any merit in the appeal. The same is accordingly
dismissed.
APPLICATIONS BY THE RUBY MILLS LTD:
29. IA No. 153162 of 2022 has been filed by the
Ruby Mills Ltd. seeking Intervention in the present
proceedings on the ground that they had to pay
balance advance amount of Rs 78,50,00,000 as full
and final payment toward the claims made by
Corporate Debtor which was not being accepted in
view of the initiation of the present proceedings under
IBC.
30. IA No. 153166 of 2022 was filed for issuing
appropriate directions for depositing the aforesaid
amount with State Bank of India for which it had filed
Civil Appeal No.2085 of 2022 Page 31 of 32
IA No. 1002 of 2022 in Company Petition No. 236 of
2022 before the NCLT.
31. IA No.19253 of 2023 was filed to take some
additional documents on record.
32. IA Nos.97314 of 2023 and 121868 of 2023 were
again filed for directions of similar nature as IA No.
153162 of 2022 to permit the applicant to deposit
with the Registrar of this Court the deposit receipts
in relation to the Fixed Deposits aggregating to Rs. 79
Crores.
33. Mr Jaideep Gupta, learned Senior Counsel, had
been continuously requesting for appropriate
directions being issued on the above applications but
the same was being resisted by the appellant as also
the State Bank of India.
34. Now that we have held that the IBC proceedings
would continue as we are dismissing the present
appeal, we leave it open for the applicant – the Ruby
Mills Limited, to pursue its remedy before the
Adjudicating Authority or any other forum as maybe
appropriate.
35. The above applications are accordingly disposed
of.
Civil Appeal No.2085 of 2022 Page 32 of 32
36. Any other pending application(s) shall also
stand disposed of.
……………………………………J.
(VIKRAM NATH)
……………………………………J.
(AHSANUDDIN AMANULLAH)
NEW DELHI
SEPTEMBER 12 , 2023
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