Edelweiss Asset Reconstruction Co. Ltd vs Chemstar Organics India Ltd

Mumbai (hereinafter referred to as the 'Adjudicating Authority').

By the said order the Adjudicating Authority has dismissed the

petition filed under Section 7 of the IBC on behalf of the appellant

primarily on the ground that it was barred by limitation.

2. The appellant herein is an Asset Reconstruction Company

under Section 3 of the Securitisation and Reconstruction of

Financial Assets and Enforcement of Security Interest Act, 2002

(hereinafter referred to as SARFAESI Act) who acquired the loan

account of the Corporate Debtor i.e Chemstar Organics (India) Ltd

(hereinafter referred to as 'CD') from Bank of Baroda vide

Assignment Agreement dated 26.03.2014. It is the case of the

appellant that Respondent/CD was sanctioned loan by Bank of

Baroda in the year 1998 and also various credit facilities were

provided which are reflected in the following table:-

S.No. Sanction letters

1. Sanction letter dated 12.03.1998 provided the following facilities:

i) Term Loan -2,50,000/- ii) Cash Credit 2,00,00,000/- iii) Packing Credit 2,00,00,000/- iv) Advance bill -2,00,00,000/- v) Cash Credit 50,00,000/- vi) Letter of Credit 25,00,000/- vii) Bank Guarantee 25,00,000

Company Appeal (AT)(Ins) No.707/2021 3

2 Sanction letter dated 07.04.1999 sanctioning Adhoc credit limit of Rs.70,00,000/-

3. As per the appellant, the CD's bank account became Non

Performing Asset (hereinafter referred to as NPA) on 30.09.2000.

It is further case of the appellant that CD executed letters of

acknowledgement on 05.10.2000 and 04.07.2003. Since the CD

defaulted in payment the Bank of Baroda sent Notice on

04.06.2005 to the CD recalling the outstanding amount and CD

sent a reply. Thereafter on 13.03.2006 the CD submitted a letter

showing their willingness to settle the dues of financial creditor.

During interregnum period the Bank of Baroda under the

provisions of SARFAESI Act assigned the debt of the CD to the

appellant herein vide Assignment Agreement dated 26.03.2014. It

further appears from the record that in the year 2016 SARFAESI

proceedings were initiated and Notice under Section 13(2) of the

SARFAESI Act was issued on 15.06.2016. Appellant thereafter

took symbolic possession of the secured assets of the CD.

Thereafter besides SARFAESI proceedings number of other

litigations were generated. Finally in the year 2019 the appellant

filed a petition under Section 7 of the IBC for initiation of Corporate

Insolvency Resolution Process (hereinafter referred to as CIRP)

Company Appeal (AT)(Ins) No.707/2021 4

which was registered as CP (IB)4044/2019 in which proceedings,

CD/Respondent appeared and raised objections regarding

maintainability of the application on the ground of inordinate delay

i.e. on the ground of limitation.

4. The learned Adjudicating Authority after hearing the parties

concluded that application was barred by limitation and dismissed

the company petition. Before further proceeding it is necessary to

reproduce dates and facts which were incorporated in the table at

internal page 7 of the impugned order. The same is reproduced

hereinbelow:-

Year Particulars Comments

04.05.1993 Letter of acknowledgement of Issued prior to the date

debt of default for a sum of

Rs.37 lakhs only

04.05.1993 Letter of acknowledgement of Issued prior to date of

debt default for a sum of

Rs.35.29 Lacs only

04.05.1993 Letter of acknowledgement of Issued prior to date of

debt default for a sum of

Rs.5.32 lacs and Rs.2.12

lacs only

May 2000 DATE OF DEFAULT

Company Appeal (AT)(Ins) No.707/2021 5

3 YERS PERIOD TO BE RECKONED FROM THIS DATE

May 2003 3 years period of limitation expires.

04.06.2005 Demand Notice issued by the 1.Not issued by the

petitioner's Advocate Respondent.

2. Not issued within 3

years from the date of

default

3. Does not constitute

acknowledgement under

Section 18 of the

Limitation Act.

20.08.2010 OTS letter by the Corporate 1. Letter issued

Debtor 'Without

Prejudice."

2. Does not

constitute

acknowledgment

under Section 18

of the Limitation

Act.

3. Not issued within

3 years from the

date of default.

Company Appeal (AT)(Ins) No.707/2021 6

25.10.2011 Letter issued by Assignor Bank 1. Not issued by the

Respondent.

2. Not issued within

3 years from the

date of default

3. Does not

constitute

acknowledgement

under Section 18

of the Limitation

Act.

31.10.2014 Settlement proposal by the 1. Not issued within

Respondent 3 years from the

date of default.

2. Does not

constitute

acknowledgement

under Section 18

of the Limitation

Act.

3. Proposal rejected

by the petition.

Company Appeal (AT)(Ins) No.707/2021 7

12.12.2014 Draft OTS proposed by CD 1. Letter issued

'Without

Prejudice."

2. Draft Notice

cannot be taken

as

acknowledgement.

3. Issued after the

expiration of

period of

limitation.

05.01.2015 OTS letter issued by Applicant 1. Not issued within

3 years from the

date of default.

2. Does not

constitute

acknowledgement

under Section 18

of the Limitation

Act.

26.09.2017 Revocation letter issued by 1. Not issued by

application Respondent.

Company Appeal (AT)(Ins) No.707/2021 8

2. Not issued within

3 years from the

date of default.

3. Does not

constitute

acknowledgement

under Section 18

of the Limitation

Act.

08.10.2018 Settlement proposal letter by Issued after the

the Corporate Debtor expiration of

period of

limitation.

19.11.2018 Revised request for OTS Issued after the

proposed by the Corporate expiration of

Debtor period of

limitation.

10.01.2019 Acceptance of OTS proposed Issued after the

by the applicant duly expiration of

acknowledged by the period of

Corporate Debtor limitation.

23.10.2019 Application under Section 7 filed after 9 years and

5 months from the date of default.

Company Appeal (AT)(Ins) No.707/2021 9

5. Of course the learned Adjudicating Authority has reproduced

the aforesaid tabular chart which were presented by the

Respondent

6. Mr. Neeraj Malhotra, learned senior counsel has appeared on

behalf of the appellant. He assailing the impugned order

submitted that the Learned Adjudicating Authority has incorrectly

relied on the tabular charge wherein it was elaborated that in view

of dates and events and facts depicted in the chart the application

under Section 7 of the IBC was barred by limitation, but real fact

is otherwise. He submits that it is true the Learned Adjudicating

Authority in its order has noticed that default in the case occurred

in the month of May, 2000 and application under Section of 7 of

IBC was filed on 23.10.2019 i.e. after 19 years 5 months from the

date of default but the Adjudicating Authority failed to notice that

by way of acknowledgement and event of One Time Settlement the

period of limitation was regularised. He submits that the extension

was periodically deemed to be extended in view of the fact that

before expiry of three years during initial period acknowledgement

was made and subsequently matter was pending under the

SARFAESI Act and also the litigation went to the Hon'ble High

Company Appeal (AT)(Ins) No.707/2021 10

Court. According to him those events makes it clear that from time

to time period of limitation was extended and date on which

petition under Section 7 was filed, was filed within the period of

three years as prescribed in Section 18 of the Limitation Act.

According to learned senior counsel the order impugned is fit to be

set aside and matter is required to be remitted back for

reconsideration. Besides making oral submissions on behalf of the

appellant, Notes of written submissions as well as additional

written submission have been filed which are reproduced

hereinbelow:

Written Submissions

The present Appeal has been filed under Section 61 of the IBC, 2016 against the order of the Ld. Adjudicating Authority dated 03.06.2021 ("impugned order") in CP No. 4044/2019 titled as "Edelweiss Asset Reconstruction Company Limited vs Chemstar Organics (India) Limited"

by which the Ld. Adjudicating Authority had erroneously dismissed the Section 7 Application filed by the Appellant on the ground of bar of Limitation.

Our submissions on the issue of limitation

a. The important dates for limitation purposes are being given in the table below:

Date Event Annexur es

30.06.200 Date of NPA

Company Appeal (AT)(Ins) No.707/2021 11 0

05.10.200 The Respondent executed two Letters of A-6/ 0 Acknowledgment both dated 05.10.2000. The letter Page of acknowledgment at Page 207-208 is about the term 206-210 loan account and vide this letter, the Respondent has acknowledged that an amount of Rs 2,18,37,775 was due as on 05.10.2000.

The second letter of acknowledgment at Page 209-210 is about the cash credit book debt account and vide this letter, the Respondent has acknowledged that an amount of Rs 26,15,760 was due as on 05.10.2000.

The Respondent Company had passed a Resolution in the meeting of the Board of Directors held on 29.09.2000 for execution of the above mentioned letters of acknowledgment.

Note: The reference of the said letters of acknowledgement and the said Board Resolution is mentioned in Para 5.25 of the OA No. 43/2007 (at Page 120) which was annexed as Exhibit K-3 to the Section 7 Application.

04.07.200 The Respondent executed as many as 8 letters of A- 3 acknowledgment in respect of different credit 7/Page facilities. By these letters, inter alia the Respondent 211-228 has admitted its liabilities about the outstandings as (Typed of 24.05.2003 in respect of Term Loan/cash credit copies book-debts /cash credit hypothecation of stocks/ from 229-255) BP/BD/FBP/FCD/ Packing credit/Term Loan(2) facilities. All these details are also mentioned in Para 5.32 of the OA No. 43/2007 (at Page 122) which was annexed as Exhibit K-3 to the Section 7 Application.

04.06.200 Demand notice issued by Bank of Baroda to the Exh. 0-5 5 Respondent demanding the payment of a sum of Rs. with the 13,37,83,309.98/- due as on 31.03.2005. Section 7 Applicat

Company Appeal (AT)(Ins) No.707/2021 12

ion/ Page 130-136 (137-145 Typed Copy)

29.06.200 Reply by the Respondent to the above Demand Notice A-8/ 5 containing the acknowledgment of liability Paras 2, 5, Page 7, 8, 11 and 12 at Page 256, 258 and 259 respectively 256-264

13.03.200 The Respondent submitted a letter dated 13.03.2006 A-

6 to the bank containing a proposal for one time 9/Page settlement. In Para 2 and 3 of this letter the 265-266 Respondent has made an unconditional (267-268 acknowledgment of liability. Typed copy) Note: The reference of this letter dated 13.03.2006 was mentioned in Para 5.38 of the OA No. 43/2007 (at Page 122)

20.03.200 The above OTS was accepted by the Bank by its letter A-10/ 6 dated 20.03.2016. This letter also bears the signature Page of the Respondent 269

Note: The reference of the said letter has been (270-271 mentioned in para 5.38 of the OA no. 43/2007 (at typed copy) Page 122)

06.06.200 The above OTS was revoked due to non-compliance 6 vide letter dated 06.06.2006.

Note: The reference of the said letter has been mentioned in para 5.38 of the OA no. 43/2007. (at Page 122)

15.06.200 Notice issued by BoB under Section 13(2) of SARFAESI A-

6 Act qua the residential property of the promoters of 11/Page the Respondent 272-277

Company Appeal (AT)(Ins) No.707/2021 13

Typed Copy is being filed herewith. This typed Copy has been taken from SLP No. 31404/2012 filed by the Respondent in the Supreme Court

09.02.200 SA No. 04/2007 filed by the Promoters of the 7 Respondent under Section 17 of the SARFAESI Act in DRT-1 Mumbai.

Note: Reference of the above SA has been given in Delhi High Court order dated 17.09.2012 in WP No. 1478/2011 at Page No. 309.

09.03.200 OA No. 43/2007 was filed by Bank of Baroda in DRT Exh. K-3 7 Ahmedabad with the Section 7 Applicati on (Page No. 110-

128)

April 2007 The Respondent filed a reference before BIFR under Section 15 of SICA.

Note: The reference of the above BIFR case has been given in Delhi High Court order dated 17.09.2012 in WP No. 1478/2011 at Page No. 310

05.04.200 Second Notice under Section 13(2) issued by Bank of A-12/ 8 Baroda qua the factory premises of the Respondent Page No. situated at villate Nandesari, Dist. Vadodara and at 278-282 Umraya, Taluka : Padra. District Vadodara.

Note: Reference of the above notice is given in Delhi High Court order dated 17.09.2012 in WP No. 1478/2011 at Page No. 310.

Typed Copy is being filed herewith. This typed Copy has been taken from SLP No. 31404/2012 filed by the

Company Appeal (AT)(Ins) No.707/2021 14

Respondent in the Supreme Court

22.05.200 Reply of the Respondent to the Section 13(2) notice A-13/ 8 issued by Bank of Baroda containing the Page No. acknowledgment of liability. In para 6/Pg. 287 of the 283-296 said Reply it has been admitted that Bank of Baroda had granted a term loan of Rs. 2 crores to the Respondent. In para 10/Pg. 290, the grant of Ad-hoc limit of Rs. 100 lacs has been admitted. Further in para 14/Pg.295, sanction of additional ad-hoc limit of Rs. 50 lacs has been admitted.

Note: Reference of the above reply is in Delhi High Court order dated 17.09.2012 in WP No. 1478/2011 at Page No. 310.

Typed Copy is being filed herewith. This typed Copy has been taken from SLP No. 31404/2012 filed by the Respondent in the Supreme Court

12.11.200 BIFR dismissed the reference as non-maintainable. A-14/ 8 Page No. 297 -

Typed Copy is being filed herewith. This typed Copy 301 has been taken from SLP No. 31404/2012 filed by the (Relevan Respondent in the Supreme Court t page No. 301)

FY 2009- Balance Sheet of the Respondent wherein the liability A- 10 of Rs. 27,785,532 as on 31.03.2010 towards the bank 22/Page has been duly acknowledged by the Respondent. The No. 343- (Signed on Balance Sheet has been signed on 05.08.2010. 375 05.08.201 (Relevan 0 at Page t page

375) No. 357)

16.08.201 The Respondent submitted a letter dated 16.08.2010 Exh. O-6 0 to the bank containing a proposal for One Time with Settlement. In Para 1, 5 and 6 of this letter the Section 7 Respondent has made an unconditional Applicati acknowledgment of liability by offering to make One on/ Time Payment of Rs. 2.75Cr to the Bank for settlement Page

Company Appeal (AT)(Ins) No.707/2021 15

of its dues No. 147- 148

20.08.201 The Respondent submitted a letter dated 20.08.2010 Exh. O-6 0 to the bank. With this letter the Respondent enclosed with the DD for a sum of Rs. 10 lacs and requested the Section 7 bank to approve their OTS for an amount of Rs. 2.75 Applicati Crs as already proposed. The contents of this letter on/ amount to acknowledgement of liability. Page No. 146

24.09.201 The Respondent submitted a letter dated 24.09.2011 A-15/ 1 to Bank of Baroda containing the revised final offer of Page OTS for a sum of Rs. 4.60 Cr. The contents of this letter No. 302 amount to acknowledgement of liability.

10.10.201 The bank had declined the OTS proposal of the A-16/ 1 Respondent dated 24.09.2011 by its letter dated Page No. 26.09.2011. The Respondent by its letter dated 303 10.10.2011 requested the Bank to return the amount of 13 lacs which was lying with the Bank in No-Lien Account.

07.02.201 S.A. no. 04. 2007 was dismissed by DRT-I Mumbai. -----

2 Note:Reference of the above dismissal order is there in Hon'ble Delhi High Court order dated 17.09.2012 at Page 327

16.03.201 The Respondent submitted a revised OTS offer for the A-17/ 3 amount of Rs. 5.25 lacs. The Respondent enhanced Page No. OTS offer by 65 lacs as their earlier offer dated 304 24.09.2011 was for Rs. 460 lacs only.

25.09.201 The Respondent submitted a letter dated 25.09.2013 A-18/ 3 assuring that either Alchemist ARC or Phoenix ARC Page No. will pay the entire OTS Amount of Rs. 5.25 crores. 305-306

31.10.201 The Respondent vide its letter dated 31.10.2014 has Exh. O-8 4 submitted an OTS Proposal offering two options - Rs. with 5.25 crores to be payable in 3 years or Rs. 8.78 crores Section 7 Applicati

Company Appeal (AT)(Ins) No.707/2021 16

repayable in 8 years on/ Page No. 151- 152

12.12.201 The Respondent by its letter dated 12.12.2014 Exh. O-9 4 submitted its revised OTS offer for an amount of Rs. with 710 lacs with upfront payment of Rs. 70 lacs Section 7 Applicati on/ Page No. 153-155

05.01.201 Letter by the Appellant accepting the OTS proposal of Exh. O- 5 the Respondent dated 12.12.2014. As per the said 10 with letter, the OTS of Rs. 7.10 crores Rs. 035 Cr. was Section 7 payable on issue of OTS Sanction letter and the Applicati balance Rs. 6.75 Cr. was payable on or before on/ 31.03.2016. This letter is duly accepted by the Page Authorized Signatory of the Respondent. No. 156- 157

07.01.201 Part-Payment of Rs. 35,00,000. Please 5 refer to Exh. O-

The said part-payment has been acknowledged by the 15 with Respondent in the Settlement Letter dated 10.01.2019 Section 7 Applicati which is signed by both Appellant and the on/ Respondent.

Page No. 171

31.03.201 Default in payment of OTS amount as per OTS 6 Sanction letter dated 05.01.2015

26.09.201 The Appellant vide its letter dated 26.09.2017 has Exh. O- 7 revoked the OTS proposal dated 05.01.2015 11 with Section 7 Applicati on/ Page No. 158

Company Appeal (AT)(Ins) No.707/2021 17

08.10.201 The Respondent vide its letter dated 08.10.2018 has Exh. O-

8 requested for One Time Settlement (OTS) of the entire 12 with dues to Edelweiss ARC/BoB. The Respondent offered Section 7 Rs. 684 lacs - Applicati on/

i. Rs. 125 lacs within 30 days and Page ii. Remaining Rs. 559 lacs within 6 months No. 159- 166 (relevan t Page No. 160)

23.10.201 The Appellant vide letter dated 23.10.2018 has Exh. O- 8 rejected the above OTS proposal as the amount due on 13 with 26.02.2014 was more than Rs. 50 crores Section 7 Applicati on/ Page No. 167

19.11.201 Revised request for OTS proposal by Respondent Exh. O- 8 offering Rs. 675 lacs out of which Rs. 125 lacs was 14 with payable within 15 days of receipt of NOC for sale of Section 7 Nandesari factory and remaining Rs. 550 lacs by Applicati 31.03.2019 on/ Page No. 168- 169

06.12.201 Part-Payment of Rs. 35,00,000 8

17.12.201 Part-Payment of Rs. 15,00,000 through RTGS.

8 Vide letter dated 18.12.2018, the Respondent A-19/ confirmed the Appellant about the payment of Rs. 15 Page No. 18.12.201 lacs through RTGS on 17.12.2018. 307 8

10.01.201 The Bank conveyed its acceptance to the offer of OTS Exh. O- 9 submitted by the Respondent by their letter dated 15 with 03.12.2018 under this OTS, the settlement amount Section 7 was 7.10 Cr. out of which Rs. 0.35 Cr. was received Applicati

Company Appeal (AT)(Ins) No.707/2021 18

in January 2015 and the further sum of Rs. 0.50 Cr. on/ had also been received. On the issue of the said letter Page No. the Respondent has to make the payment of Rs. 1.25 170-173 Cr. and the balance amount of Rs. 5 Cr. was payable by 25.03.2019. This letter is duly accepted by the director of the Respondent.

10.01.201 Part-Payment of Rs. 125,00,000 /Page No. 170-173, Respond 9 The Respondent also submitted a post dated cheque ent has of Rs. 5.00Cr. for the outstanding OTS amount. itself admitted in the Affidavit Reply filed on 15.02.20 20 in paras E(a) and E(b)/ Page No. 182

16.01.201 Board Resolution passed by Respondent Exh. O- 9 acknowledging and approving the above OTS 15 with Section 7 Applicati on/ Page No. 173

29.03.201 Revocation of the OTS proposal dated 10.01.2019 Exh. O- 9 owing to failure of the Respondent to make the 15 with payment in terms of OTS Section 7 Applicati on/ Page No. 174

04.11.201 The Appellant filed Section 7 Application Page No. 9 83-101

Company Appeal (AT)(Ins) No.707/2021 19

b. From the above table, it is crystal clear that the Section 7 Application which had been filed on 04.11.2019 was without any iota of doubt within the prescribed period of limitation.

c. Reliance is placed on the following judgements wherein it has been held that the period of pendency of O.A./period of pendency of proceedings under SARFAESI Act i.e., (from 09.02.2007 upto 07.02.2012) is liable to be excluded in the computation of the limitation period. Also, if there is acknowledgment of debt in the balance sheets or the OTS proposal, the period of limitation would be extended :

i. Sesh Nath Singh & Anr. Vs. Baidyabati Sheoraphuli Co-operative Bank Ltd and Anr. (Hon'ble SC) dated 22.03.2021, MANU/SC/0205/2021 (Para 87 is relevant) (Annexure A-29 of Rejoinder)

Note: It has been held in this case that the period spent in proceedings under SARFAESI Act, 2002 is liable to be excluded.

ii. Phoenix ARC Pvt. Ltd. vs Nagaur Water Supply Company Pvt. Ltd.

(Hon'ble NCLAT) dated 01.04.2021 MANU/NL/0125/2021 (Para Nos. 38-39 are relevant) (Annexure A-26 of Rejoinder)

Note: It has been held in this case that acknowledgment of liability in the balance sheets will extend the period of limitation.

iii. Kishanlal Likhmichand Bothra vs Canara Bank (Hon'ble NCLAT) dated 24.03.2021 MANU/NL/0104/2021 (Para Nos. 13 and 14 are relevant) (Annexure A-28 of Rejoinder)

Note: It has been held in this case that if there is acknowledgment of debt in the balance-sheets or the OTS Proposal, the period of limitation would get extended if the acknowledgment is made before the period of limitation expires.

iv. Dena Bank Vs. C. Shivkumar Reddy and Ors, (Hon'ble SC) dated on 04.08.2021 MANU/SC/0502/2021 2021 (Para No. 143 is relevant) (Annexure A-30 of Rejoinder)

Company Appeal (AT)(Ins) No.707/2021 20

Note: It has been held in this case that Moreover, a judgment and/or decree for money in favour of the Financial Creditor, passed by the DRT, or any other Tribunal or Court, or the issuance of a Certificate of Recovery in favour of the Financial Creditor, would give rise to a fresh cause of action for the Financial Creditor, to initiate proceedings Under Section 7 of the IBC.

v. Sandeep Jindal Vs State Bank of India (Hon'ble NCLAT) dated 08.04.2021 MANU/NL/0138/2021 MANU/NL/0138/2021 (Para No. 28 is relevant) (Annexure A-27 of Rejoinder)

Note: It has been held in this case that t Annual Returns/Audited Balance Sheets, one-time settlement proposals, proposals to restructure loans, by whatever names called, cannot be simply ignored as debarred from consideration and in every given matter, it would be a question of applying the facts to the law and vice versa, to see whether or not the specific contents, spell out an acknowledgement under the Limitation Act."

Therefore, in this manner aforesaid, section 7 Application was well within limitation.

d. The Appellant alongwith the main Appeal has also filed an IA No. 1876 of 2021 to place on record the Additional documents which was previously not filed before Ld. NCLT, Mumbai. The Respondent filed the Reply of the said Application on 01.03.2022. The Respondent in the said Reply had raised its objection on the ground that introduction of the Additional Documents at the Appellate Stage is impermissible, and that even otherwise, no case has been made out by the Appellant for allowing the said Additional Documents to be relied upon or placed on record at this stage of the proceedings.

e. As regards, the issue of filing additional documents along with the Appeal, the reliance is placed on the following judgments wherein it was held that the additional documents presented at a later stage will not be disregarded on the technical grounds or it cannot be removed out of consideration only because they were not on record before Ld. NCLT.

Company Appeal (AT)(Ins) No.707/2021 21

i) Manasi Indrajit Wadkar vs. Union Bank of India and Ors. dated 27.05.2021 of Hon'ble NCLAT MANU/NL/0183/2021 (Para No. 10 is relevant) (annexed as Annexure A-24 of Rejoinder)

ii) Wizman Impex Pvt. Ltd. vs Kedrion Biopharma Inc. dated 07.02.2022 of Hon'ble Supreme Court MANU/SC/0207/2022 (Para No. 8-9 are relevant) (annexed as Annexure A-25 of Rejoinder).

Additional Written Submissions on behalf of Appellant

1. The present written submissions are being filed in pursuance to the

liberty granted by the order dated 16.11.2022 by this Hon'ble Tribunal. It is

submitted that the Appellant had earlier also filed the written submissions

vide diary no. 39574 dated 17.09.2022. The instant written submissions

may please be read in continuation of the earlier written submissions.

2. It is submitted that during the course of the final arguments, the Hon'ble

Tribunal's attention had been drawn to the Written Submissions filed by the

Appellant before the Ld. Adjudicating Authority on 30.03.2021 whereby it

was quite clear and evident that the Section 7 filed by the Appellant was

well within the limitation. A copy of the said Written submission is available

at Annexure A-21 (Pages 328-342 of the Appeal Book).

3. It is submitted that while filing the Written Submission before the Hon'ble

Adjudicating Authority on 30.03.2021, a copy of the same had been duly

mailed to Ld. Counsel of the Respondent also. A copy of the email dated

30.03.2021 is filed herewith as ANNEXURE A. In that email, CC is marked

Company Appeal (AT)(Ins) No.707/2021 22

to Mr. Shadab Jan to his email id i.e., shadab.jan@crawfordbayley.com. In

Para 3 of the said email, it is stated that " that the present email is being

marked to the Advocates for the Corporate Debtor as and by way of service

upon them."

4. Our submissions on the issue of limitation

a. The important dates for limitation purpose are being given in the table below:

Date Event Annexures Remarks already filed before Ld. Adjudicating Authority

31.05.20 Date of default by the This date 00 Respondent was mentioned in Section 7 Application (Please refer Page 94 of the Appeal Book Vol-1)

30.09.20 Date of NPA -do- 00

05.10.20 The Respondent executed a Letter The reference of The LADs 00 of Acknowledgment dated the said letter of are already 05.10.2000 in pursuance to its acknowledgement filed as Board Resolution dated and the said Annexure 29.09.2000 Board Resolution A-6/ Page is mentioned in 206-210 of Para 5.25 of the the Appeal OA No. 43/2007. A copy of the OA No. 43/2007 had been filed

Company Appeal (AT)(Ins) No.707/2021 23

alongwith Section 7 Application as Exhibit K-3.

The copies of the said Board Resolution dated 29.09.2000 and LAD dated 05.10.2000 were not before the Ld. Adjudicating Authority and the same have been filed before this Hon'ble Appellate Tribunal as Annexure A-6 (colly) /Page 206- 2010 alongwith IA 1876/2021 for placing on record the Additional Documents

04.07.20 The Respondent executed as The reference of The letters 03 many as 8 letters of the said letters are filed as acknowledgment in respect of has been given in Annexure

different credit facilities. By these Para 5.32 of the A-7/Page letters, inter alia the Respondent OA No. 43/2007. 211-228 has admitted its liabilities about (Typed the outstandings as of copies from 24.05.2003 in respect of Term The copies of the 229-255) Loan/cash credit book-debts letters of /cash credit hypothecation of acknowledgment stocks/ BP/BD/FBP/FCD/ dated 04.07.2003 Packing credit/Term Loan(2) were not before facilities. the Ld. Adjudicating Authority and the

Company Appeal (AT)(Ins) No.707/2021 24

same have been filed before this Hon'ble Appellate Tribunal as Annexure A-7 (colly) /Page 211-

255 alongwith IA 1876/2021 for placing on record the Additional Documents.

04.06.20 Demand notice issued by Bank of Annexed as Exh. 05 Baroda to the Respondent 0-5 with the Section 7

demanding the payment of a sum Application/ of Rs. 13,37,83,309.98/- due as Page 129-136 on 31.03.2005. (137-145 Typed Copy) of the Appeal paper book.

Note: This document was on record before the Ld. Adjudicating Authority

29.06.20 Reply by the Respondent to the This document A-8/ Page 05 256-264 of

above Demand Notice dated was not before the Ld. Adjudicating the Appeal 04.06.2005 containing the Authority. It has Paper book acknowledgment of liability in been filed alongwith IA No. Paras 2, 5, 7, 8, 11 and 12 at 1876/2021 for Page 256, 258 and 259 taking on record the Additional

Company Appeal (AT)(Ins) No.707/2021 25

respectively documents.

13.03.20 The Respondent submitted a The reference of A-9/Page 06 letter dated 13.03.2006 to the this letter dated 265-266 bank containing a proposal for 13.03.2006 was (267-268 one time settlement. In Para 2 mentioned in Para Typed copy) and 3 of this letter the 5.38 of the OA No. of the Appeal Respondent has made an 43/2007.

paper book unconditional acknowledgment of liability.

The copy of the said letter dated 13.03.2006 was not before the Ld. Adjudicating Authority and the same has been filed before this Hon'ble Appellate Tribunal as Annexure A-9 (Pages at 265-

266 (267-268 Typed copy) of the Appeal paper book alongwith IA 1876/2021 for placing on record the Additional Documents

20.03.20 The above OTS was accepted by The reference of A-10/ Page 06 the Bank by its letter dated the said letter has 269 (270- 20.03.2016. This letter also bears been mentioned 271 typed the signature of the Respondent in para 5.38 of the copy) of the OA no. 43/2007 Appeal at Page 122. Paper book

Company Appeal (AT)(Ins) No.707/2021 26

The copy of the said letter dated 20.03.2006 was not before the Ld. Adjudicating Authority and the same has been filed before this Hon'ble Appellate Tribunal as Annexure A-10 (Pages at 269 (270-271 typed copy) of the Appeal Paper book alongwith IA 1876/2021 for placing on record the Additional Documents

15.06.20 Notice issued by BoB under The copy of the A-11/Page 06 Section 13(2) of SARFAESI Act said letter dated 272-277 of qua the residential property of the 15.06.2006 was the Appeal promoters of the Respondent not before the Ld. Paper Book Adjudicating Authority and the same has been filed before this Hon'ble Appellate Tribunal as Annexure A-11 (Pages at Pages 272-277) of the Appeal Paper book alongwith IA 1876/2021 for placing on record the Additional Documents.

Company Appeal (AT)(Ins) No.707/2021 27

However, there is reference of this demand notice at Para 2 (iii) in the Written submission dated 30.03.2021 filed before Ld. Adjudicating Authority which is Annexure 21 of the present Appeal.

09.02.20 SA No. 04/2007 filed by the Reference of the A-20/Page 07 Promoters of the Respondent above SA has 308-327 of under Section 17 of the been given in the Appeal SARFAESI Act in DRT-1 Mumbai. Delhi High Court Paper Book order dated 17.09.2012 in WP No. 1478/2011 at Page No. 309 of the Appeal paper book. Reference of the said SA No. 01/2007 has also been given in Para 2 (iv) in the Written submission dated 30.03.2021 filed before Ld. Adjudicating Authority.

09.03.20 OA No. 43/2007 was filed by A copy of OA No. 07 Bank of Baroda in DRT 43/2007 was on Ahmedabad record before Ld. Adjudicating

Company Appeal (AT)(Ins) No.707/2021 28

Authority as an Annexure K-3 of Section 7 Application. The same is available at Page No. 110-

128 of the Appeal paper Book.

April The Respondent filed a reference The reference of 2007 before BIFR under Section 15 of the above BIFR SICA. case has been given in Delhi High Court order dated 17.09.2012 in WP No. 1478/2011. The said Judgment is Annexure A-20 (Page 308-327) to the Appeal Paper Book and the reference of the BIFR case has been given in Para 3/Page 310 of the said judgment.

05.04.20 Second Notice under Section 13(2) Reference of the A-12/ 08 issued by Bank of Baroda qua above notice is Page No. the factory premises of the given in Delhi 278-282 of Respondent situated at villate High Court order the Appeal Nandesari, Dist. Vadodara and dated 17.09.2012 Paper book Umraya, Taluka : Padra. District in WP No. Vadodara. 1478/2011 in Para No. 3 at Page 310 of the Appeal Book. This notice was not available before the Ld. Adjudicating

Company Appeal (AT)(Ins) No.707/2021 29

Authority and the same has been filed before this Hon'ble Tribunal with IA No. 1876/2021 for placing on record the Additional Documents

22.05.20 Reply of the Respondent to the Reference of the A-13/ 08 Section 13(2) notice issued by above reply is in Page No. Bank of Baroda containing the Delhi High Court 283-296 acknowledgment of liability. In order dated Para 6/Pg. 287 of the said 17.09.2012 in WP Reply, it has been admitted that No. 1478/2011 at Bank of Baroda had granted a Page No. 310. term loan of Rs. 2 crores to the This reply was not Respondent. In Para 10/Pg.

available before 290, the grant of Ad-hoc limit the Ld. of Rs. 100 lacs has been Adjudicating admitted. Further in para Authority and the 14/Pg.295, sanction of same has been

additional ad-hoc limit of Rs.

filed before this 50 lacs has been admitted.

Hon'ble Tribunal with IA No. 1876/2021 for placing on record the Additional Documents

12.11.20 BIFR dismissed the reference as Reference of the A-14/ 08 non-maintainable. dismissal of BIFR Page No. case on 297 -301 12.11.2008 is in (Relevant Delhi High Court page No. order dated 301) 17.09.2012 in WP No. 1478/2011 at Para 5/Page No. 312.

However, the

Company Appeal (AT)(Ins) No.707/2021 30

order dated 12.11.2008 was not available before the Ld. Adjudicating Authority and the same has been filed before this Hon'ble Tribunal with IA No. 1876/2021 for placing on record the Additional Documents

FY 2009- FY 2009-10 This balance A-22/Page 10 sheet was not No. 343-

(Signed on 05.08.2010 at Page available before 375 (Signed 375) the Ld. (Relevant on Adjudicating page No. 05.08.20 Authority and the 357) 10 at same has been Page filed before this 375) Hon'ble Tribunal with IA No. 1876/2021 for placing on record the Additional Documents

16.08.20 The Respondent submitted a This letter was 10 letter dated 16.08.2010 to the part of Section 7 bank containing a proposal for Application before One Time Settlement. In Para 1, 5 the Ld. and 6 of this letter the Adjudicating Respondent has made an Authority as Exh. unconditional acknowledgment of O-6 (available at liability by offering to make One Page No. 147- Time Payment of Rs. 2.75Cr to the 148 of the Bank for settlement of its dues Appeal Paper Book)

20.08.20 The Respondent submitted a This letter was

letter dated 20.08.2010 to the part of Section 7

Company Appeal (AT)(Ins) No.707/2021 31

10 bank. With this letter the Application before Respondent enclosed the DD for a the Ld. sum of Rs. 10 lacs and requested Adjudicating the bank to approve their OTS for Authority as Exh. an amount of Rs. 2.75 Crs as O-6 (available at already proposed. The contents of Page No. 146 of this letter amount to the Appeal acknowledgement of liability. Paper Book)

24.09.20 The Respondent submitted a This letter was not A-15/ 11 letter dated 24.09.2011 to Bank available before Page No. of Baroda containing the revised the Ld. 302 of the offer of OTS for a sum of Rs. 4.60 Adjudicating Appeal Cr. The contents of this letter Authority and the Paper Book amount to acknowledgement of same has been liability. filed before this Hon'ble Tribunal with IA No. 1876/2021 for placing on record the Additional Documents

26.09.20 BoB declined the aforesaid OTS Reference of this 11 letter dated 24.09.2011 by its letter has been letter dated 26.09.2011 given by the Respondent in their letter dated 10.10.2011 mentioned below

10.10.20 As mentioned above, BoB had This letter was not A-16/ 11 declined the OTS proposal of the available before Page No. Respondent dated 24.09.2011 by the Ld. 303 of the its letter dated 26.09.2011. Adjudicating Appeal Authority and the Paper Book same has been In view of the same, the filed before this Respondent by its letter dated Hon'ble Tribunal 10.10.2011 requested the Bank with IA No. to return the amount of 13 lacs 1876/2021 for which was lying with the Bank in placing on record No-Lien Account. the Additional

Company Appeal (AT)(Ins) No.707/2021 32

Documents

25.10.20 BoB turned down the request of This letter was 11 the Respondent to refund the part of Section 7 amount of Rs. 13.00 lacs for the Application before reasons mentioned therein. the Ld. Adjudicating Authority as Exh.

O-7 (available at Page No. 149-

150 of the Appeal Paper Book)

07.02.20 S.A. No. 04. 2007 was dismissed Reference of the 12 by DRT-I Mumbai. above dismissal order is there in Hon'ble Delhi High Court order dated 17.09.2012 in Para 26 at Page 327 of the Appeal Paper Book.

However, the dismissal order dated 07.02.2012 is not on record.

16.03.20 The Respondent submitted a This letter was not A-17/ 13 revised OTS offer for the amount available before Page No. of Rs. 5.25 Cr. The Respondent the Ld. 304

enhanced OTS offer by 65 lacs as Adjudicating their earlier offer dated Authority and the 24.09.2011 was for Rs. 460 lacs same has been only. filed before this Hon'ble Tribunal with IA No. 1876/2021 for placing on record the Additional Documents

Company Appeal (AT)(Ins) No.707/2021 33

25.09.20 The Respondent submitted a This letter was not A-18/ 13 letter dated 25.09.2013 assuring available before Page No. that either Alchemist ARC or the Ld. 305-306 Phoenix ARC will pay the entire Adjudicating OTS Amount of Rs. 5.25 crores. Authority and the same has been filed before this Hon'ble Tribunal with IA No. 1876/2021 for placing on record the Additional Documents

26.03.20 The Appellant submits that the Copy of the 14 loan account of the Respondent Assignment was assigned to the Appellant by Agreement dated Bank of Baroda vide Assignment 26.03.2014 was Agreement dated 26.03.2014 Exhibit-E to the Section 7 application.

Please refer item no. 7 at Page 84 of the Appeal Book

31.10.20 The Respondent vide its letter Exh. O-8 with 14 dated 31.10.2014 has submitted Section 7 an OTS Proposal offering two Application/ options - Rs. 5.25 crores to be Page No. 151- payable in 3 years or Rs. 8.78 152 of the Appeal crores repayable in 8 years Paper book which is a part of Annexure-3 of the Appeal

12.12.20 The Respondent by its letter Exh. O-9 with 14 dated 12.12.2014 submitted its Section 7 revised OTS offer for an amount Application/ of Rs. 710 lacs with upfront Page No. 153- payment of Rs. 70 lacs 155 of the Appeal Paper book which is a part of

Company Appeal (AT)(Ins) No.707/2021 34

Annexure-3 of the Appeal

05.01.20 By this letter, the Appellant Exh. O-10 with 15 accepted the OTS proposal of the Section 7 Respondent dated 12.12.2014. Application/ As per the said letter, the OTS Page No. 156- amount was Rs. 7.10 crores and 157 of the out of that, Rs. 0.35 Cr. was Appeal Paper payable on issue of OTS Sanction book which is a letter and the balance Rs. 6.75 part of Annexure-

Cr. was payable on or before 3 of the Appeal 31.03.2016. This letter is duly accepted by the Authorized Signatory of the Respondent.

07.01.20 Part-Payment of Rs. 35,00,000. Exh. O-15 with 15 Section 7 Application/ The said part-payment has been Page No. 171 of acknowledged by the the Appeal Paper Respondent in the Settlement book which is a Letter dated 10.01.2019 which is part of Annexure-

signed by both Appellant and the 3 of the Appeal Respondent. This letter dated 10.01.2019 is available at Pages 170-173 of the Appeal Paper book.

31.03.20 Default in payment of OTS 16 amount as per OTS Sanction letter dated 05.01.2015. The Respondent had to make the payment of Rs. 6.75 Cr. on or before 31.03.2016 which he defaulted to make.

26.09.20 The Appellant vide its letter dated Exh. O-11 with 17 26.09.2017 has revoked the OTS Section 7 proposal dated 05.01.2015 Application/ Page No. 158

Company Appeal (AT)(Ins) No.707/2021 35

08.10.20 The Respondent vide its letter Exh. O-12 with 18 dated 08.10.2018 has requested Section 7 for One Time Settlement (OTS) of Application/ the entire dues to Edelweiss Page No. 159-

ARC/BoB. The Respondent 166 (relevant offered Rs. 684 lacs - Page No. 160)of the Appeal i. Rs. 125 lacs within 30 days Paper book and

ii. Remaining Rs. 559 lacs within 6 months

23.10.20 The Appellant vide letter dated Exh. O-13 with 18 23.10.2018 has rejected the Section 7 above OTS proposal as the Application/ amount due on 26.02.2014 was Page No. 167 of more than Rs. 50 crores the Appeal Paper Book

19.11.20 Revised request for OTS proposal Exh. O-14 with 18 by Respondent offering Rs. 675 Section 7 lacs out of which Rs. 125 lacs Application/ was payable within 15 days of Page No. 168- receipt of NOC for sale of 169 of the Nandesari factory and remaining Appeal Paper Rs. 550 lacs by 31.03.2019 Book

06.12.20 Part-Payment of Rs. 35,00,000 Exhibit F at Page 18 109 (Vol.I) of the Section 7 Application

Additionally, reference of the said payment has been made in Para 3 (z) in the Written submission dated 30.03.2021 filed before Ld. Adjudicating Authority. Please

Company Appeal (AT)(Ins) No.707/2021 36

refer to Page 339 of the Appeal Book

17.12.20 Part-Payment of Rs. 15,00,000 Annexed as 18 through RTGS. Exhibit F at Page 109 (Vol.I) of the Company Petition.)

Additionally, reference of the said payment has been made in Para 3 (aa) in the Written submission dated 30.03.2021 filed before Ld. Adjudicating Authority. Please refer to Page 339 of the Appeal Book

Vide letter dated 18.12.2018, the This letter was not A-19/ Page Respondent confirmed to the available before No. 307 18.12.20 18 Appellant about the payment of the Ld. Rs. 15 lacs through RTGS on Adjudicating 17.12.2018. Authority and the same has been filed before this Hon'ble Tribunal with IA No. 1876/2021 for placing on record the Additional Documents.

However, reference of the said payment has

Company Appeal (AT)(Ins) No.707/2021 37

been made in Para 3 (aa) in the Written submission dated 30.03.2021 filed before Ld. Adjudicating Authority. Please refer to Page 339 of the Appeal Book

10.01.20 The Bank conveyed its Exh. O-15 with 19 acceptance to the offer of OTS Section 7 submitted by the Respondent by Application/ their letter dated 03.12.2018. Page No. 170- Under this OTS, the settlement 173 of the amount was 7.10 Cr. out of which Appeal Paper Rs. 0.35 Cr. was received in Book January 2015 and the further sum of Rs. 0.50 Cr. had also been received. On the issue of the said letter the Respondent had to make the payment of Rs. 1.25 Cr.

on issue of OTS sanction letter and the balance amount of Rs. 5 Cr. was payable by 25.03.2019.

This letter is duly accepted by the director of the Respondent.

10.01.20 Part-Payment of Rs. 1.25 Cr. Respondent has 19 /Page No. 170-173, The itself admitted in Respondent also submitted a paras E(a) and post dated cheque of Rs. 5.00Cr. E(b) the Affidavit for the outstanding OTS amount. Reply filed on 15.02.2020 before Ld. Adjudicating Authority Page No. 182 of the Appeal Paper Book

16.01.20 Board Resolution passed by Exh. O-15 with

Company Appeal (AT)(Ins) No.707/2021 38 19 Respondent acknowledging and Section 7 approving the above OTS Application/ Page No. 173 of the Appeal Paper Book

29.03.20 Revocation of the OTS proposal Exh. O-15 with 19 dated 10.01.2019 owing to Section 7 failure of the Respondent to make Application/ the payment in terms of OTS Page No. 174 of the Appeal Paper Book

04.11.20 The Appellant filed Section 7 Page No. 83-101 19 Application of the Appeal Paper Book

b.It is submitted that there is no specific denial by the Respondent either in their

Reply to the Appeal or in Reply to IA No. 1876/2021 for taking on record the

Additional documents of any of the additional documents which have been filed along

with the said IA No. 1876/2021. It implies that the genuineness or authenticity of

any of the Additional documents is beyond any doubt.

c.It is crystal clear that the Section 7 Application which had been filed on 04.11.2019

was without any iota of doubt within the prescribed period of limitation.

7. Learned senior counsel for the appellant by way of referring

to the tabular chart incorporated in para 4 of additional written

submissions which we have quoted hereinabove, has tried to

justify that after the date of default i.e. 31.05.2000 and date of NPA

i.e. 30.09.2000 Respondents issued the acknowledgement in

pursuance of the Board Resolution dated 5.10.2000 and thereafter

Company Appeal (AT)(Ins) No.707/2021 39

on 04.07.2003 Respondent executed as many as eight letters of

acknowledgement in respect of different credit facilities. Learned

senior counsel by way of referring to aforesaid chart has tried to

persuade the Court that continuance of events reflects that from

time to time period of limitation was extended and as such the

learned Adjudicating Authority has committed serious error in

rejecting the application on the ground of limitation.

8. Mr. Abhijeet Sinha, learned counsel appearing on behalf of

sole Respondent/CD opposing the appeal submits that the learned

Adjudicating Authority has committed no error warranting

interference with the impugned order. He submits that the

appellant in a casual manner had filed petition under Section 7 of

the IBC oblivious of the fact that the appellant was filing petition

under Section 7 after expiry of more than 19 years from the date

of default. He further submits that even before the Adjudicating

Authority the appellants had not specifically mentioned as to what

was actual date of default and what was the actual debt. In such

a situation the Learned Adjudicating Authority was having no

option but to reject the petition on the ground of limitation.

9. According to Mr Sinha, learned counsel in the application it

has been indicated that CD's account was declared as NPA on

Company Appeal (AT)(Ins) No.707/2021 40

30.06.2000. However, thereafter no cogent material was brought

on record to show that within three years from the date of NPA

there was any fact or document available for extending the period

of limitation. He submits that of course before this Appellate

Tribunal some of the dates and events have been explained in the

tabular chart in the written submissions but those facts were not

brought to the notice of the Adjudicating Authority and in the

absence of those information the learned Adjudicating Authority

was not expected to pass an order in favour of the appellant. Mr.

Sinha, learned counsel besides orally opposing the appeal has also

placed written submission which was filed in the present

proceeding on behalf of the Respondent. We propose to reproduce

the written submissions:

WRITTEN SUBMISSIONS ON BEHALF OF THE RESPONDENT

I. SUMMARY

1. On 23rd October 2019, the Appellant filed an application - C.P. (IB) 4044 of 2019 ("said

Company Petition") under Section 7 of the Insolvency & Bankruptcy Code, 2016

('Code') seeking initiation of CIRP of the Respondent for a claim of Rs. 142,55,35,318/-

(INR One Hundred and Forty Two Crore Fifty Five Lakh Thirty Five Thousand Three

Hundred and Eighteen Only). The date of default as stated in Form I of the said

Company Petition was May 2000 which is 19 years 5 months from the date of filing.

2. By Impugned Order dated 3 rd June 2021, the Adjudicating Authority dismissed the said

Company Appeal (AT)(Ins) No.707/2021 41

Company Petition. Although various grounds were raised by the Respondent to

oppose admission, the Adjudicating Authority dismissed the said Company Petition

solely on the ground of limitation holding that the Appellant has failed to produce

necessary acknowledgments of liability within 3 years from the date of default which

would renew the period of limitation.

3. By the present Appeal, the Appellant has sought to assail the Impugned Order, and has

also filed I.A. No. 1876 of 2021 ("said IA") seeking to produce certain additional

documents which were not produced in the said Company Petition before the

Adjudicating Authority.

4. In view of the fact that the said IA was pending adjudication, and the additional

documents sought to be relied upon were not brought on record at the relevant time,

the Respondent has filed its Affidavit in Reply dated 26th May 2022 opposing the

appeal on the basis of documents on record before the Adjudicating Authority, and

reserved its right to deal with the additional documents as and when the said IA is

decided. Infact, as on date of final hearing of the present Appeal, the said IA was still

pending adjudication and thus the additional documents were yet to be permitted.

5. Accordingly, on 16th November 2022 (i.e., date of final hearing), the parties have

confined their arguments to the documents produced along with pleadings before the

Adjudicating Authority in the said Company Petition.

II. APPLICATION IS BARRED BY LIMITATION

i. No documents produced from 3 years from Date of Default

1. The Appellant has admitted that the Date of Default is in May

2000. Therefore, prima facie the Application being filed on 23rd

October 2019 i.e. 19 years 5 months after the Date of Default is

barred by limitation;

Company Appeal (AT)(Ins) No.707/2021 42

2. The Applicant has failed to produce any acknowledgment of liability or prove any part payment within

the prescribed period of limitation of 3 years as under Section

18 or 19 of the Limitation Act to save limitation under Article 137

of the Limitation Act. Therefore, any such document purporting

to be an acknowledgment of debt or liability would be irrelevant

for the purposes of Section 18 of the Limitation Act, and thus

would not revive limitation. (Sesh Nath Singh vs Baidyabati

Sheraphuli Co- op. Bank Ltd. - (2021) 7 SCC 313 - Para 64)

& (Laxmipat Surana v Union Bank of India 2021 8 SCC

481-Para 43)

3. Under Section 18 of the Limitation Act, a document must meet

the following ingredients to qualify as an acknowledgment in

writing to extent the period of imitation:

a. Acknowledgment must be made in writing;

b. Acknowledgment must be made by person against whom claim is made;

c. Acknowledgment must be made before expiration of limitation period;

4. Therefore, acknowledgment of liability, if any, has to be prior to

the expiration of period of limitation (i.e., 3 years from date of

default), and any document executed after three years from date

of default would not revive limitation. In Sampuran Singh vs

Niranjan Kaur-(1999) 2 SCC 679) the Hon'ble Supreme Court

Company Appeal (AT)(Ins) No.707/2021 43

as follows has laid down that any acknowledgment of liability

has to be prior to expiration of period of limitation, and any such

acknowledgment after the period of limitation would not assist

the party concerned:

9. In his endeavour, learned counsel for the appellants, referred to Section 18 of the Limitation Act to hold that the acknowledgement by the original mortgagees to the respondents, through the said registered document dated 11th January 1960, the period of limitation is revive which would only start from that date of acknowledgement hence the suit filed in the year 1980 would be within limitation. The said submission is without any force. Section 18, sub-section (]), itself starts with the words "18. (1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made... ".

Thus, the acknowledgment, if any, has to be prior to the expiration of the prescribed period for filing the suit, in other words, if the limitation has already expired, it would not revive under this Section. It is only during subsistence of a period of limitation, if any, such document is executed, the limitation would be revived afresh from the said date of acknowledgement. In the present case, admittedly the oral mortgage deed is in March 1893. If the period of limitation for filing suit for redemption is 60 years then limitation for filing a suit would expire in the year 1953. Thus, by the execution of this document dated 11th January 1960 it cannot be held by virtue of Section 18 that the period of limitation is revived afresh from this date.

5. Hence, the Appellant having failed to produce any

acknowledgment of liability/debt within the period of three

Company Appeal (AT)(Ins) No.707/2021 44

years of date of default, the claim is barred by limitation.

ii. Documents produced relate to period after three vear period

6. As stated above, the Appellant has not produced any document

within the period of three years from the date of default which

would revive limitation for the Company Petition filed before the

Adjudicating Authority. The documents produced by the

Appellant are after the period of limitation which would not

extend the limitation under Section 18 or 19 of Limitation Act,

1961.

7. Even otherwise, such documents relied upon by the Appellant

do not constitute any acknowledgment of debt, and thus would

not have extended the period of limitation even if the same

related to period within 3 years from date of default. The

following tabular representation clearly shows that such

documents produced by the Appellant do not constitute

acknowledgement under Section 18 of the Limitation Act: (The

table contains documents produced before the Adjudicating

Authority in the Company Petition)

Year Particulars Comments J'

May DATE OF DEFAULT 2000 3 year period to be reckoned from this date.

May 3 YEAR PERIOD OF LIMITATION 2003 EXPIRES

04/06/2 Anx. A-3 (Pg. 1. Not issued by the Respondent 005 206)

Company Appeal (AT)(Ins) No.707/2021 45

2. Not issued within 3 years Demand Notice issued from the date of default by Appellant's

3. Does not constitute Advocate acknowledgment under Section 18 of the Limitation Act.

20/08/2 Anx -A3 1. Not issued within 3 years 010 (Pg_l46} from the date of default

2. Does not constitute OTS Letter by the acknowledgment under Section Corporate Debtor 18 of the Limitation Act;

3. Letter issued "WITHOUT PREJUDICE"

25.10.20 Anx: - A3 (Pg. 1. Not issued by the Respondent 11 149) 2. Not issued within 3 years from the date of default Letter issued by Assignor 3. Does not constitute Bank acknowledgment under Section 18 of the Limitation Act.

31/10/2 Anx - A3 (Pg. 1. Not issued within 3 years 014 151) from the date of default

2. Does not constitute Settlement proposal by acknowledgment under Section the Respondent 18 of the Limitation Act.

12/12/2 Anx - A3 (Pg. 1. Draft Notice cannot be taken

153) 014 as acknowledgment Draft OTS proposal by the 2. Issued "WITHOUT PREJUDICE"

Corporate Debtor via email 3. Issued after the expiration of period of limitation.

05/01/2 Anx -A3 (Pg. 1. Not issued within 3 years 015 156) from the date of default Appellant 2. Does not constitute OTS Letter acknowledgment under Section issued by 18 of the Limitation Act.

26/09/2 Anx - A3 (Pg. 1. Not issued by the Respondent 017 158) 2. Not issued within 3 years Revocation Letter issued from the date of default by Appellant 3. Does not constitute acknowledgment under Section 18 of the Limitation Act.

08/10/2 Anx - A3 (Pg. 159) Issued after the expiration of 018 period of limitation.

Settlement proposal letter by the Corporate Debtor

Company Appeal (AT)(Ins) No.707/2021 46

19/11/2 Anx - A3 (Pg. 168) Issued after the expiration of 018 period of limitation.

Revised request for OTS proposal by the Corporate Debtor 10/01/2 Aux - A3 (Pg. 158) Issued after the expiration of 019 period of limitation.

Acceptance of OTS proposal by the Appellant duly acknowledged by the Corporate Debtor

23/10/2 Application under Section 7 filed after 9 years and 5 months from 019 the date of default

8. In summary, the following conclusions arise from the above tabular representations:

a. None of the above letters have been issued by the Respondent within 3 years of the date of default;

b. None of the above letters would constitute

acknowledgment of liability within Section 18 of Limitation

Act;

c. None of the above letters would extent the period of limitation;

9. The Appellant has failed to produce a chain of acknowledgments from May 2000 which will prove

that the claim is not barred from limitation. Instead, the documents relied upon bv the Appellant are

much after the expiry of period of limitation. and thus would not aid the Appellant in saving the present

Application from being barred by limitation.

10. In addition to the aforesaid, the letters of OTS offers relied

upon by the Appellant do not constitute acknowledgment of

debt in terms of Section 18 of the Limitation Act, as the said

Company Appeal (AT)(Ins) No.707/2021 47

offers were rejected by the Appellant as held by this Hon'ble

Appellate Authority in the case of Bimalkumar Manubhai

Savalia v. Bank of India & Anr. [Company Appeal (AT) Ins.

No. 1166/2019 dated 5th March 2020 - para 9).

11. Furthermore, the reliance upon orders passed by DRT is

also misplaced as filing of any recovery proceedings (within

limitation) does not have any bearing on the period of

limitation for proceedings under the Insolvency and

Bankruptcy Code, 2016 as held by the Hon'ble Supreme Court

of India in the case of (Jignesh Shah vs Union of lndia (2019)

10 SCC 750 (Para 21).

12. Therefore, the Company Petition filed by the Appellant is clearly barred by the law of limitation as I

applicable to the Code. Therefore, it is submitted that this

Hon'ble Appellate Tribunal be pleased to dismiss the present

Appeal with cost.

III. RELIANCE ON WRITTEN SUBMISSIONS BEFORE ADJUDICATING AUTHORITY

i. Additional documents produced in written submissions before Adjudicating Authority

13. At the outset, the submissions and documents being relied

upon in the written submissions were neither pleaded nor

argued before the Adjudicating Authority, and were produced

Company Appeal (AT)(Ins) No.707/2021 48

for the first time in the written submissions after the closure

of arguments. In this regard, this Hon'ble Appellate Tribunal

in Central Bank of India v Himmat Steel Foundry Limited

[Company Appeal (AT) (Insolvency) No. 286 of2022 (Para

16)] has held that arguments having no foundation in

application under Section 7 of the Code must be disregarded.

Even the Hon'ble Supreme Court in the case of Bachhaj Nahar

v Nilima Mandal (2008) 17 SCC 491 (Para 10) has laid down

the importance of pleadings and its effect as thus:

10. The High Court, in this case, in its obvious zeal to cut delay and hardship that may ensue by relegating the plaintiffs to one more round of litigation, has rendered a judgment which violates several fundamental rules of civil procedure. The rules breached are :

(i) No amount of evidence can be looked into, j

upon a plea which was never put forward in the pleadings. A question which did arise from the pleadings and which was not the subject matter of an issue, cannot be decided by the court.

(ii) A Court cannot make out a case not pleaded. The court should confine its f

decision to the question raised in pleadings.

Nor can it grant a relief which is not claimed and which does not flow from the facts and the cause of action alleged in the plaint.

(iii) A factual issue cannot be raised or considered for the first time in a second appeal.

14. In view of the above, the attempt of the Appellant to fill the

Company Appeal (AT)(Ins) No.707/2021 49

inherent defects and lacunae of limitation by relying upon the

Written Submissions filed by it before the Adjudicating

Authority (Anx A21 - Page 328) must be disregarded from

consideration.

15. Without prejudice to the above, it is submitted that even

on merits, the reliance of the Appellant on the Written

Submissions is erroneous. More particularly, the Appellant

has sought to rely upon the following excerpts from the written

submissions to contend that the period of limitation had stood

extended within three years from date of default:

Para 3(d) & (e) Page 333 of Appeal

(d) On 30th June 2003, the Corporate Debtor

has confirmed, admitted and acknowledged

that the liability by passing resolution for

execution of LAD. (Please see Exhibit K-3 at

para 5.32 of OA at Pages 270 (Vol II) of

the Company Petition)

(e) On 13th March 2006, the Corporate Debtor

submitted a letter inter alia showing their

willingness to settle dues of the Financial

Creditor.

(Please see Exhibit K-3 at para 5.39 of the OA at

Page 271 (Vol II) of the Company Petition)

Company Appeal (AT)(Ins) No.707/2021 50

16. Firstly, the arguments taken in the Written Submissions

have neither been pleaded in Form 1 to the Company

Petition nor in the Affidavit in Rejoinder filed before the

Adjudicating Authority. Such

arguments have been raised for the first time in the written

submissions. The Written Submissions were never shared

with the Respondent at the relevant time.

17. Secondly, assuming that the arguments raised can be

permitted, the above passages cannot constitute an

acknowledgement of debt/liability as the same are referring to

pleadings/averments made by the Appellant in its Original

Application filed before the Debt Recovery Tribunal.

18. Thirdly, the documents referred to in the above passages

of the written submissions have not been produced by the

Appellant before the Adjudicating Authority in the Company

Petition. The Appellant has merely produced a copy of the

Original Application (at Exhibit K-3 of the Company Petition)

but has failed to produce the documents referred therein. (See

Index of Company Petition at Page 85 of Appeal).

19. Therefore, on all three counts above, the contention of the Appellant must fail.

ii. Applicability of Section 22(5) of SICA

20. The Appellant has raised a ground that the exclusion of

period under Section 22(5) of the SICA Act would be available

Company Appeal (AT)(Ins) No.707/2021 51

to the Appellant, and thus the time period spent in course of

references and appeal before BIFR/AIFR would stand

excluded.

21. Likewise, the above contention has been raised for the

first time in written submissions before the Adjudicating

Authority, and the same was never pleaded in its Form

I/Rejoinder or made during oral arguments.

22. Section 22(5) of the SICA Act is reproduced below for reference:

22. Suspension of legal proceedings, contracts, etc.-

(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 enforcement thereof remains suspended under this section shall be excluded.

23. Without prejudice to the preliminary objections, it is

submitted that the exclusion of time period under Section 22

(5) of the SICA Act would not be available to Appellant for the

purposes of proceedings under Section 7 of the Code for the

following reasons:

a. The exclusion of period is available only for such

rights/privileges/obligations/liabilities which

have been suspended bv virtue of any

pend ency of reference before BIFR or AIFR;

b. There was no right to initiate corporate

Company Appeal (AT)(Ins) No.707/2021 52

insolvency resolution process available to the

Appellant at the relevant time when the

reference of Respondent before BIFR/AIFR was

pending which would lead to suspension of any

such right. Hence, the question of any exclusion

of time for exercise of such right would not arise;

c. Even otherwise, assuming that SICA was

presently in force, the pendency of any

reference before BIFR/AIFR would not restrict

the right to initiate insolvency resolution

process in light of overriding provisions under

the Code;

24. Therefore, in view of the above, the exclusion sought by the Appellant cannot be granted or considered

in respect of proceedings under the Code.

IV. REMAND IS THE APPROPRIATE COURSE -

ADDITIONAL DOCUMENTS AND SAID IA

25. As regards the additional documents sought to be

produced are concerned, the Respondent has not been

afforded any chance to deal with the same before the

Adjudicating Authority. Since the Appellant has filed the

said IA the proper course of action to be adopted would be

to remand the matter as laid

Company Appeal (AT)(Ins) No.707/2021 53

down by the Hon'ble Supreme Court in Wizaman Impex Private Limited vs Kedrion Biopharma Inc. (2022) sec 810:

6. It appears from the perusal of the record that the respondent applicant, in appeal against the aforesaid order of the NCLT. moved an application (I.A. No. 2685 of 2020) before the Appellate Tribunal and thereby, sought permission to produce the exchanges of e-mails from 03.11.2017 to 11.01.2019 with respect to the propositions for settlement of dues.

Admittedly, the said documents were not on record before the NCLT.

9. For what has been discussed and observed hereinabove, in our view, the appropriate course in this matter would be to set aside the impugned order dated 15.12.2021 passed by NCLAT to the extent it has allowed the application under Section 9 of the Code filed by the applicant-respondent but while retaining the other part of the impugned order taking the documents filed with I.A. No. 2685 of 7020 on record. After taking the said documents on record, for the appropriate process of adjudication in the matter, it is also considered just and proper that the order dated 06.10.2020 passed by NCLT be also set .aside and the NCLT be directed to re-consider the application under Section 9 of the Code as filed by the applicant- respondent while taking into consideration the additional documents n ow taken on record and at the same time, while extending an ad'equate opportunity of hearing to the corporate debtor.

26. Therefore, in case this Hon'ble Appellate Tribunal is inclined

to allow the said IA, and permit introduction of additional

documents, the proper course of action would be to be remand

the matter to the Adjudicating Authority so that the matter be

Company Appeal (AT)(Ins) No.707/2021 54

heard afresh after providing the Respondent an opportunity to

deal with the additional documents.

10. Taking aid from the facts disclosed in the written

submissions he submits that the default in the present case had

taken place in the month of May, 2000. However, first so called

demand notice was issued by the Advocate of Bank of Baroda on

04.06.2005. Meaning thereby that 1st demand notice itself was

issued beyond the period of limitation. He submits that once the

claim of the appellant was barred by limitation by any subsequent

act there was no reason to presume that the period of limitation

was extended. Besides this he submits that even so called

acceptance of OTS proposed by the appellant and duly

acknowledged by the CD had occurred on 10.01.2019 which was

obviously much after the expiry of the period of limitation and as

such in any event the limitation was not required to be condoned

and rightly learned Adjudicating Authority has rejected the

application.

11. Besides hearing learned counsel for the parties we have also

examined the materials available on record. In the present case

besides filing Notes of written submissions the Respondent has

filed reply and rejoinder was also filed on behalf of the appellant.

Company Appeal (AT)(Ins) No.707/2021 55

12. On examination of the tabular chart which has been noticed

by the Learned Adjudicating Authority we are of the considered

opinion that the learned Adjudicating Authority has committed no

error in dismissing the petition filed under Section 7 of the IBC, by

impugned order primarily on the ground of limitation. Of course

before this Appellate Tribunal the appellant through tabular chart

has tried to persuade the Court that from time to time the period

of limitation was extended, on examination of the same it is evident

that no such information/documents were brought to the notice of

the Adjudicating Authority either by filing application under

Section 7 of the IBC or by way of filing any supplementary affidavit.

In the tabular chart which has been detailed in additional written

submission filed on 09.12.2022 on behalf of the appellant, it is

evident that the appellant himself has admitted that number of

such documents and information were not available before the

Adjudicating Authority. The fact regarding execution of letter of

acknowledgement dated 05.10.2000 in pursuance to its Board

Resolution dated 29.09.2000 which is at Sr.No.3 in the tabular

chart in Column 3 the appellant has admitted "the copies of said

Board Resolution dated 29.09.2000 and LAD dated 05.10.2000

were not before the learned Adjudicating Authority and the same

Company Appeal (AT)(Ins) No.707/2021 56

has been filed before the Hon'ble Appellate Tribunal as Annexure

alongwith IA No.1876 of 2021." Similarly in Sr. No.4 in Column

No.1 date has been mentioned as 04.07.2003 and 2 nd column it

has been mentioned that Respondent executed as many as 8

letters of acknowledgement in respect of different credit facilities.

By these letters inter alia the Respondent has admitted its liability

about the outstanding as on 24.05.2003 in respect of term

loan/cash credit/book debt/cash credit hypothecation of

stock/DP/BD/FBP/FCD/Packing credit/term loan (two facilities).

However, in the 3rd column the appellant admits that copies of

letters of acknowledgement dated 04.07.2003 were not before the

learned Adjudicating Authority and same have been filed before

this Hon'ble Tribunal as Annexures alongwith IA No.1876 of 2021.

Again in tabular chart which is at running page 3 of the Additional

written submissions in Sr. No.2 dated 29.06.2005 in Column No.2

reply of Respondent to demand notice has been mentioned.

However, in 3rd column the appellant admits that those documents

were not before the Adjudicating Authority. It has been filed

alongwith IA No.1876/2021. Even the fact relating to acceptance

of OTS by Bank which is at Sr. No.4 dated 20.03.2006 at running

page 3 of the Additional written submission in Column 3 the

Company Appeal (AT)(Ins) No.707/2021 57

appellant admits that copy of letter dated 20.03.2006 was not

before the Adjudicating Authority and same has been filed before

this Appellate Tribunal alongwith IA No.1876/2021. Even notice

issued under Section 13(2) of SARFAESI Act which is reflected at

running page 4 of additional written submission in Column 2 date

is mentioned as 05.06.2006. However, in Column No.3 the

appellant has admitted that the said letter dated 05.06.2006 was

not before the Adjudicating Authority and has been filed before this

Appellate Tribunal alongwith IA No.1876/2021.

13. The statement made in additional written submission reflects

admission of the appellant that important information/documents

showing extension of period of limitation was not brought to the

notice of the Adjudicating Authority and as such on the ground of

absence of such information the appellant may not be allowed to

point out fault in the order of the Adjudicating Authority on the

point of limitation. Of course the appellant while admitting non-

availability of such document/information before the Adjudicating

Authority has stated that those documents were brought in IA

No.1876/2021 filed before this Appellate Tribunal, however, on

examination of the entire order sheet in the present proceeding it

is evident that the said IA was never allowed by this Tribunal and

Company Appeal (AT)(Ins) No.707/2021 58

as such it would be difficult for us to lay our hand on those

documents which were annexed with IA No.1876/2021. Moreover,

at the Appellate Stage normally new documents may not be taken

note of which were not available before the Court below. However,

in a special and exception circumstances though even at Appellate

Stage a new document can be examined. Since in the present

appeal IA No.1876/2021 through which new documents were

being brought on record itself was not allowed, we may not take

note of documents annexed with the IA.

14. On examination of the charts provided by both the side it

appears that for several years the matter was pending before the

Debt Recovery Tribunal. The period consumed by the appellant

during the SARFAESI proceeding may not be excluded in terms of

Section 14 of the Limitation Act. In respect of getting the period

consumed in a different proceeding excluded, it is required to be

established that an incorrect jurisdiction was invoked only then

period consumed in such proceeding can be claimed to be

excluded. However, in the present case it is not the case of the

appellant that they had approached incorrect forum having no

jurisdiction to entertain the claim. If we examine those period it is

evident that period of three years had already expired while

Company Appeal (AT)(Ins) No.707/2021 59

pursuing the SARFAESI proceeding by the appellant. In the

present case before the NCLT the appellant has not satisfied with

cogent material as to whether after date of default within three

years there was any valid acknowledgment by the Respondent/CD

regarding the date or any other facts were available. This reflects

that all the events have taken place much after the expiry of 1 st

three years of limitation and as such the appellant may not get any

benefit for regularisation of the limitation period. The Adjudicating

Authority in absence of any such document showing continuously

extension of period of limitation has rightly passed the impugned

order.

15. We do not find any ground to interfere with the impugned

order. The appeal stands dismissed.

(Justice Rakesh Kumar) Member (Judicial)

(Dr. Ashok Kumar Mishra) Member (Technical) bm

Company Appeal (AT)(Ins) No.707/2021