Mr. Virender Bagai Suspended Director ... vs Punjab & Sind Bank And Anr

IN THE MATTER OF: Virender Bagai Suspended Director of Samar Estates Pvt. Ltd. ...Appellant

Versus

Punjab and Sind Bank & Anr. ...Respondents

Present: For Appellant : Mr. Nikhil Singhvi, Advocate. For Respondents : Mr. Khalid Abdullah, Advocate for R-1. Mr. Aalok Jagga, Mr. Vibhu Aggarwal, Mr. APS Madaan, Advocate for R-2 (RP).

ORDER

(Hybrid Mode)

05.08.2024: Heard learned counsel for the Appellant. This Appeal has

been filed against order dated 12.01.2024 by which Section 7 application has

been admitted, against which order appeal has been filed by the Suspended

Director of the Corporate Debtor.

2. When the appeal was taken on 08.04.2024, learned counsel for the

Appellant said that the Appellant is ready to submit a proposal to the Bank

for settlement, which is recorded in order dated 08.04.2024. Subsequently,

when the case was taken on 07.05.2024, a statement was made by learned

counsel for the Bank that no proposal worth consideration has been

submitted and earlier proposal was also rejected. The said statement was

recorded in order dated 07.05.2024. Interim order was also vacated on the

said date. Order dated 07.05.2024 is as follows:

Cont'd..../ 2

"ORDER (Hybrid Mode)

07.05.2024: Learned Counsel for the Respondent submits that Appellant has not submitted any proposal worth consideration and earlier proposal was already rejected and the last communication received from the Appellant dated 05.05.2024 has already been replied on 06.05.2024.

2. Learned Counsel for the Appellant submits that this Appeal may be taken after two weeks to enable the Appellant to submit a fresh proposal.

3. We are of the view that the opportunity was granted to the Appellant twice hence on the next date Appellant shall address the arguments on merit if there is no settlement brought on record.

4. We are of the view that interim protection granted on 08.04.2024 deserves to be vacated. We vacate the interim protection.

List this Appeal on 29th May, 2024."

3. Learned counsel for the Appellant challenging the order has made two

submissions. He submits that the application filed by the Financial Creditor

was barred by limitation. He submits that date of default being 30.09.2016

application was not filed within three years from the date of default. The

Adjudicating Authority has dealt the said issue in Para 11.1 of the order,

which is as follows:

Company Appeal (AT) (Insolvency) No.529 of 2024 3

"11.1. The next contention of the Ld. Counsel for the Respondent/Corporate Debtor is that the claim is time barred, as the date of default is 30.09.2016, when the account of the Corporate Debtor was declared as NPA.

No doubt, the date of default is meant for the calculation of period of limitation of 3 years, but in the case in hand, the Respondent/Corporate Debtor has admitted its liability of Rs. 115 Crores, towards the Petitioner/Financial Creditor, sanctioned vide letter dated 05.12.2012, in the letter dated 19.07.2018, which is annexed and marked as A-1/99 along with I.A. No. 693/2022.

Secondly, the acknowledgment is within 3 years, if computed from the date of declaration of the account of the Respondent/Corporate Debtor as NPA. As per Section 18 of the Limitation Act of 1963, the limitation period would commence w.e.f. 19.07.2018. For ready reference, Section 18 of the Limitation Act of 1963, 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 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.

The present petition has been filed on 15.12.2021, and re-filed on 13.04.2022 Therefore, taking into consideration the exclusion of the period of Covid-19,

Company Appeal (AT) (Insolvency) No.529 of 2024 4

as held by the Hon'ble Supreme Court in MA No. 21 of 2022 in MA No. 665 of 2021 in Suo Moto Writ Petition No. 3 of 2020, the present petition is within the period of limitation, even if the date of refiling of the petition is taken into consideration."

4. Learned counsel for the Appellant contends that letter dated

19.07.2018, which is relied by the Adjudicating Authority does not admit the

entire debt as claimed in the Section 7 application and Appellant has admitted

only Rs.20 Crores debt.

5. Be that as it may. The letter dated 19.07.2018 indicate that credit

facility and ODP limit was admitted and the Corporate Debtor also admitted

its default in paying and according to the letter, the default of more than Rs.20

Crore was accepted. We, thus, are of the view that letter dated 19.07.2018

furnishes sufficient ground for extension of limitation under Section 18 of the

Limitation Act.

6. Learned counsel for the Appellant further submits that there is dispute

between the parties regarding actual quantum of debt which is liability to be

discharged by the Corporate Debtor which is also reason for non-settlement

between the parties.

7. The debt and default being more than Rs.1 Crore, we do not find any

infirmity with admission of Section 7 application. In respect to quantum of

debt, it is for the Resolution Professional to verify the same after claims are

filed by the Financial Creditors.

Company Appeal (AT) (Insolvency) No.529 of 2024 5

8. We, thus, do not find any error in the order impugned. Appeal is

dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical) Archana/nn

Company Appeal (AT) (Insolvency) No.529 of 2024