Case Law Details
UCO Bank Vs GIT Textiles Manufacturing Limited (NCLT Kolkata)
Corporate Debtor contended that the instant petition is barred by limitation. It can be seen that the date of default is mentioned to be 30.09.2012 i.e the date on which the account became NPA. Accordingly, the limitation period for filing the application would ordinarily end on 30.09.2015. However, balance sheets of the Corporate Debtor from the year 2012 to 2019 have been placed on record by the Financial Creditor in the supplementary affidavit dated 6.02.2020. In these Balance sheets, multiple acknowledgments of debt to the Financial Creditor have been made by the Corporate Debtor, specifically, the Corporate Debtor has acknowledged the debt in the balance sheets of Financial Years 2012-13, 2014-15, 2015-16, 2016-17, 2017-18 and 2018-19.
In this regard, we seek to rely on the law laid down in Laxmi Pat Surana V. Union Bank of India & Anr, decided on March 21, 2021, wherein the Hon’ble Supreme Court has held that
“37. Ordinarily, upon declaration of the loan account/debt as NPA that date can be reckoned as the date of default to enable the financial creditor to initiate action under Section 7 of the Code. However, Section 7 comes into play when the corporate debtor commits “default”. Section 7, consciously uses the expression “default” not the date of notifying the loan account of the corporate person as NPA. Further, the expression “default” has been defined in Section 3(12) to mean non-payment of “debt” when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be. In cases where the corporate person had offered guarantee in respect of loan transaction, the right of the financial creditor to initiate action against such entity being a corporate debtor (corporate guarantor would get triggered the moment the principal borrower commits default due to non-payment of debt. Thus, when the principal borrower and/or the (corporate) guarantor admit and acknowledge their liability after declaration of PA but before the expiration of three years there from including the fresh period of limitation due to (successive) acknowledgments, it is not possible to extricate them from the renewed limitation accruing due to the effect of Section 18 of the Limitation Act. Section 18 of the Limitation Act gets attracted the moment acknowledgment in writing signed by the party against whom such right to initiate resolution process under Section 7 of the Code enures. Section 18 of the Limitation Act would come into play every time when the principal borrower and/or the corporate guarantor (corporate debtor), as the case may be, acknowledge their liability to pay the debt. Such acknowledgment, however, must be before the expiration of the prescribed period of limitation including the fresh period of limitation due to acknowledgment of the debt, from time to time, for institution of the proceedings under Section 7 of the Code. Further, the acknowledgment must be of a liability in respect of which the financial creditor can initiate action under section 7 of the Code.”
In light of the aforementioned judgment, it is clear that due to the specific admissions of debt by the Corporate Debtor, section 18 of the Limitation Act, 1963 will come into effect and result in computation of fresh limitation period of three years from the date of acknowledgment in each balance sheet. Since the last of such acknowledgments was made on 31st March 2019, the limitation period would last up till 31st March 2022. As such, the present petition is well within limitation.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
