CIRP plea filed u/s 7 was well within time as all payments made by corporate debtor were duly reflected in ledger of financial creditor

Case Details: Sanjeev Agraj v. IDBI Bank Ltd - [2022] 140 taxmann.com 186 (NCLAT-New Delhi)

Judiciary and Counsel Details

• • Justice Ashok Bhushan, Chairperson, Ms Shreesha Merla & Naresh Salecha, Technical Member
  • Alok Dhir, Ms Varsha Banerjee & Udita Singh, Advs. for the Appellant.
  • Apoorv Agarwal, Atul Sharma, Abhishek Sharma, Ashly Cherian, Gaurav Arora & Kamlendra Pratap Singh, Advs. for the Respondent.

Facts of the Case

In the instant case, the appeal was filed against the Order passed by the Adjudicating Authority (NCLT) which had admitted the Application under section 7 of the IBC, 2016 filed by the Financial Creditor.

The Financial Creditor had extended Financial Facility to the Corporate Debtor for a term loan of Rs. 130 Crores. The Account was classified as ‘NPA’ thereafter Notice under section 13(2) of the SARFAESI Act, 2002 was issued and subsequently, the Financial Creditor filed the section 7 Application.

The Counter Affidavit was filed by the Corporate Debtor to section 7 Application where the plea was taken that the Application under section 7 was barred by time since NPA was declared as on 29th June 2016 and Application was filed three years thereafter.

The Rejoinder was filed by the Appellant before the Adjudicating Authority where the Financial Creditor has pleaded that after the declaration of NPA on 29th June, 2016 the Corporate Debtor continued to make a payment towards the outstanding debt and payments. Copies of the Letter sent by the Corporate Debtor to the Financial Creditor were annexed with the Rejoinder Affidavit.

The Adjudicating Authority after hearing the parties took the view that the Corporate Debtor having made the payment even up to the year 2019, the Application was not barred by time.

Learned Counsel appearing for the Appellant challenging the Order pressed two submissions. He submitted that the Adjudicating Authority ought not to have looked into the materials brought in the Rejoinder Affidavit and the Financial Creditor ought to have amended its section 7 Application bringing on record all the relevant facts and hence the Adjudicating Authority committed an error in relying on the Rejoinder-Affidavit.

He further relied on the Judgment of Hon’ble Supreme Court in Asset Reconstruction Co. (India) Ltd. v. Bishal Jaiswal [2021] 126 taxmann.com 200/166 SCL 82 submitted that for purpose of acknowledgement under section 18 there had to be pleading of acknowledgement of liability. He was in support of his submissions submitted that there being no pleading, the Adjudicating Authority committed an error in holding the Application not barred by time.

NCLAT Held

NCLAT observed that there was no dispute to the preposition that Application under section 7 should be filed within three years from the date of NPA but if there are materials on record to indicate that there was an acknowledgment within the meaning of section 18 of the Code the limitation gets extended.

The present was the case where there was acknowledgement within the meaning of section 18 the Limitation got extended hence the Application filed on 6-12-2019 was well within time. No other argument was raised. Accordingly, the Appeal was dismissed.

List of Cases Reviewed

• • Order of NCLT – New Delhi in C.P. No. (IB) 3 (ND)/2020, dated 4-5-2022 (para 12) affirmed.
  • Asset Reconstruction Co. (India) Ltd. v. Bishal Jaiswal [2021] 126 taxmann.com 200/166 SCL 82 (SC) (para 10) distinguished.

List of Cases Referred to

• • Asset Reconstruction Co. (India) Ltd. v. Bishal Jaiswal [2021] 126 taxmann.com 200/166 SCL 82 (SC) (para 5)
  • Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries (P.) Ltd. [2020] 118 taxmann.com 323 (SC) (para 11).