National Company Law Appellate Tribunal, Principal Bench, New Delhi, Company Appeal (AT)(Insolvency) No. 1080 of 2021
Respondent:
Punjab National Bank (International) Ltd. National Company Law Appellate Tribunal, Principal Bench, New Delhi, Company Appeal (AT)(Insolvency) No. 1080 of 2021
Facts:
Punjab National Bank (International) Ltd. (Financial Creditor) filed an application under Section 7 against Warana Dairy and Agro Industries Ltd. (Corporate Debtor) for the resolution of an amount of US$5,725,994.06, which was admitted on 16.09.2021.
Namdev Hindurao Patil, an ex-director of the Corporate Debtor, filed the present appeal against the order dated 16.09.2021, challenging the finding of the Adjudicating Authority that the application was not barred by limitation.
Procedural History:
Warana Dairy and Agro Industries Ltd. (Corporate Debtor) secured a loan of USD 5.00 Million from Punjab National Bank (International) Ltd. (Financial Creditor) in the year 2012. The respondent served a demand notice for loan repayment on 08.07.2016 to which a reply was sent dated 29.07.2016 in which averment was made that the demand was a harsh notice to the appellant’s client as he has so far made payment in the sum of US$ 7,87,500/- to PNB (International) Ltd. against the principal amount due up to June 2015.
Issues:
Whether the application filed by Punjab National Bank (International) Ltd. under Section 7 against Warana Dairy and Agro Industries Ltd. for the resolution of a debt amount was barred by limitation, considering the last payment made by the Corporate Debtor and whether subsequent actions by the Corporate Debtor constituted an acknowledgement of the debt, thus resetting the limitation period.
Arguments:
1. Appellant's Argument:The appellant argued that the application was barred by limitation,contending that the last payment made by the Corporate Debtor was in June 2015, and since the application under Section 7 was filed on 31.01.2020, it exceeded the limitation period prescribed under Article 137 of the Limitation Act, 1961.
2. Respondent's Argument:The respondent contended that various payments were made by the Corporate Debtor up to February 2017, and a proposal for a one-time settlement of the term loan was sent on 07.03.2019, constituting an acknowledgement of the debt. Therefore, the application filed on 31.01.2020 was within the limitation period..
Decision:
After hearing both parties and examining the record, the learned tribunal concluded that there was no substance in the appellant's argument. The learned tribunal found that the Corporate Debtor had made payments on the loan account much after June 2015, with the last payment made on 23.02.2017.
Additionally, the learned tribunal considered the proposal for a one-time settlement as an acknowledgement of the debt. Therefore, the application under Section 7 filed on 31.01.2020 was within the limitation period. Consequently, the learned tribunal dismissed the appeal, stating that there was no merit in interfering with the order of admission on the grounds of limitation.
Reasons:
The learned tribunal's decision was based on the interpretation of the actions and communications between the parties, particularly the Corporate Debtor and the Financial Creditor. The learned tribunal examined the evidence provided by both parties, notably the payment history and correspondence.
The learned tribunal noted that the Corporate Debtor had made payments on the loan account beyond the alleged cutoff date of June 2015. Payments were recorded up to February 2017, indicating ongoing financial interactions between the parties.
The learned tribunal considered the Corporate Debtor's actions, particularly the proposal for a one- time settlement of the term loan sent on 07.03.2019, as constituting an acknowledgement of the debt. It was established under Section 18 of the Limitation Act that when a person against whom a right or a property is claimed, before the date of expiration of the period for filing of a suit or application, acknowledges such a liability, the limitation shall be computed from the time when such an acknowledgement was made. This acknowledgement served to reset the limitation period, making the application filed on 31.01.2020 within the prescribed timeframe.