The National Company Law Appellate Tribunal (NCLAT), New Delhi bench comprising Justice Rakesh Kumar Jain, Judicial Member and Dr. Alok Srivastava, Technical Member was hearing an Appeal of the Corporate Debtor and held that the bank could not produce any evidence to prove that there has been acknowledgement in writing and signed by the Appellant.
The issue involved in this appeal is whether the application filed under Section 7 of the Code is within the period of limitation.
It has now been repeatedly held by the Hon’ble Supreme Court and followed by the Appellate Tribunal that Article 137 of the Act would apply for counting the period of limitation in respect of an application filed under Section 7 of the Code. Article 137 of the Act provides three years from the date when the right to apply accrues. The right to apply accrues from the date of default as has been provided in Section 7 of the Code itself.
In the instant case, the Bank did not mention the date of default in Part IV of Form 1 of the application filed under Section 7 of the Code and disclosed the date of default as 30.06.2011 only in the supplementary affidavit. The trigger date is thus 30.06.2011 for the purpose of counting the period of three years which is up to 30.06.2014. Meaning thereby, w.e.f 01.07.2014 the limitation to apply under Section 7 of the Code had expired. However, Section 18 of the Act deals with acknowledgement of the debt for the purpose of extension of limitation but it categorically provides that the acknowledgement has to be made during the period of three years and not beyond that. In the present case, the Bank could not produce any evidence to prove that there has been acknowledgement in writing and signed by the Appellant for the purpose of extension of the period of limitation except for the reply to the notice issued under Section 13(2) of the SARFAESI Act, 2002 in which the Appellant did not make any unambiguous and unequivocal acknowledgement which could extend the period of limitation. The Bank has also relied upon the OTS offer dated 28.12.2018 which is purported to have been approved and accepted by the Corporate Debtor on 21.01.2019 but that too was not during the period of limitation and cannot be counted for the purpose of extension of the period of limitation in terms of Section 18 of the Act.
Thus, the limitation counted from the date of default i.e. 30.06.2011 had expired on 30.06.2014 and there is no acknowledgement of debt during this period in terms of Section 18 of the Act. The Bank did not place on record the balance sheet prior to 2014 and the only balance sheets placed on record are from 31.03.2015 to 31.03.2018 and the OTS also took place on 21st January 2019 much beyond the period of three years.
The appeal was allowed and the impugned order was set aside.
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