Gokul Anilkumar Aggarwal Vs. Shailesh Bhalchandra Desai (IRP) and Anr. - Therefore, the Claim under CIRP, cannot be rejected on the grounds that it is time barred.

  NCLT Mumbai-V (2024.04.24) in Gokul Anilkumar Aggarwal Vs. Shailesh Bhalchandra Desai (IRP) and Anr. [ (2024) ibclaw.in 468 NCLT, I.A. 3272 of 2023 in C.P. No. (IB) 115 of 2021 ] held that; 

• "The rules of limitation are not meant to destroy the rights of the parties. Section 3 of the Limitation Act only bars the remedy, but does not destroy the right which the remedy relates to. The right to the debt continues to exist notwithstanding the remedy is barred by the limitation.

• Though the right to enforce the debt by judicial process is barred, the right to debt remains. The time barred debt does not cease to exist by reason of s.3. That right can be exercised in any other manner than by means of a suit. 

• The debt is not extinguished, but the remedy to enforce the liability is destroyed. What SC.3. refers only to the remedy but not to the right of the creditors. Such debt continues to subsists so long as it is not paid. It is not obligatory to file a suit to recover the debt. 

• Therefore, the Claim under CIRP, cannot be rejected on the grounds that it is time barred.

Excerpts of the order;

# 1. The above application I.A. No. 3272 OF 2023 is filed by Gokul Anilkumar Aggarwal (hereinafter referred to as the “Applicant”) seeking direction against Shailesh Bhalchandra Desai and Anr. (hereinafter referred to as the “Respondent”) under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 And Rule 11 of NCLT Rules, 2016 (hereinafter called as “the Code”), praying for following reliefs:

• a. That this Hon'ble Tribunal be pleased to reject the proofs of Claim dated 12.04.2023 filed by the Respondent No. 2 as Financial Creditors of the Corporate Debtor as being ex-facie barred by the laws of limitation;

• b. Pending the hearing and final disposal of the present Application, the Respondent No. 2 be restrained from participating in and/or voting upon any business to be conducted in the Committee of Creditors during the CIRP of the Corporate Debtor;

• c. For Costs;

• d. For such other and further reliefs as this Hon,ble Tribunal may deem fit in the nature, facts and circumstances of the present case.

Brief facts of the application

# 2. The Present Applicant bearing no. I.A. 3272 of 2023 is filed by Gokul Anilkumar Aggarwal, a member of the suspended board of directors of Maharashtra Theatres Private Limited ("Corporate Debtor"), which is currently undergoing a Corporate Insolvency Resolution  Process ("CIRP"), seeking reliefs that the proof of claim submitted by the Respondent No. 2 with the Respondent No. 1 in respect of an alleged financial debt, be rejected.

# 3. The Respondent No. 1 is the Interim Resolution Professional appointed by this Hon'ble Tribunal vide order dated 31.03.2023, to carry out the CIRP of the Corporate Debtor. Subsequent thereto, the Applicant came to the knowledge that the Respondent No. 2/ Indian

Bank has filed its proof of claim with the Respondent No. 1 as purported Financial Creditor of the Corporate Debtor, claiming huge sums of monies towards alleged financial debt purportedly owed to it by the Corporate Debtor, on or about 12.04.2023 which was disputed by the Corporate Debtor.

# 4. The Applicant submitted that the Respondent No. 2 had issued a sanction letter dated 22.01.2013 whereby a Term Loan facility of Rs.55 crores (subsequently revised on 19.09.2014), was granted to the Corporate Debtor.

# 5. The Applicant further submitted that the account of the Corporate debtor was declared as a Non-Performing Asset as on 31.03.2016. On 16.05.2016, the Respondent No. 2 issued a notice under the provisions of Section l3(2) of the SARFAESI Act, 2002 to the Corporate Debtor alleging that the Corporate Debtor had violated certain terms of the sanction letters.

# 6. The Applicant submitted that the purported claim of the Respondent No. 2, the date of default, if any, could only be 90 days prior to 31.03.2016 i.e. the date on which the Corporate Debtor's account was classified as a Non-Performing Asset by the Respondent No.2.

# 7. Therefore, the date of default in respect of the alleged claims of the Respondent No. 2 is prior to 31.03.2016. Hence, any action by the Respondent No. 2 including filing of a proof of claim is ex-facie barred by the laws of limitation and therefore cannot be accepted in the CIRP of the Corporate Debtor.

# 8. The Applicant submitted that he had made a representation dated 30.05.2023 to the Respondent No. 1 placing on record the facts and requested him to reject any claims that is filed by the Respondent No. 2 in the CIRP of the Corporate Debtor. However, despite receipt

of the representation, the Respondent No. 1 did not respond to the same. Making it apparent that the CIRP of the Corporate Debtor was conducted by the Respondent No. 1 in a non-independent manner. Hence, this Application for calling for the records pertaining to the Proof of Claim filed by the Respondent No. 2 and reject the same as being ex-facie barred by the laws of limitation.

Submission of Respondent No. 1/ Shailesh Bhalchandra Desai/ Interim Resolution Professional

# 9. The Respondent No. 1 in its reply had denied each and every averment contained in the Application.

# 10. It is submitted that the Applicant has no locus to file the present application since the Applicant is a suspended board of director of the Corporate debtor who is also a personal guarantor to the Indian Bank i.e. the Respondent No. 2.

# 11. It is further submitted that the Respondent No. 1/ Resolution Professional has already filed an application under Section 19(2) of the code against the Applicant which was listed on several occasions however, the Applicant chose not to appear or file a reply. The Respondent No. 1/ Resolution Professional sought copies of audited balance sheets under the said application from the Applicant in the Present case since the Applicant failed to file the same with the ROC for the past 4 years shows that the Applicant do not want to co-operate in the CIRP process. Therefore, the Respondent No. 1/ Resolution Professional had to proceed to verify and admit the claims after considering the information available and documents submitted along with the claim form.

# 12. The Indian Bank i.e. Respondent No. 2 had filed their claim as Secured Financial Creditor in Form C dated 12.04.2023 for an amount of Rs. 75,16,33,261/- having 33.22% voting share in COC along with supporting financing documents. The details of sanction and financing documents are as under:-

# 13. The Ld. Counsel for the Respondent no. 1 has relied on the Judgement of the Hon’ble Supreme Court in Swiss Ribbons Private Limited vs. Union of India, (2019) 4 Supreme Court Cases 17, as a Resolution Professional does not have any power to adjudicate a claim. Hence based on the said supporting documents provided by them, Respondent No. 1/ Resolution Professional has admitted the claim submitted by Indian Bank / Respondent No. 2. 14. Hence, in view of the above facts and applicable law the present petition deserves to be dismissed.

Submission of Respondent No. 2/ Indian Bank

# 15. The Ld. counsel for the Respondent submitted that the Company Petition was filed in the year 2021 and was admitted by this Hon’ble Tribunal vide order dated 31.03.2023. Pursuant to the above order, the then IRP issued public announcement under Rule 6 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulation, 2016 thereby calling upon the creditors of the Corporate Debtors to submit their proof of claims on or before 17.04.2023 and pursuant to the above public announcement this Respondent i.e. Indian Bank has filed its proof of claim in Form C dated 12.04.2023 for Rs. 75.16 crores

# 16. It is further submitted that the Respondent No. 1 admitted the claim of the Respondent No. 2 of Rs 74.24 crore after being satisfied of the existence of debt due to the Respondent no. 2 from the documents provided to him with the Form . Moreover, the Applicant himself admits in its application that a term loan was granted to the Corporate Debtor and due to default in the repayment the account of the Corporate Debtor was classified as NPA.

# 17. In addition it is further submitted that In response to the above submission of the Applicant that the fallacious attempt was made to revive a time barred debt., the Ld. Counsel for the Respondent No. 2 submitted that the time period for filing a suit for money recovery is 3 years from the date when the cause of action arises or 3 years from the date on which there is an acknowledgement of debt. It is further submitted the Applicant himself has acknowledged the debt of the Corporate Debtor by way of One Time Settlement (OTS) proposal dated 02.06.2023, which is signed by the Applicant in his capacity as the member of suspended Board of Directors and therefore, such debt is not time barred as contemplated by the Applicant since the Applicant has himself signed the OTS proposal which itself is a deemed acknowledgement of its liability. The Ld. Counsel for the Respondent No. 2 has relied on the Judgement of The Hon'ble NCLAT passed in Company Appeal (AT) (Insolvency) No. 371 of 2020 Tejas Khandahar Vs. Bank of Baroda, holding that OTS proposals fall within definition  of the ambit of ‘acknowledgement of Debt’ as envisaged under Section 18 of the Limitation Act, 1963.

# 18. Therefore, the prayer in the present I.A merits no consideration.

Findings:

# 19. Heard the Ld. counsels for the parties and perused the record with their able assistance.

# 20. The present Petition reveals that the Respondent No. 2 i.e. Indian Bank has granted a term loan of Rs. 55 crores to M/s. RNA Corp Pvt. Ltd. along with the Corporate Debtor as a Co-borrower vide sanction letter dated 22.01.2013. However due to non-payment of dues the account of the Corporate Debtor was declared NPA on 31.03.2016 and the Company Petition No. 115 of 2021 was admitted by this Hon’ble Tribunal on 31.03.2023. However, the

contention of the Applicant is that the date of default could only be 90 days prior to the date when the Corporate Debtor was classified as a Non-Performing Asset by the Respondent No.2 i.e. on 31.03.2016 and therefore, filing of a proof of claim by the Respondent No. 2 on 12.04.2023 is ex-facie barred by the laws of limitation.

# 21. The issue that needs to be resolved in this Application is : “Whether the submission of claim by the Respondent No. 2 i.e. Indian Bank to the Respondent No. 1 i.e. Resolution Professional is valid or barred by law of limitation?”

# 22. In view of the above issue, this bench observes that in pursuance of the admission order dated 31.03.2023, the IRP issued public announcement under Rule 6 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulation, 2016, thereby calling upon the creditors of the Corporate Debtors to submit their proof of claims on or before 17.04.2023. The Respondent No. 2 i.e. Indian Bank on receipt of public announcement has submitted its proof of claim to the Respondent No. 1 in Form C dated 12.04.2023 for Rs. 75.16 crores.

# 23. This Bench relies on the Judgement of Hon’ble Supreme Court of India (20.04.1992) Punjab National Bank And Ors vs Surendra Prasad Sinha (Criminal Appeal No. 254 of 1992.) wherein it has been held that,

• "The rules of limitation are not meant to destroy the rights of the parties. Section 3 of the Limitation Act only bars the remedy, but does not destroy the right which the remedy relates to. The right to the debt continues to exist notwithstanding the remedy is barred by the limitation. Only exception in which the remedy also becomes barred by limitation is the right is destroyed. Though the right to enforce the debt by judicial process is barred, the right to debt remains. The time barred debt does not cease to exist by reason of s.3. That right can be exercised in any other manner than by means of a suit. The debt is not extinguished, but the remedy to enforce the liability is destroyed. What SC.3. refers only to the remedy but not to the right of the creditors. Such debt continues to subsists so long as it is not paid. It is not obligatory to file a suit to recover the debt."

Therefore, the Claim under CIRP, cannot be rejected on the grounds that it is time barred. NCLAT (31.07.2019) in Sunil Kumar Aggarwal Vs. New Okhla Industrial Development Authority & Ors.[Company Appeal (AT) (Insolvency) No. 775 of 2019] held that the Interim Resolution Professional will examine the claim submitted by the Applicant and the same will not be rejected on the basis that it is time barred or filed by an entity other than Financial Creditor. The Adjudicating Authority had already made it crystal clear that “the claim can’t be rejected because it is time barred or it is claimed by an entity other than financial creditor.”

# 24. Moreover, the suit can be filed within 3 years from the date when the cause of action arises or 3 years from the date on which there is an acknowledgement of debt. In the present case the Applicant himself has acknowledged the debt of the Corporate Debtor by way of One Time Settlement (OTS) proposal dated 02.06.2023, which is signed by the Applicant in his capacity as the member of suspended Board of Directors and therefore, such a debt is not barred by time as contemplated by the Applicant. Additionally, this bench has observed that the Applicant himself has admitted in its application that a term loan was granted to the Corporate Debtor and due to default in the repayment the account of the Corporate Debtor was classified as NPA.

# 25. Therefore, in view of the above facts and circumstances, this bench further relied on the Judgement Hon'ble NCLAT passed in Company Appeal (AT) (Insolvency) No. 371 of 2020 Tejas Khandahar Vs. Bank of Baroda, wherein it was held that OTS proposals fall within definition of the ambit of ‘acknowledgement of Debt’ as envisaged under Section 18 of the Limitation Act, 1963.  Therefore, filing of a proof of claim by the Respondent No. 2 on 12.04.2023 is well within the period of Limitation.

# 26. That though the prayer in present IA on the strength of above stated facts and circumstance merits no consideration but it also needs to be kept in mind that the Applicant is a suspended director and also a personal guarantor who has no locus at all. The attempt to file such frivolous application on the part of the Suspended director/personal guarantor deserves to be strongly deprecated as the acceptance or rejection of the claims fall within the ambit of the Respondent No. 1 / RP. RP has acted in term of IBC and regulations made thereunder. Therefore, with these observations Interlocutory Application Number 3272 of 2023 is dismissed.

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M/s Tech Sharp Engineers Pvt. Ltd. Vs. Sanghvi Movers Ltd. - A claim may not be barred by limitation. It is the remedy for realisation of the claim, which gets barred by limitation. The impugned order of the NCLAT is unsustainable in law.

  Supreme Court (19.09.2022) in M/s Tech Sharp Engineers Pvt. Ltd. Vs. Sanghvi Movers Ltd. [Civil Appeal No. 296 of 2020] held that;

• A claim may not be barred by limitation. It is the remedy for realisation of the claim, which gets barred by limitation. The impugned order of the NCLAT is unsustainable in law.

Excerpts of the order;

This appeal under Section 62 of the Insolvency and Bankruptcy Code, 2016, hereinafter referred to as the “IBC” is against a judgment and order dated 23rd July 2019 passed by the National Company Law Appellate Tribunal (NCLAT), New Delhi allowing Company Appeal (AT) (Insolvency) No. 118 of 2019 filed by the Respondent and setting aside an order dated 2nd January 2019 passed by the Adjudicating Authority, i.e., the National Company Law Tribunal (NCLT), Chennai whereby the Adjudicating Authority had dismissed an application filed by the Respondent as barred by limitation.

 

# 2. Pursuant to an agreement executed by and between the Appellant and the Respondent, the Respondent let out on hire to the Appellant, 150 MT crane for erection of equipment at the site of Indian Oil Corporation Ltd. (IOCL) at Paradip in Odisha. The Respondent/Operational Creditor raised invoices on the Appellant between 3rd January 2012 and 4th March 2013 for a sum of Rs.38,84,709/-.

 

# 3. On or about 6th May 2013, the Respondent issued notice to the Appellant for payment of outstanding hire charges. By letter dated 17th May 2013, the Appellant replied to the said notice. Further correspondence ensued.

 

# 4. Ultimately, on 14th October 2013, the Respondent issued a statutory notice to the Appellant under Sections 433(e), 434 and 439 of the Companies Act, 1956 for Winding Up of the Appellant-Company. The Appellant duly replied to the notice on 7th November 2013, acknowledging its liability to the Respondent.

 

# 5. On 9th November 2013, the Respondent called upon the Appellant to clear its dues. On 24th May 2014, the Respondent issued a statutory notice under Sections 433(e), 434 and 439 of the Companies Act, 1956 calling upon the Appellant to pay Rs.38,84,709/- towards crane hire charges.

 

# 6. On or about 22nd December 2015, the Respondent filed a Winding Up petition dated 4th July 2015 in the Madras High Court. On 5th January 2016, the High Court returned the Winding Up petition to the Respondent for curing of defects. The Winding Up petition was represented on 3rd February 2016, but again returned on 24th May 2016 with an endorsement to comply with the defects as intimated earlier.

 

# 7. The IBC came into force on 1st December 2016. Thereafter the Respondent issued a demand notice on 14th November 2017 under Section 8(1) calling upon the Appellant to repay its dues.

 

# 8. On 30th March 2018, the Respondent filed petition being CP/724/ (IB)/2018 under Section 9 of the IBC for initiation of the Corporate Insolvency Resolution Process (CIRP) in the NCLT. On 20th June 2018, the Adjudicating Authority (NCLT) directed the Registry to issue notice to the Appellant.

 

# 9. By an order dated 2nd January 2019, the Adjudicating Authority (NCLT) rejected the application as barred by limitation, placing reliance on the judgment of this Court in B.K. Educational Services Pvt. Ltd. v. Parag Gupta and Associates1. The application under Section 9 of the IBC was accordingly dismissed.

 

# 10. The Respondent appealed to the NCLAT under Section 61 of the IBC. By the impugned judgment and order, the NCLAT has set aside the order dated 2nd January 2019 passed by the Adjudicating Authority (NCLT) rejecting the application of the Respondent under Section 9 of the IBC and has remitted the case to the Adjudicating Authority for admission after notice to the parties. The NCLAT directed that before admission of the case, it would be open to the Respondent to settle the matter with the Appellant. The NCLAT held; 

• “8. In the present case, it is not in dispute that right to apply under Section 9 accrued to the Appellant on 1st December, 2016, when ‘I&B Code’ came into force. Therefore, we find that the application under Section 9 filed by the Appellant is within the period of three years from the date of right to apply accrued.”

 

# 11. For the purpose of limitation, the relevant date is the date on which the right to sue accrues which is the date when a default occurs. In B.K. Educational Services Pvt. Ltd. (supra), cited before the NCLT and referred to in the judgment and order impugned, this Court held :-

• “42. It is thus clear that since the Limitation Act is applicable to applications filed under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted. “The right to sue”, therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application.”

 

# 12. In Radha Export (India) Private Ltd. v. K.P. Jayaram and Anr.2, this Court referred to B.K. Educational Services Pvt. Ltd. (supra) and held the application under Section 7 of the IBC to be barred by limitation.

 

# 13. In Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries Private Ltd. and Anr.3, this Court held that limitation of three years as provided by Article 137 of the Limitation Act, which commenced from the date of the default, was extendable under Section 5 of the Limitation Act, 1963.

 

# 14. It is well settled by a plethora of judgments of this Court as also different High Courts and, in particular, the judgment of this Court in B.K. Educational Services Pvt. Ltd. (supra) that the NCLT/NCLAT has the discretion to entertain an application/appeal after the prescribed period of limitation. The condition precedent for exercise of such discretion is the existence of sufficient cause for not preferring the appeal and/or the application within the period prescribed by limitation.

 

# 15. In Ramlal, Motilal & Chhotelal v. Rewa Coalfields Ltd.4, this Court affirmed the view taken by the Madras High Court in Krishna v. Chathappan5 and held that Section 5 of the Limitation Act gives the Court a discretion, which is to be exercised in the way in which judicial power and discretion ought to be exercised, upon principles which are well understood.

 

# 16. The condition precedent for condonation of the delay in filing an application or appeal, is the existence of sufficient cause. Whether the explanation furnished for the delay would constitute “sufficient cause” or not would be dependent upon facts of each case. There cannot be any straitjacket formula for accepting or rejecting the explanation furnished by the Appellant/applicant for the delay in taking steps.

 

# 17. When an appeal is filed against an order rejecting an application on the ground of limitation, the onus is on the Appellant to make out sufficient cause for the delay in filing the application. The date of enforcement of the IBC and/or the date on which an application could have first been filed under the IBC are not relevant in computation of limitation. It would be absurd to hold that the CIRP could be initiated by filing an application under Section 7 or Section 9 of the IBC, within three years from the date on which an application under those provisions of the IBC could have first been made before the NCLT even though the right to sue may have accrued decades ago.

 

# 18. The fact that an application for initiation of CIRP, may have been filed within three years from the date of enforcement of the relevant provisions of the IBC is inconsequential. What is material is the date on which the right to sue accrues, and whether the cause of action continuous.

 

# 19. The pendency of the proceedings in a parallel forum, invoked by the Respondent, is not sufficient cause for the delay in filing an application under Section 9 of the IBC. By the time the application was filed, the claim had become barred by limitation.

 

# 20. In a notice dated 24th May 2014 issued by the Respondent demanding payment, it was contended that the Appellant had agreed to pay its outstanding dues in five equated monthly installments of Rs.8,48,053/-. The Appellant had, however, defaulted after payment of one installment for the month of June, 2013. A copy of the petition filed by the Respondent in the High Court of Judicature at Madras is enclosed to the paper book. The Respondent asserted –

• “The Petitioner states that without any valid reason the Respondent delayed the payment for the Services done by the petitioner. Even after repeated and constant follow-up the Responder did not settle the dues payable to the Petitioner and therefore, the Petitioner issued a notice dated 06.05.2013 and demanded the Respondent to make the payment. The Respondent sent a reply dated 17.05.2013 and in the said reply the Respondent admitted the outstanding dues and agreed to settle the outstanding dues in six months and requested the Petitioner to give discount. The Petitioner issued a rejoinder dated 21.05.2013 providing 10% discount and to settle the remaining amount in 5 equaled monthly instalment, commencing from 1st June, 2013. However, it is made clear that the offer given by rejoinder dated 21.05.2013 is subject to the condition that the Respondent issue and honour the post-dated cheques for the five monthly instalments.

• The Petitioner states that the Respondent sent a reply dated 07.06.2013 stating that they are unable to pay 1st instalment on 01.06.2013 and informed that the same will be paid on 20.06.2013. The Petitioner sent a sur-rejoinder dated 14.06.2013 and asked the Respondent to proceed with the payment schedule proposed by them and it is made very clear that the discount and the waiver of interest offered by the Petitioner is strictly on the condition that the Respondent adhere to the payment schedule. The Respondent paid the 1st instalment and failed to make any further payment and therefore the Petitioner sent a reminder dated 02.08.2013. The Respondent did not honour their promise and miserably failed to make payment for the 2nd instalment and therefore the Petitioner was constrained to revoke their offer and issued notice dated 14.10.2013 demanding the Respondent to pay Rs.38,84,709/- (Rupees Thirty Eight Lakhs Eighty Four Thousand Seven Hundred and Nine only) with interest.

• The Petitioner states that the Respondent issued reply dated 07.11.2013 and confirmed the non-payment of instalments as per their promise and further stated that the Respondent has requested IOCL to make direct payment to the Petitioner and also enclose a draft letter to be sent by the Respondent to IOCL. The Petitioner sent sur re-rejoinder dated 09.11.2013 and informed the Respondent that the discount offered has been withdrawn due to the failure on the part of the Respondent. However, considering the request of the Respondent gave final opportunity to settle the dues in two instalments and it was made very clear that any failure on the part of the Respondent to clear dues will result in withdrawal of discounts/waivers and the Respondent has to pay the entire amount of Rs.38,84,709/- (Rupees Thirty Eight Lakhs Eighty Four Thousand Seven Hundred and Nine only).”

 

# 21. From the averments in the Winding Up petition, it is patently clear that there was no acknowledgment of liability after 7th November 2013. The last payment was made in June 2013.

 

# 22. The Adjudicating Authority (NCLT) held :-

• “On perusal of the Application filed under Section 9 of the I&B Code, 2016, it appears that the claim amounting to Rs.38,84,709/- has become due and payable on 28.02.2013. There is a single confirmation of the claim by the Corporate Debtor on 07.11.2013 as reflects from the document placed at page 60 of the typed set filed with the Application. Thereafter, there is nothing on record to suggest that at any point of time the Corporate Debtor confirmed/acknowledged the debt.

• In the circumstances, the claim has become time barred and in view the judgment of the Hon’ble Supreme Court passed in B.K. Educational Services Pvt. Ltd. -vs- Parag Gupta and Associates (2018 SCC Online SC 1921), the Petition stands dismissed.”

 

# 23. It is now well settled that the provisions of the Limitation Act are applicable to proceedings under the IBC as far as may be. Section 14(2) of the Limitation Act which provides for exclusion of time in computing the period of limitation in certain circumstances, provides as follows:

• “14. Exclusion of time of proceeding bona fide in court without jurisdiction.—

• (1) …

• (2) In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.”

 

# 24. Similarly, under Section 18 of the Limitation Act, an acknowledgment of present subsisting liability, made in writing in respect of any right claimed by the opposite party and signed by the party against whom the right is claimed, has the effect of commencing of a fresh period of limitation, from the date on which the acknowledgment is signed. However, the acknowledgment must be made before the period of limitation expires.

 

# 25. Proceedings in good faith in a forum which lacks jurisdiction or is unable to entertain for like nature may save limitation. Similarly, acknowledgment of liability may have the effect of commencing a fresh period of limitation.

 

# 26. In this case, the last acknowledgment was in 2013 and the Madras High Court neither suffered from any defect of jurisdiction to entertain the winding up application nor was unable to entertain the winding up application for any other cause of a like nature.

 

27. The NCLAT held :-

• “From the facts as narrated above, it will be evident that the winding up petition was filed before the Hon’ble High Court of Judicature at Madras which had not reached finality and in the meantime, as the ‘I&B Code’ came into force, the demand notice under Section 8(1) was issued on 14th November, 2017 for payment of outstanding amount along with the interest. Thus, as we find that there is continuous cause of action the claim is within the period of limitation. The Appellant had moved before an appropriate forum for appropriate relief in time, in accordance with law and so we hold that the claim of the Appellant is not barred by limitation as the petition under Section 433 & 434 of the Companies Act, 1956 become infructuous; by operation of law.”

 

# 28. The limitation for initiation of winding up proceedings in the Madras High Court stopped running on the date on which the Winding Up petition was filed. The initiation of proceedings in Madras High Court would not save limitation for initiation of proceedings for initiation of CIRP in the NCLT under Section 7 of the IBC.

 

# 29. A claim may not be barred by limitation. It is the remedy for realisation of the claim, which gets barred by limitation. The impugned order of the NCLAT is unsustainable in law.

 

# 30. The appeal is allowed. The impugned order of the NCLAT is set aside.

 

# 31. This judgment, however, will not prevent the Respondent from pursuing any other remedy which the Respondent may be entitled to avail in accordance with law and/or pursue any pending proceedings in accordance with law.

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