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

  • Blog|News|Insolvency and Bankruptcy Code|
  • 3 Min Read
  • By Taxmann
  • |
  • Last Updated on 22 July, 2022

corporate debtor; 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 DhirMs Varsha BanerjeeUdita Singh, Advs. for the Appellant.
    • Apoorv AgarwalAtul SharmaAbhishek SharmaAshly CherianGaurav AroraKamlendra 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

List of Cases Referred to

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied