Section 7 of IBC – Interplay of Sections 5 & 18 of the Limitation Act for counting period of limitation.
Interplay of Section 7 of IBC & Sections 5 & 18 of the Limitation Act for counting period of limitation in the light of facts of the case
Leave and Licence Agreement between the appellant – Axis Bank and the Universal Premises & Textiles Pvt Ltd for ground to 10th floors in Solaris C building. Security deposit of Rs.87,56,24,381/- was given by the appellant between the period of 23.6.2007 to 3.11.2008. Universal Premises executed simple mortgage of seven floors without possession in favour of the appellant on 6.11.2008.
On 2.5.20211, Universal Premises executed sale-deed in favour of Rajput Retail Ltd for the land of 5123.90 sq.fts including the land underneath building Solaris C also. Leave and licence was acknowledge, reserved and protected under the sale-deed.
On 29.6.20211, RPL created equitable mortgage of the land underneath in favour of SBI for credit facilities.
ON 28.6.2013, SBI declared CD as NPA.
In 2021, Universal Premises merged with RPIL and renamed as Shreem Corporation Limited (Corporate Debtor).
The appellant filed eight summary suits for refund of security deposit under Leave and Licence Agreement on failure to return the same inspite of demand notices.
On 22.1.2020, the respondent no.2 filed section 7 IBC application against the Corporate Debtor and also section 5 application under the Limitation Act for condonation of delay of 1392 days. However, the respondent no.2 filed additional affidavit that the delay was 662 days since its debt was acknowledged in the Balance Sheet of 2021 by the Corporate Debtor. Moreover, the appellant was neither intimated of the said proceedings nor was made party to the same.
On 22.9.2021, the NCLT condoned the delay, admitted the IBC petition and appointed Interim Resolution Professional.
The NCLAT dismissed the appeal of the appellant vide Order dated 4.1.2022. As a result, the appellant filed the civil appeal in the Supreme Court.
HELD -SBI declared the CD as NPA on 28.6.2013 and therefore, limitation period would be three years from 31.3.2013 upto 31.3.2016 if there were no intervening circumstances during the said period. However, in the Balance Sheet of 201-15 ending with 31.3.2015, the CD had acknowledged debt of SBI which is valid for the benefit of Section 18 of the Limitation Act. Thus, the period of limitation would start from 31.3.2015 upto 31.3.2018. Secondly, the OTS proposals were made within three years of the said period.
Judgment dated 12.9.2023 in Civil Appeal No.2085 of 2022 – Axis Bank Limited Vs. Naren Sheth and another
