JUDGEMENT

[Per: Barun Mitra, Member (Technical)] The present appeal filed under Section 61 of Insolvency and Bankruptcy Code, 2016 (“IBC” in short) by the Appellant arises out of the Order dated 01.09.2023 (hereinafter referred to as “Impugned Order”) passed by the Adjudicating Authority (National Company Law Tribunal, Indore Bench) in CP (IB) No.06/MP/2019. By the impugned order, the Adjudicating Authority has admitted the application under Section 7 of the IBC filed by Kotak Mahindra Bank Ltd-present Respondent No.1 and initiated Corporate Insolvency Resolution Process (“CIRP” in short) of the Corporate Debtor – M/s Gwalior Polypipes Ltd. Aggrieved by this impugned order, the present appeal has been filed by the erstwhile Director of the Corporate Debtor.

2. The factual matrix of the present matter is as outlined below:

 State Bank of India (“SBI” in short), the original lender granted various financial assistance to the Corporate Debtor from the year 1984, which came to be renewed/enhanced/reduced from time to time. SBI vide its Arrangement Letter sanctioned renewed/reduced credit facilities aggregating to Rs.3.95 crores on 02.02.2002.  The Corporate Debtor executed an Agreement of Hypothecation of Goods and Assets in favour of the Financial Creditor.  The Corporate Debtor was declared to be NPA in 2001 having failed to pay the interest due. SBI issued a Legal Notice on the Corporate Debtor on 18.08.2003 recalling the loan facility for non-payment of dues and in 2004 filed an application against the Corporate Debtor before DRT.  Assignment Agreement came to be executed by and between SBI and Kotak Mahindra Bank Ltd. (“KMBL” in short), the Financial Creditor/Respondent No.1 on 16.01.2006.  DRT passed an order dated 15.03.2007 inter-alia directing the Corporate Debtor to pay Rs.1.81 crore and issued Interim Recovery Certificate.  KMBL issued a Demand Notice upon the Corporate Debtor under Section 13(2) of the SARFAESI Act on 06.07.2007.  DRAT vide its judgment dated 26.08.2009 dismissed the Appeal filed by the Corporate Debtor challenging the DRT order.  KMBL took symbolic possession of the mortgaged properties under Section 13(4) of the SARFAESI Act on 29.11.2011. On the directions of the Hon’ble High Court of Madhya Pradesh dated 07.05.2012, the Corporate Debtor filed a Securitisation Application before the DRT challenging the action taken by KMBL under the SARFAESI Act which is pending.  KMBL filed a Section 7 application against the Corporate Debtor on 11.10.2019 which was admitted by the Adjudicating Authority on 01.09.2023. Assailing the impugned order, the Appellant has come up in appeal.

3. The Learned Counsel for the Appellant making his submissions admitted that SBI had advanced working capital loan to the Corporate Debtor, last renewed on 02.02.2002, for a total limit of Rs.3.95 crore. Having failed to pay the interest due, the Corporate Debtor was declared to be NPA in 2001 and SBI initiated DRT proceedings against the Corporate Debtor. Though SBI had assigned the debt in favour of KMBL on 16.01.2006 vide an Assignment Agreement, KMBL was not substituted in place of SBI in the DRT proceedings and none of the securities lying with SBI were ever transferred to KMBL.

KMBL however filed a Section 7 application against the Corporate Debtor on 11.10.2019 though the right to sue arose on 31.03.2004 when the period of limitation expired qua the default which arose on 31.03.2001. Thus, the Section 7 application which was filed after 18 years in October 2019 was way beyond the prescribed limitation period of 3 years under Section 18 of the Limitation Act, 1963 and thus the petition stood barred by limitation.

4. It was also asserted that the Adjudicating Authority incorrectly relied upon entries in the balance sheet of the Corporate Debtor to extend the limitation period from 2001 to 2019. The caveats which formed part of the balance sheets disputing the said liability have not