The acknowledgment of debt and pending proceedings extend the limitation period for filing insolvency petitions, confirming debts under the Insolvency and Bankruptcy Code remain enforceable.

ORDER

Date of Order: 14.09.2023

The Financial Creditor, M/S Stressed Assets Stabilization Fund has filed petition under Section 95 (2) Section 60 (2) of the Insolvency and Bankruptcy Code 2016 (herein-after-referred to as the IBC) read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 to initiate Insolvency Resolution Process against the Personal Guarantor (herein-after- referred to as the Applicant) of the Corporate Debtor i.e., M/S Priyaranjan Fibres Limited. The Applicant instead of filing counter to the petition, filed the IA No.58/2003, challenging the maintainability of CP No.314/95/HDB/2022 on the ground of limitation under Article 55 of Limitation Act and Section 238 (A) of the IBC read with Rule 11 of NCLT Rules .

1. The brief facts necessary to dispose of the present application, as stated, are that:

1.1 M/S Stressed Assets Stabilization Fund (SASF) (hereinafter referred to as the Respondent) was incorporated as a Trust established by the Government of India on 24^th September, 2004 and entrusted to acquire and absorb stressed assets transferred to it by the erstwhile IDBI, filed the Company Petition No.314/2022 to initiate Corporate Insolvency Resolution Process (CIRP) against the Personal Guarantor of Corporate Debtor, M/S Priyaranjani Fibres Limited.

1.2 It is averred that the Corporate Debtor secured a term loan of Rs.990 lakhs on 15.09.1994 and for repayment of the said amount, the personal guarantor alongwith Sri V.Raman and Sri K.Jawaharlal Reddy stood guarantors and executed Guarantee Deed dated 15^th September, 1994.

1.3 When the Corporate Debtor committed default in paying the loan amount, the Financial Creditor filed an application before the Debts Recovery Tribunal, Chennai, wherein the personal guarantor and Corporate Debtor were asked to repay the loan amount and accordingly on the basis of the Recovery Certificate No.106/2009, notice dated 20^th November, 2009 was issued demanding the payment of the amount. Despite this, the Corporate Debtor and personal guarantor committed default in paying the amount.

1.4 After coming into force of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, the respondent issued Demand Notices dated 13.09.2021 and 22.04.2022 to the Applicant. When the Applicant failed to make the payment of the loan amount, the respondent approached this Authority by filing the Company Petition No.314/2022.

2. The Applicant by filing the present application under Section 3 (1) and Article 55 of the Limitation Act and Section 238 (A) of the Insolvency and Bankruptcy Code read with Rule 11 of the NCLT Rules claimed that the Company Petition No.314/2022 is hopelessly barred by limitation.

2.1 It has been explained that the default in paying the debt took place on 01.04.1997 which has been admitted by the respondent by filing affidavit in the proceedings before the Debts Recovery Tribunal. Hence, the respondent has wrongly claimed that the demand notices were issued on 13.09.2021 and22.04.2022 are legally valid.

2.2 Further, the Corporate Debtor vide reference No.266/2001 under Section 15 (1) of Sick Industrial Companies Act (SI