AXIS BANK LIMITEDversusNAREN SHETH & ANR.

                 [2023] 14 S.C.R. 581 : 2023 INSC 820



                             CASE DETAILS

                         AXIS BANK LIMITED
                                      v.
                        NAREN SHETH & ANR.
                     (Civil Appeal No. 2085 of 2022)
                          SEPTEMBER 12, 2023
   [VIKRAM NATH AND AHSANUDDIN AMANULLAH, JJ.]

                              HEADNOTES

      Issue for consideration: NCLAT dismissed the appeal filed by the
appellant upholding the order passed by the Adjudicating Authority whereby
it admitted the application u/s.7, Insolvency and Bankruptcy Code, 2016
filed by Respondent No.2-Secured Creditor against the Corporate Debtor,
after condoning the delay. Respondent No.2 whether entitled to the benefit
of s.18, Limitation Act and whether s.5 thereof would also be applicable.
      Insolvency and Bankruptcy Code, 2016 – s.7 – Limitation Act,
1963 – ss.18, 5 – Respondent No.2 filed application u/s.7 against the
Corporate Debtor on 22.01.20 along with the application for condoning
delay of 1392 days – Later, it stated that the delay was only of 662 days
in view of the acknowledgement in the Balance Sheet of the Corporate
Debtor for the financial year ending 31.03.2015 – Appellant inter alia
pleaded that Respondent No.2 admitted in its s.7 petition that there
was a delay of 1392 days – According to it, the Corporate Debtor was
declared as NPA on 28.06.2013, w.e.f 31.03.2013, as per the Balance Sheet
and the limitation of three years would expire on 31.03.2016 and thus,
the application u/s.7 filed in 2020 was barred by limitation – Whether
the debt acknowledged in the balance sheet of the financial year ending
on 31.03.2015 and the three OTS proposals would give a fresh life of
limitation of three years from each of the respective dates:
      Held: Respondent No.2 declared the Corporate Debtor as an NPA on
28.06.2013 – Therefore, the limitation period would be three years from the
last date of the financial year previous to the declaration of NPA, which would
be 31.03.2013, and would run up to 31.03.2016 – If there were no further
                                      581
582           SUPREME COURT REPORTS                        [2023] 14 S.C.R.


intervening circumstances or developments relating to acknowledgment, the
petition u/s.7 would be barred by limitation as contended by the appellant
– However, there are four major acknowledgments made by the Corporate
Debtor after the declaration of the NPA and within the expiry of three years
from the said date – Corporate Debtor in its balance sheet for the financial
year 2014-15, which came to an end on 31.03.2015, acknowledged the
debt in its balance sheet for the said year – A balance sheet acknowledging
debt is also a document relevant for calculating the limitation – This
acknowledgment of debt in the balance sheet is a valid acknowledgment
for the benefit of s.18, Limitation Act – Petition u/s.7 was filed within three
years from the date of the first, second and the third One-Time Settlement
(OTS) proposals – Taking the date of acknowledgment of debt in Balance
Sheet and the three OTS proposals the same were within the limitation
under law or the extended limitation due to acknowledgments – Application
of Respondent No.2 entitled to benefit of ss.5 and 18, Limitation Act and,
therefore, was within time – No merit in the appeal. [Paras 13-15, 27, 28]
        Insolvency and Bankruptcy Code, 2016 – Limitation Act, 1963 –
s.14:
      Held: s.14 of the Limitation Act will have no application in the present
case inasmuch as the proceedings under the SARFAESI Act before the DRT
cannot be said to be before a Court or Tribunal having no jurisdiction –
Respondent No.2, being a Secured Creditor, would definitely have a right
to invoke the power under the SARFAESI Act and the said proceedings
cannot be said to be without jurisdiction – Therefore, no benefit u/s.14 would
be admissible to Respondent No.2 – Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002. [Para 12]

         LIST OF CITATIONS AND OTHER REFERENCES

      Dena Bank (Now Bank of Baroda) vs. C. Sivakumar Reddy and Another
(2021) 10 SCC 330; Kotak Mahindra Bank Limited vs. Kew Precision Parts
Private Limited and Ors (2022) 9 SCC 364; Asset Reconstruction Company
(India) Limited vs. Bishal Jaiswal and Another (2021) 6 SCC 366 – relied on.
     Jignesh Shah & Anr. vs. Union of India & Anr. 2019 (10) SCC 750 :
[2019] 12 SCR 678; M/s Invent Asset Securitisation & Reconstruction Pvt.
Limited vs. M/s Girnar Fibres Ltd. 2022 SCC Online SC 808; Invent Assets
       AXIS BANK LIMITED v. NAREN SHETH & ANR.                        583


Securitization and Reconstruction Private Limited vs. Xylon Electrotechnic
Private Limited Civil Appeal No. 3783 of 2020; Vashdeo R. Bhojwani
vs. Abhyudaya Co- Operative Bank Limited and Another 2019 (9) SCC
158:[2019] 12 SCR 75; B.K. Educational Services Private Limited vs. Parag
Gupta and Associates 2019 (11) SCC 633:[2018] 12 SCR 794; Babulal
Vardharji Gurjar vs. Veer Gurjar Aluminium Industries Pvt. Limited &
Anr. 2020 (15) SCC 1; Ome Prakash Verma vs. Amit Jain & Anr. CA(AT)
(Insolvency) No. 827 of 2020 passed by NCLT, (Principal Bench, Delhi);
Rajendra Narottamdas Sheth and Another vs. Chandra Prakash Jain and
Another (2022) 5 SCC 600; Gopal Sardar vs. Karuna Sardar (2004) 4 SCC
252:[2004] 2 SCR 826; Serish Maji vs. Nishit Kumar Dolui 1999 SCC
Online Cal 58; Sesh Nath Singh and Another vs. Baidyabati Sheoraphuli
Co-Operative Bank Limited and Another (2021) 7 SCC 313 - referred to.
      OTHER CASE DETAILS INCLUDING IMPUGNED
             ORDER AND APPEARANCES
     CIVIL APPELLATE JURISDICTION : Civil Appeal No.2085 of 2022.
    From the Judgment and Order dated 22.09.2021 of the National
Company Law Appellate Tribunal, Principal Bench, New Delhi in Company
Appeal (AT) (Insolvency) No.930 of 2021.
     Appearances:
     Sanjiv Sen, Sr. Adv., Ujjal Banerjee, Swapnil Gupta, Abash Khurana,
Anjali Singh, Mridul Suri, Advs. for the Appellant.
     N. Venkataraman, ASG, Jaideep Gupta, Sr. Adv., Ms. Megha Karnwal,
Surya Prakash, Devesh Dubey, Ms. Neha Sharma, Deeptakriti Verma, Rashi
Rampal, K. Modi, Vikas Mehta, Advs. for the Respondents.
       JUDGMENT / ORDER OF THE SUPREME COURT

                             JUDGMENT

     VIKRAM NATH, J.
     This appeal, under Section 62 of the Insolvency and Bankruptcy Code,
2016,1 has been filed assailing the correctness of judgment and order of


1   In short, “IBC”
584             SUPREME COURT REPORTS                    [2023] 14 S.C.R.


National Company Law Appellate Tribunal2 dated 04.01.2022, whereby the
Company Appeal (AT) (Insolvency) No.930 of 2021 filed by the appellant
was dismissed upholding the judgment and order dated 22.09.2021, passed
by the Adjudicating Authority, admitting the application under Section 7 of
the IBC after condoning the delay.
    2. Relevant facts giving rise to the present appeal are briefly
summarized as under:
     2.1. The appellant entered into a leave and license agreement
with Universal Premises and Textiles Private Limited3 for the premises
being Ground to 10th floor in the building named Solaris “C”. A security
deposit of Rs. 87,56,24,381/- was furnished by the appellant between the
period 23.06.2007 to 03.11.2008. Universal Premises executed a simple
mortgage without possession in favour of the appellant for seven floors
on 06.11.2008.
     2.2. On 02.05.2011, Universal Premises executed a sale deed in favour
of Rajput Retail Ltd.4. The sale deed was for the land admeasuring 5123.90
sq. meters which included the land beneath the aforesaid building - Solaris
“C” also. The Leave and License Agreements in favour of the appellant were
duly acknowledged, reserved, and protected under the sale deed.
      2.3. RRL, having availed credit facilities from the State Bank of
       5
India (Respondent No.2), created an equitable mortgage on 29.06.2011
with respect to the land underneath the building-Solaris “C” to secure the
said credit facilities.
     2.4. In 2012, Universal Premises was merged with RRL under
the orders of the High Court of Bombay and it was renamed as Shreem
Corporation Limited6, which is the Corporate Debtor. Between June, 2012
and 17.10.2013, the appellant issued notices for the refund of Security
Deposit under the Leave and License agreement. However, as the said
amount was never paid, the appellant filed eight summary suits before the


2     NCLAT
3     The Universal Premises
4     RRL
5     In short, “State Bank of India”
6     In short, “SCL”
       AXIS BANK LIMITED v. NAREN SHETH & ANR.                           585
                  [VIKRAM NATH, J.]

Bombay High Court for refund of the Security Deposit, along with interest,
during the period from 14.12.2012 to 24.12.2013.
     2.5. In the meantime, Respondent No.2 declared the Corporate Debtor
as Non-Performing Asset7 in view of the default as on 31.03.2013, vide
communication dated 28.06.2013.
     2.6. The High Court of Bombay on 27.07.2015 passed a common
conditional order in all the Summary Suits granting leave to defend to the
Corporate Debtor subject to deposit of the Security Deposit. Later, the suits
were decreed on 02.12.2015 and 15.12.2015.
      2.7. According to the appellant, the Corporate Debtor was shown as an
inactive Company since 2016 and the date of last Annual General Meeting8
was shown to be 26.09.2016.
     2.8. The appellant had applied before the High Court of Bombay for
recovery of its dues in which objections were filed by respondent No.2.
However, the same were rejected on 18.03.2019 and a proclamation of sale
was ordered in favour of the appellant.
      2.9. In the meantime, the respondent No.2 moved separate applications
at different times for lifting of attachment from ground floor and 2nd to 5th
floors in Solaris “C”, which was withdrawn in October 2016.
     2.10. On 08.11.2019, respondent No.2 filed fresh interim applications
again seeking lifting of attachment orders on the 11 floors of Solaris “C”
and also for stay of the sale process for the seven floors.
      2.11. Respondent No.2 filed a Company Petition No.1382/MB/2021
under Section 7 IBC against the Corporate Debtor on 22.01.2020 without
intimating or making the appellant a party to the said proceedings.
Application under Section 5 of the Limitation Act was also filed along with
the petition for condoning delay of 1392 days. Later on, respondent No.2
filed an additional affidavit stating that the delay was only of 662 days in
view of the acknowledgement in the Balance Sheet of the Corporate Debtor
for the financial year ending 31.03.2015.


7   In short, “NPA”
8   AGM
586          SUPREME COURT REPORTS                       [2023] 14 S.C.R.


     2.12. On 22.09.2021, the Adjudicating Authority condoned the delay
of 662 days and passed an order of admission and appointment of Interim
Resolution Professional (IRP).
     2.13. The IRP on 05.10.2021 published a notice as required under the
IBC for commencement of the resolution process.
      2.14. Before the Bombay High Court on 20.10.2021, the counsel for
the Respondent No.2 filed a copy of the order dated 22.09.2021 admitting
its petition under Section 7 IBC passed by the Adjudicating Authority.
      2.15. The appellant, aggrieved by the order of admission dated
22.09.2021, preferred an appeal before the NCLAT under Section 61 of IBC
which was registered as Company Appeal (AT) (Ins.) No.930 of 2021. By
the impugned order dated 04.01.2022, NCLAT dismissed the said Company
Appeal, giving rise to the present Civil Appeal.
     3. This Court, while entertaining the appeal, issued notices on
01.04.2022 and passed an order of status quo. Pleadings have been
exchanged and we have heard the learned counsel for the parties and perused
the material on record.
      4. Before proceeding further with the respective submissions, certain
dates which were not mentioned by the appellant, however, the same having
been disclosed by the respondent No.2, needs to be referred to.
     4.1.The change in the number of days for which delay had been
caused from 1392 to 662 days by the Respondent No.2 was based upon
the Balance Sheet for the Financial year ending 31.03.2015, wherein the
debt of Respondent No.2 was acknowledged in the Balance Sheet of the
Corporate Debtor.
     4.2. Before this Court, Respondent No.2 has placed certain documents
to further justify the delay by referring to two One-Time Settlement9
proposals submitted by the Corporate Debtor which were duly considered.
The first proposal of OTS is dated 16.03.2017 and the second proposal
is dated 01.01.2018. Copies of both the proposals have been filed as


9     OTS
       AXIS BANK LIMITED v. NAREN SHETH & ANR.                         587
                  [VIKRAM NATH, J.]

Annexures-A1 and A2 along with I.A. No.26982 of 2023 seeking permission
to place additional documents on record.
      4.3. Respondent No.2 relies upon these two OTS proposals as also the
Balance Sheet for the Financial Year closing 31.03.2015 to plead that the
limitation would start running from each of these three dates and would be
three years corresponding to each date.
      4.4. In brief, although NPA was declared on 28.06.2013, but within
three years thereof, the Corporate Debtor acknowledged the debt in its
Balance Sheet for the Financial Year ending 31.03.2015, which was within
three years from the date of NPA.
     4.5. Again, before the expiry of three years, an OTS proposal was
submitted within three years by the Corporate Debtor on 16.03.2017 and
again before expiry of three years from the said date, a fresh OTS proposal
was submitted on 01.01.2018. Taking the last date of OTS proposal dated
01.01.2018 acknowledging the debt, the limitation for initiating Insolvency
proceedings would run up to 31.12.2020. The petition under Section 7 IBC
having been filed on 22.01.2020, which was well within time.
      5. The arguments advanced on behalf of the appellant by Shri Sanjiv
Sen, learned Senior Counsel are summarized as under:
     a)    Respondent No. 2 admitted in its Section 7 petition that there
           was a delay of 1392 days. According to it, the Corporate Debtor
           was declared as NPA on 28.06.2013, with effect from 31.03.2013,
           as per the Balance Sheet. Accordingly, applications seeking
           condonation of delay were filed by State Bank of India. The
           period of limitation, which is three years, would thus expire on
           31.03.2016.
     b)    As per the website of the Ministry of Corporate Affairs, the
           Corporate Debtor was shown as an inactive company since 2016
           with the last date of the AGM being 26.09.2016.
     c)    Respondent No. 2 relied upon the Balance Sheet of the financial
           year ending 31.03.2015, in which the date was acknowledged
           by the Corporate Debtor and as such the limitation would run
           up to three years from the said date of the balance sheet, which
588            SUPREME COURT REPORTS                       [2023] 14 S.C.R.


             would extend up to 31.03.2018, and it was on this premise that
             Respondent No. 2 made an application stating that the actual
             delay was not 1392 days but 662 days.
      d)     Respondent No. 2, apart from declaring the Corporate Debtor
             as NPA on 28.06.2013, had further participated before the High
             Court of Bombay by moving applications objecting to the said
             proceedings, where it had failed. Section 7 petition was filed
             thereafter on 22.01.2020.
      e)     Before the NCLAT, the Respondent No. 2 further improved
             its case by referring to an OTS proposal dated 16.02.2019 as
             an acknowledgement of the debt. However, this was objected
             to on the ground that even if it is assumed that the Corporate
             Debtor acknowledged the debt as per the Balance Sheet of the
             financial year ending 31.03.2015, the period of limitation from
             the said date having expired on 31.03.2018, the OTS proposal
             dated 16.05.2019 would be beyond the period of limitation and,
             as such, would be of no assistance to the Respondent No. 2.
      f)     The Respondent No. 2, before this Court, filed documents which
             were not presented either before the National Company Law
             Tribunal10 or the NCLAT, relating to two other OTS proposals
             dated 16.03.2017 and 01.01.2018. These documents were
             introduced for the first time by way of additional evidence before
             this Court. However, such documents as additional evidence
             should not be entertained nor were admissible before this Court
             in a Civil Appeal.
      g)     The Respondent No. 2, from time to time, had been improving
             its case, which is not permissible under law and amounted to an
             abuse of process of law and the same needs to be deprecated.
      h)     The additional documents filed cannot be relied upon having been
             introduced at such a late stage and for the following reasons:



10    NCLT
           AXIS BANK LIMITED v. NAREN SHETH & ANR.                         589
                      [VIKRAM NATH, J.]

             i.     Veracity of documents unknown;
             ii.    Documents are inconsistent;
             iii.   No unequivocal acknowledgement by Corporate Debtor;
             iv.    No mention of quantum of debt;
             v.     No identification/ company seal of Corporate Debtor;
             vi.    No proper board resolution in support;
             vii. Address of Corporate Debtor wrongly mentioned in the
                  Board Resolution;
             viii. No separate arrangement vis-à-vis Corporate Debtor was
                   made;
             ix.    Debt is disputed by the Corporate Debtor; and
             x.     OTS was never accepted by State Bank of India itself.
      6. Shri Sanjiv Sen, learned senior counsel, further placed reliance
upon the following authorities for the propositions. (i)Firstly, that Section
7 application was not maintainable for time-barred claims; (ii) Secondly,
Section 14 of the Limitation Act is applicable only if the first forum lacks the
jurisdiction to entertain the proceedings; and (iii) Lastly, acknowledgment
has to be made before the expiry of the period of limitation as per Section
18 of the Limitation Act:
      i.     Jignesh Shah & Anr. vs. Union of India & Anr.11,
      ii.    M/s Invent Asset Securitisation & Reconstruction Pvt.
             Limited vs. M/s Girnar Fibres Ltd.12,
      iii.   Invent Assets Securitization and Reconstruction Private
             Limited vs. Xylon Electrotechnic Private Limited13,
      iv.    Vashdeo R. Bhojwani vs. Abhyudaya Co-Operative Bank
             Limited and Another14,


11   2019(10) SCC 750
12   2022 SCC Online SC 808
13   Civil Appeal No. 3783 of 2020
14   2019 (9) SCC 158
590             SUPREME COURT REPORTS                             [2023] 14 S.C.R.


       v.     B.K. Educational Services Private Limited vs. Parag Gupta
              and Associates15,
       vi.    Babulal Vardharji Gurjar vs. Veer Gurjar Aluminium
              Industries Pvt. Limited & Anr.16,
       vii. Ome Prakash Verma vs. Amit Jain & Anr. 17,
       viii. Insolvency Law Report March 2018,
       ix.    Rajendra Narottamdas Sheth and Another vs. Chandra
              Prakash Jain and Another18,
       x.     Gopal Sardar vs. Karuna Sardar19, and
       xi.    Serish Maji vs. Nishit Kumar Dolui20.
      7. On the other hand, Shri N. Venkataraman, learned Additional
Solicitor General appearing for Respondent No. 2, in addition to the list
of dates mentioned by the appellant, referred to the short list of dates in
support of his arguments. Some of these dates are in addition to the list of
dates mentioned and already incorporated in the earlier part of this order.
A brief reference to the said dates relied upon by the Respondent No. 2 are
as follows:
       a)     The Corporate Debtor was classified as NPA by Respondent No.2
              on 28.06.02013.
       b)     Notice under Section 13(2) of the Securitization and Reconstruction
              of Financial Assets and Enforcement of Security Interest Act,
              200221 was issued on 02.07.2013.
       c)     Notice under Section 13(4) of the SARFAESI Act was issued on
              23.11.2013.


15    2019(11) SCC 633
16    2020(15) SCC 1
17    In CA(AT) (Insolvency) No. 827 of 2020 passed by NCLT, (Principal Bench, Delhi).
18    (2022) 5 SCC 600
19    (2004) 4 SCC 252
20    1999 SCC Online Cal 58
21    In short, “SARFAESI Act”
 AXIS BANK LIMITED v. NAREN SHETH & ANR.                            591
            [VIKRAM NATH, J.]

d)   Respondent No.2 filed an Original Application before the Debt
     Recovery Tribunal (DRT), Mumbai registered as Original
     Application No. 726 of 2014 on 03.06.2014.
e)   Corporate Debtor acknowledged their liability in the balance
     sheet dated 04.09.2015 for the financial year ending 31.03.2015.
f)   An order under Section 14 of the SARFAESI Act was passed by
     the competent Magistrate on 09.03.2017.
g)   The Corporate Debtor admitted a one-time settlement offer on
     16.03.2017 (additional document before this Court).
h)   The Corporate Debtor once again admitted their liability and
     made a fresh compromise/one-time settlement offer dated
     01.01.2018 (additional document before this Court).
i)   The Corporate Debtor again admitted their liability while
     submitting a fresh compromise/one-time settlement offer dated
     16.05.2019 (additional document before NCLAT).
j)   The mortgaged property was put on auction sale on 12.12.2019,
     and again on 26.02.2020. However, no bids were received.
k)   Respondent No.2 filed an application under Section 7 of the IBC
     along with application under Section 5 of the Limitation Act on
     22.01.2020.
l)   Referring to the above sequence of events, it was submitted by
     the learned senior counsel that at no point in time did Respondent
     No.2 lose its right to initiate the insolvency proceedings. It being
     a Secured Creditor/Financial Creditor with dues of more than Rs.
     681 crores at the time of filing the Section 7 petition, cannot be
     non-suited by an unsecured creditor (appellant) having a liability
     of approx. Rs. 87 crores as on 30.11.2019. The total facilities
     provided are of Rs. 395 crores, and the principal outstanding
     amount as on 31.05.2013 was Rs. 283 crores.
m)    The limitation, in fact, never expired, and the petition filed
     under Section 7 of IBC was well within time. Even if the date of
     declaring the NPA is taken as the base for counting the limitation,
592            SUPREME COURT REPORTS                       [2023] 14 S.C.R.


             the same continued to be extended in view of the developments
             subsequent to the said declaration of NPA, which entitled the
             Respondent No.2 to the benefit of Sections 5, 14 and 18 of the
             Limitation Act.
       n)    There being repeated acknowledgments, not only by way of
             the debt being reflected in the balance sheet, but also repeated
             proposal for one-time settlement by the Corporate Debtor, which
             extended the limitation, Respondent No.2 would be entitled to
             the benefit of Section 18 of the Limitation Act.
       o)     The NCLT as also the NCLAT rightly rejected the objection
             taken by the appellant regarding the petition being time-barred
             and further rightly proceeded to admit the petition under Section
             7 of the IBC by initiating the CIRP. The appeal, being devoid of
             merits is liable to be dismissed.
       p)    Reliance was placed upon the following judgements by learned
             senior Counsel appearing for Respondent No.2, in support of his
             submissions:
       (i). Kotak Mahindra Bank Limited vs. Kew Precision Parts
            Private Limited and Ors22,
       (ii). Asset Reconstruction Company (India) Limited vs. Bishal
             Jaiswal and Another23,
       (iii). Dena Bank (Now Bank of Baroda) vs. C. Sivakumar Reddy
              and Another24, and
       (iv). Sesh Nath Singh and Another vs. Baidyabati Sheoraphuli
             Co-Operative Bank Limited and Another25.
     8. We have considered submissions advanced by learned counsels for
the parties as also the materials placed on record.



22    (2022) 9 SCC 364
23    (2021) 6 SCC 366
24    (2021) 10 SCC 330
25    (2021) 7 SCC 313
       AXIS BANK LIMITED v. NAREN SHETH & ANR.                             593
                  [VIKRAM NATH, J.]

      9. Before dealing with the arguments advanced, it would be appropriate
to refer to the statutory provisions. Section 3(1) of the Limitation Act creates
bar for the institution of any suit, appeal, or application made after the
prescribed period of limitation to be dismissed, even though limitation has
not been set up as a defence. The said Section reads as follows:
     “3. Bar of limitation.—(1) Subject to the provisions contained in
     sections 4 to 24 (inclusive), every suit instituted, appeal preferred,
     and application made after the prescribed period shall be dismissed,
     although limitation has not been set up as a defence. ”
      10. Section 5 of the Limitation Act provides for an extension for the
prescribed period in certain cases where sufficient cause for not preferring
the appeal or where the application could not be made within the prescribed
time. Section 5 reads as follows:
     “5. Extension of prescribed period in certain cases.—Any appeal or
     any application, other than an application under any of the provisions
     of Order XXI of the Code of Civil Procedure, 1908 (5 of 1908), may
     be admitted after the prescribed period if the appellant or the applicant
     satisfies the court that he had sufficient cause for not preferring the
     appeal or making the application within such period.
     Explanation.—The fact that the appellant or the applicant was misled
     by any order, practice or judgment of the High Court in ascertaining
     or computing the prescribed period may be sufficient cause within the
     meaning of this section.”
      11. Section 18 of the Limitation Act provides that where acknowledgment
in writing of the liability is made by a party against whom any right is
claimed, a fresh period of limitation shall be computed from the time when
the acknowledgment is so signed. The said Section is reproduced hereunder:
     “18. Effect of acknowledgment in writing.—
     (1)   Where, before the expiration of the prescribed period for a suit or
           application in respect of any property or right, an acknowledgment
           of liability in respect of such property or right has been made in
           writing signed by the party against whom such property or right
           is claimed, or by any person through whom he derives his title
594           SUPREME COURT REPORTS                       [2023] 14 S.C.R.


            or liability, a fresh period of limitation shall be computed from
            the time when the acknowledgment was so signed.
      (2)   Where the writing containing the acknowledgment is undated,
            oral evidence may be given of the time when it was signed; but
            subject to the provisions of the Indian Evidence Act, 1872 (1 of
            1872), oral evidence of its contents shall not be received.
      Explanation.—For the purposes of this section,—
      (a) an acknowledgment may be sufficient though it omits to specify
      the exact nature of the property or right, or avers that the time for
      payment, delivery, performance or enjoyment has not yet come or is
      accompanied by a refusal to pay, deliver, perform or permit to enjoy,
      or is coupled with a claim to set off, or is addressed to a person other
      than a person entitled to the property or right,
      (b) the word “signed” means signed either personally or by an agent
      duly authorised in this behalf, and
      (c) an application for the execution of a decree or order shall not be
      deemed to be an application in respect of any property or right.”
      12. The question in the present case is primarily whether Respondent
No.2 would be entitled to the benefit of Section 18 of the Limitation Act and
whether Section 5 of the Limitation Act thereof would also be applicable.
Although Section 14 of the Limitation Act has also been referred to,
but in our opinion, Section 14 will have no application inasmuch as the
proceedings under the SARFAESI Act before the DRT cannot be said to be
before a Court or Tribunal having no jurisdiction. Respondent No.2, being
a Secured Creditor, would definitely have a right to invoke the power under
the SARFAESI Act and the said proceedings cannot be said to be without
jurisdiction. Therefore, no benefit under Section 14 would be admissible to
Respondent No.2 in the present case.
     13. Coming back to the benefit available under Section 18 of the
Limitation Act, the following sequence of events and the law thereon
would be relevant. The State Bank of India declared the Corporate Debtor
as an NPA on 28.06.2013. Therefore, the limitation period would be three
       AXIS BANK LIMITED v. NAREN SHETH & ANR.                           595
                  [VIKRAM NATH, J.]

years from the last date of the financial year previous to the declaration
of NPA, which would be 31.03.2013, and would run up to 31.03.2016. If
there were no further intervening circumstances or developments relating
to acknowledgment, the contention raised by the appellant that the petition
under Section 7 of IBC having been filed much beyond 31.03.2016, in
2020 to be specific on 22.01.2020, the petition would be clearly barred by
limitation.
      14. However, there are four major acknowledgments made by the
Corporate Debtor after the declaration of the NPA and within the expiry of
three years from the said date, details of which have already been mentioned
in the previous paragraphs. However, briefly the same are being referred
to again.
     a)    The Corporate Debtor, in its balance sheet for the financial
           year 2014-15, which came to an end on 31.03.2015, had
           acknowledged the debt in its balance sheet for the said year. This
           acknowledgment of debt in the balance sheet has been held to
           be a valid acknowledgment for the benefit of Section 18 of the
           Limitation Act. From the above date the period of three years
           would run up to 31 March, 2018.
     b)    The first OTS proposal is dated 16 March, 2017, within a period of
           three years of the date of acknowledgment of debt in the balance
           sheet.
     c)    The second OTS proposal is dated 1st January, 2018, again within
           a period of three years from the date of the first OTS proposal.
     d)    The third OTS proposal is dated 16th May, 2019, once again
           within a period of three years from the date of the second OTS
           proposal.
      15. The petition under Section 7 was filed on 22nd January, 2020 within
three years from the date of the first, second and the third OTS proposals.
     16. The question for consideration would be whether the debt
acknowledged in the balance sheet of the financial year would end on 31st
March, 2015 and whether the three OTS proposals would give a fresh life
596          SUPREME COURT REPORTS                         [2023] 14 S.C.R.


of limitation of three years from each of the respective dates. Section 18 of
the Limitation Act is the provision on which strong reliance has been placed
upon by the Respondent No.2 for seeking such extension of limitation.
      17. A plain reading of Section 18(1) of the Limitation Act would reflect
that where any acknowledgment of a liability has been made in writing by
the party against whom any right is claimed, a fresh period of limitation
would be computed from the time when the acknowledgment was so signed,
subject to such acknowledgment being made before expiry of the prescribed
period for filing a suit or application in that respect.
     18. Section 18(2) of the Limitation Act may not be applicable in the
present case inasmuch as all the acknowledgements in the present case
have a date and, therefore, there would be no question of leading any oral
evidence to establish the date of the acknowledgement.
      19. Learned Senior counsel for the appellant has strongly contended
that all the acknowledgments were firstly, not filed along with the petition
under Section 7 of the IBC but were subsequently filed one at the stage of
appeal before the NCLAT and two of such acknowledgements have been
filed before this Court, as such the same should not be entertained. This
argument of the appellant may not have much force to disentitle a financial
creditor from claiming its right to recover the dues and initiate proceedings
under the IBC.
      20. Further, learned Senior counsel for the appellant also expressed
doubt and apprehension about the correctness and genuineness of such
acknowledgments but we are afraid to accept such a contention inasmuch
as the same could be objected regarding its correctness by the Corporate
Debtor and not by an unsecured creditor. It would be for the Adjudicating
Authority to consider such a plea, if so raised by the Corporate Debtor.
      21. Reference may be made to a recent judgement of this Court in
the case of Dena Bank (supra) where facts were similar. The documents
relating to acknowledgement claiming benefit of Section 18 were introduced
at appellate stage, and such documents being balance sheets and settlement
offers. It was held that the same could be accepted even at the appellate stage
and a settlement offer akin to an OTS proposal would be an acknowledgment
of debt for the purpose of Section 18 of Limitation Act. The only caveat
       AXIS BANK LIMITED v. NAREN SHETH & ANR.                             597
                  [VIKRAM NATH, J.]

was that such acknowledgments should be before the expiry of limitation
prescribed under law. Para 22 of the said judgement refers to the facts in
brief which are similar to the facts of the present case where the balance
sheet and one-time settlement proposal were introduced. The same is
reproduced herein:
     “22. In other words, the main question involved in this appeal is,
     whether a petition under Section 7 IBC would be barred by limitation,
     on the sole ground that it had been filed beyond a period of 3 years
     from the date of declaration of the loan account of the corporate debtor
     as NPA, even though the corporate debtor might subsequently have
     acknowledged its liability to the appellant Bank, within a period of
     three years prior to the date of filing of the petition under Section 7 IBC,
     by making a proposal for a one-time settlement, or by acknowledging
     the debt in its statutory balance sheets and books of accounts.”
     22. Ultimately, in paragraph 142 of the report, it was held that additional
documents could be introduced at the stage of appeal also. The said para is
reproduced hereunder:
     “142. There is no bar in law to the amendment of pleadings in
     an application under Section 7 IBC, or to the filing of additional
     documents, apart from those initially filed along with application under
     Section 7 IBC in Form 1. In the absence of any express provision
     which either prohibits or sets a time-limit for filing of additional
     documents, it cannot be said that the adjudicating authority committed
     any illegality or error in permitting the appellant Bank to file additional
     documents. Needless however, to mention that depending on the
     facts and circumstances of the case, when there is inordinate delay,
     the adjudicating authority might, at its discretion, decline the request
     of an applicant to file additional pleadings and/or documents, and
     proceed to pass a final order. In our considered view, the decision of
     the adjudicating authority to entertain and/or to allow the request of the
     appellant Bank for the filing of additional documents with supporting
     pleadings, and to consider such documents and pleadings did not call
     for interference in appeal.”
     23. The above discussion takes care of the arguments raised by the
appellant regarding admissibility of documents in appeal to be without any
598           SUPREME COURT REPORTS                         [2023] 14 S.C.R.


merit. The judgement in the case of Dena Bank (supra) has been later on
relied upon in the case of Kotak Mahindra Bank Ltd.(supra).
      24. A balance sheet acknowledging debt is also a document relevant
for calculating the limitation. This has already been held in case of Asset
reconstruction Company India Ltd. (supra). In all the above cases, what
has been elaborately discussed is the ‘purposive interpretation of the statute’
to advance the cause of justice.
       25. The argument advanced on behalf of the appellant regarding the
improvement made by Respondent No. 2- State Bank of India from stage
to stage also is of no assistance inasmuch as if the OTS proposals are found
to have been made by the Corporate Debtor and the balance sheet reflected
the debt in the financial year ending 31st March, 2015, then in fact, there
would be no delay on the part of the Respondent No. 2- State Bank of India
in initiating the proceeding as the same would be within the extended period
of limitation provided under Section 18 of the Limitation Act.
      26. Another argument raised by the counsel for the appellant was with
respect to the genuineness of the OTS proposals giving several reasons
to discard the same. All the said reasons will be tested in the proceedings
before the Adjudicating Authority as and when raised by the Corporate
Debtor or any other party having locus to raise such plea. Presently in
this appeal the said issue cannot be taken up for two reasons: firstly, the
Adjudicating Authority as well as NCLAT have accepted the explanation of
Respondent No.2 for the delay caused in filing the Section 7 IBC petition to
be satisfactory and have condoned the same. Secondly, in view of the first
and second OTS proposals by the Corporate Debtor being not questioned
by the suspended Directors, there is no reason to disbelieve or to cast any
doubt on the said documents at the instance of the appellant.
     27. The case laws relied upon on behalf of the appellant are on three
points as already noted above. The same are briefly discussed hereunder:
      (a)   First point on which case laws have been referred to is that a time
            barred application cannot be entertained under Section 7 IBC.
            The same would not be relevant or of any help to the appellant
            as it has already been held that the application of Respondent
            No.2 would be entitled to benefit of Sections 5 and 18 of the
            Limitation Act and, therefore, was within time.
       AXIS BANK LIMITED v. NAREN SHETH & ANR.                             599
                  [VIKRAM NATH, J.]

     (b)   The second point on which case laws have been referred to
           was that no benefit could be claimed under Section 14 of the
           Limitation Act. These case laws are also not of any relevance
           as it has been held above that no benefit could be claimed by
           Respondent No.2 under the said provision.
     (c)   The third point on which case law is relied upon is that for benefit
           under Section 18 of the Limitation Act, the acknowledgment
           should be made within expiry of the limitation provided under
           law. On this point it has been factually found that taking the date
           of acknowledgment of debt in Balance Sheet and the three OTS
           proposals the same were within the limitation under law or the
           extended limitation due to acknowledgments. Thus the case laws
           relied upon would have no relevance in the facts of the present
           case.
     28. For all the reasons recorded above, we do not find any merit in the
appeal. The same is accordingly dismissed.
     APPLICATIONS BY THE RUBY MILLS LTD:
      29. IA No. 153162 of 2022 has been filed by the Ruby Mills Ltd.
seeking Intervention in the present proceedings on the ground that they had
to pay balance advance amount of Rs 78,50,00,000 as full and final payment
toward the claims made by Corporate Debtor which was not being accepted
in view of the initiation of the present proceedings under IBC.
      30. IA No. 153166 of 2022 was filed for issuing appropriate directions
for depositing the aforesaid amount with State Bank of India for which it
had filed IA No. 1002 of 2022 in Company Petition No. 236 of 2022 before
the NCLT.
     31. IA No.19253 of 2023 was filed to take some additional documents
on record.
      32. IA Nos.97314 of 2023 and 121868 of 2023 were again filed for
directions of similar nature as IA No. 153162 of 2022 to permit the applicant
to deposit with the Registrar of this Court the deposit receipts in relation to
the Fixed Deposits aggregating to Rs. 79 Crores.
     33. Mr Jaideep Gupta, learned Senior Counsel, had been continuously
requesting for appropriate directions being issued on the above applications
600            SUPREME COURT REPORTS                     [2023] 14 S.C.R.


but the same was being resisted by the appellant as also the State Bank of
India.
     34. Now that we have held that the IBC proceedings would continue
as we are dismissing the present appeal, we leave it open for the applicant
– the Ruby Mills Limited, to pursue its remedy before the Adjudicating
Authority or any other forum as maybe appropriate.
      35. The above applications are accordingly disposed of.
      36. Any other pending application(s) shall also stand disposed of.


Headnotes prepared by:                                       Appeal dismissed.
Divya Pandey