TOTTEMPUDI SALALITH versus STATE BANK OF INDIA & ORS.

Citation: [2023] 14 S.C.R. 492 · Decided: 18-10-2023 · Supreme Court of India · Bench: ANIRUDDHA BOSE · Disposal: Dismissed

Cited by 1 judgment(s) · cites 7 · see the full citation network in Lexace

Judgment (excerpt)

CASE DETAILS
TOTTEMPUDI SALALITH
v.
STATE BANK OF INDIA & ORS.
(Civil Appeal No. 2348 of 2021)
OCTOBER 18, 2023
[ANIRUDDHA BOSE AND VIKRAM NATH, JJ.]
HEADNOTES
Issue for consideration: Issues arose as to whether the debts in 
connection with the recovery certifi cate issued in the year 2015, 
could form subject matter of an application u/s.7 IBC; whether the 
the banks having approached the DRT, were barred under the doctrine 
of election from approaching the NCLT for recovery of same set of 
debts; and whether the date of default should go back to the date 
on which the loan account of the corporate debtor was declared 
as non-performing asset.
Insolvency and Bankruptcy Code, 2016 – s. 7 – Debts in connection 
with the recovery certifi cate issued in the year 2015, if could form 
subject matter of an application u/s. 7 – Corporate debtor faced 
insolvency proceedings due to failure to repay loans to several banks 
– Issuance of recovery certifi cate by the tribunal in the year 2015 and 
2017 respectively, against the corporate debtor in which the fi nancial 
creditor-Banks had stake – On basis thereof, fi nancial creditor initiated 
proceedings u/s. 7 seeking Corporate Insolvency Resolution Process-
CIRP against the corporate debtor in the year 2019 – Tribunal admitted 
the application and declared moratorium on the ground of limitation 
– Appeal thereagainst, on the ground that the application u/s. 7 was 
not maintainable on the ground of limitation and doctrine of election 
– Dismissed by the appellate tribunal – Correctness:
Held: Doctrine of election cannot be applied to prevent the 
fi nancial creditors from approaching the NCLT for initiation of CIRP 
– Date of recovery certifi cate was treated to be the date on which 
[2023] 14 S.C.R. 492 : 2023 INSC 923
492
493
the time of limitation began to tick – Letter issued by the corporate 
debtor to the Banks, agreeing in principle to repay the amount due to 
the fi nancial creditors was a request to consider a one-time settlement 
– In absence of averments or pleading, after initiation of insolvency 
proceeding, any promise made to pay the debt cannot be treated to 
have cured the fault of limitation in a pre-existing action – It cannot 
by itself revive the debt though it could create an independent cause 
of action – Proceedings initiated before the tribunal is a composite 
application based on three recovery certifi cates, two of which were 
instituted within the three year limitation period, but the third 
recovery certifi cate was issued in 2015, beyond the limitation period 
– However, a recovery certifi cate under the 1993 Act is also clothed 
with the character of a deemed decree which has twelve years for 
enforcement as per Art. 136 – In the event a fi nancial creditor wants to 
pursue a recovery certifi cate as a deemed decree, he would get twelve 
years’ time – Application with respect to the two recovery certifi cates 
issued in 2017 is maintainable – As regards recovery certifi cate of 
2015, in case the appellate tribunal is of opinion that CIRP could 
not lie, as the decree would be still alive, the claim based on the said 
recovery certifi cate could be segregated from the composite claim 
and the Committee of Creditors would treat the sum refl ected in the 
said recovery certifi cate as part of the claims made in pursuance of 
the public announcement – Limitation Act, 1963 – Art. 136 and 137 
– Recovery of Debts and Bankruptcy Act, 1993. [Para 7, 9, 12, 13,15]
Insolvency and Bankruptcy – Insolvency proceedings – 
Doctrine of election – Application of – Plea of corporate debtor 
that the banks having approached the DRT, were barred under 
the doctrine of election from approaching the NCLT for recovery 
of same set of debts:
Held: Doctrine of election embodied in the law of evidence, 
bars prosecution of the same right in two diff erent fora based on the 
same cause of action – On facts, the recovery proceedings before the 
DRT commenced in 2014, and at that point of time, the IBC had not 
come into existence – Recovery certifi cate itself would give rise to 
a fresh cause of action entitling a fi nancial creditor to initiate CIRP 
TOTTEMPUDI SALALITH v. STATE BANK OF INDIA & 
ORS.
494 
SUPREME COURT REPORTS 
[2023] 14 S.C.R.
– Such recovery certifi cate arose out of a proceeding from the DRT – 
Enforcement mechanism for a recovery certifi cate is an independent 
course, which a fi nancial creditor may opt for realisation of its dues 
crystalised under the 1993 Act, instead

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