2021 (10) TMI 1348 - SC - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - time limitation - acknowledgement under Section 18 of the Limitation Act, 1963 - HELD THAT - It was held in Asset Reconstruction Company (India) Limited 2021 (4) TMI 753 - SUPREME COURT that There can be no doubt whatsoever that the appellant has been completely remiss and deficient in pleading acknowledgement of liability on the facts of this case. However, given the staggering amount allegedly due from the respondents, we afford one further opportunity to the appellant to amend its pleadings so as to incorporate what is stated in the written submissions filed by it before NCLAT, subject to costs of Rs 1,00,000 to be paid by the appellant to the respondents within a period of four weeks from today. Subject to the appellant being put to terms, the course adopted by this Court in Asset Reconstruction Company (India) Limited 2021 (4) TMI 753 - SUPREME COURT should be followed. Accordingly, the appeal is allowed and the impugned order is set aside. The appeal is remanded back and will be restored back to file.

Summary

Issues:
1. Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 is barred by time.
2. Whether acknowledgements made by the respondent in its balance sheets operate as acknowledgements under Section 18 of the Limitation Act, 1963.
3. Whether the appellant can seek an amendment of the application under Section 7 to incorporate the case based on acknowledgements in the balance sheets.

Analysis:
1. The appellant filed an application under Section 7 of the IBC, which was dismissed by the NCLAT on the ground of being time-barred. The NCLAT affirmed the decision of the NCLT. The appellant argued that acknowledgements made by the respondent in balance sheets should be considered under Section 18 of the Limitation Act. The NCLAT found that even with these acknowledgements, the application would still be time-barred. However, the Supreme Court allowed the appeal, remanded the case, and permitted the appellant to seek an amendment of the application under Section 7 to incorporate the case based on acknowledgements in the balance sheets.

2. The appellant contended that acknowledgements in the respondent's balance sheets should be considered as per Section 18 of the Limitation Act. The NCLAT did not seem to have considered this contention, but the Supreme Court allowed the appellant to seek an amendment based on these acknowledgements. The Court referred to previous judgments allowing amendments in such cases and granted the appellant the opportunity to amend the application under Section 7 to include the case based on acknowledgements in the balance sheets.

3. The Supreme Court permitted the appellant to seek an amendment of the application under Section 7 to include the case based on acknowledgements in the balance sheets. The Court emphasized that this opportunity is subject to the appellant being put to terms, including paying costs to the respondent. The Court clarified that the questions related to acknowledgements from specific documents shall not be revisited, indicating a limited scope for the amendment allowed in this judgment.