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2021 (11) TMI 367 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - NPA - Financial Creditors - existence of debt and dispute or not - Time Limitation - HELD THAT - In view of the fact the account of the Corporate Debtor was declared as NPA on 30th June, 2014. The Appellant submitted that the application under Section 7 of the IBC filed by Respondent No. 1 on 14.02.2019 was much after delay of 3 years, so application under Section 7 is hit by limitation. It is admitted fact that in the letter dated 04.01.2020 the Appellants stated that they are ready to settle the amount with both the Banks at the total value of 8.75 Crores, this OTS amounts to acceptance of the debt and in view of the law laid down in the judgment passed by Hon ble Supreme Court in Asset Reconstruction Company (India) Limited Vs. Bishal Jaiswal Anr. 2021 (4) TMI 753 - Supreme Court the application under Section 7 of the IBC is not barred by limitation. There is no illegality in the impugned order - Appeal dismissed.
Issues Involved:
1. Admission of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016. 2. Limitation period for filing the application. 3. Acknowledgment of debt and its impact on the limitation period. 4. Validity of financial statements as acknowledgment of debt. 5. Completion of the Corporate Insolvency Resolution Process (CIRP). Detailed Analysis: 1. Admission of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016: The Appellants, suspended Board of Directors of Kromme Glass Private Limited (Corporate Debtor), challenged the order dated 17.01.2020 by the National Company Law Tribunal (NCLT), Kolkata Bench, which admitted the application filed by Respondent No. 1 under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor. 2. Limitation period for filing the application: The Appellants argued that the application under Section 7 of the IBC was barred by limitation. They contended that the account was declared a Non-Performing Asset (NPA) on 30th June 2014, and the application was filed on 14th February 2019, well beyond the three-year limitation period as prescribed by Article 137 of the Limitation Act, 1963. The Respondent No. 1 argued that the time spent before the Debts Recovery Tribunal-II, Ahmedabad should be excluded under Section 14 of the Limitation Act, 1963. 3. Acknowledgment of debt and its impact on the limitation period: The Respondent No. 1 submitted that the Appellants acknowledged the debt in the financial statements available on the MCA website for the periods 01.04.2015 to 31.03.2016 and 01.04.2016 to 31.03.2017, and in the balance sheets dated 01.09.2018 and 25.06.2019 for the periods 2017-2018 and 2018-2019. The Appellants argued that no acknowledgment was made within the prescribed period of limitation. 4. Validity of financial statements as acknowledgment of debt: The Tribunal referred to the Supreme Court's judgment in ‘Asset Reconstruction Company (India) Limited Vs. Bishal Jaiswal & Anr.’ which held that signed balance sheets can amount to acknowledgment of debt. The Tribunal noted that the Appellants' financial statements and the letter dated 04.01.2020 proposing a One Time Settlement (OTS) amounted to acknowledgment of debt, thus extending the limitation period. 5. Completion of the Corporate Insolvency Resolution Process (CIRP): The Tribunal observed that the CIRP had been completed, and the resolution plan had been submitted before the NCLT, Kolkata Bench for approval. The Tribunal found no illegality in the impugned order and affirmed the decision of the Adjudicating Authority to admit the application filed by Respondent No. 1. Order: The Tribunal dismissed the appeal, affirming the order dated 17.01.2020 passed by the NCLT, Kolkata Bench. The application under Section 7 of the IBC was not barred by limitation, and the acknowledgment of debt by the Appellants was valid. The Registry was directed to upload the Judgment on the website of the Appellate Tribunal and send a copy to the NCLT, Kolkata Bench.
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