2023 (1) TMI 553 - AT - Insolvency and Bankruptcy

Initiation of CIRP - Financial creditors - application dismissed primarily on the ground of limitation - existence of the outstanding debt and default - whether deduction of TDS is sufficient to prove that interest amount have been paid? - Reliance on the Note in the Balance Sheet - HELD THAT - The Respondent has nowhere admitted that this amount of Rs. 10 Lakh was paid towards part payment of the amount due nor the Appellant has set up a case in the pleadings that the said amount has been paid as part payment on 27.09.2017, during the currency of the period of limitation and thus the period of limitation has further extended for the period of three years from the said date. Moreover, it is argued by Counsel for Respondent that Section 19 of the Limitation Act. 1963 talks of the effect of the payment on account of debt when acknowledged is in writing and signed. The Appellant has miserably failed to prove that the amount of Rs. 10 Lakh, reflected in the ledger account was paid by the Respondent towards the part payment of the amount due (in question) in order to extend the period of limitation of three years from the said date i.e. 27.09.2017 specially in the absence of the evidence of any writing in this regard or otherwise an admission of the Respondent who has categorically denied the same in its reply - second contention of the Appellant in respect of extension of period of limitation is hereby rejected. Acknowledgement of the debt in the balance sheet of the Respondent - HELD THAT - There is no acknowledgement or acceptance of the debt within that period when the application would have been within the period of limitation because the same is not unequivocal. The Appellant cannot take the advantage of the note for the purpose of bringing the application filed under Section 7 within the period of limitation. The contention of the Appellant in this regard as well is hereby rejected - the application filed under Section 7 by the Appellant was barred by limitation and has rightly been dismissed by the Adjudicating Authority on this ground.

Summary

Issues:
1. Application dismissed on grounds of limitation and existence of outstanding debt and default.

Analysis:
The appeal was against an order dismissing an application under Section 7 of the Insolvency and Bankruptcy Code, primarily due to limitation and doubt regarding the debt and default. The Appellant claimed the Respondent owed Rs. 1,72,93,199 from an Inter Corporate Deposit, disbursed on 28.01.2015. The Appellant argued the application was within the limitation period, citing TDS deposits by the Respondent. However, the Adjudicating Authority found the application filed on 27.01.2020 was time-barred as it should have been within three years from the default date.

The Appellant contended that TDS payment by the Respondent should be considered part payment, extending the limitation period. The Respondent cited previous tribunal decisions to counter this argument. The Tribunal rejected the Appellant's claim, stating that TDS deduction alone does not validate the transaction, as per previous judgments.

Another issue raised was a purported part payment of Rs. 10 lakhs by the Respondent, which the Appellant claimed extended the limitation period. However, the Respondent denied this payment, and the Appellant failed to provide evidence or admission supporting the claim. The Tribunal rejected this argument, emphasizing the need for factual evidence in limitation cases.

The last contention was the acknowledgement of debt in the Respondent's balance sheet note. The Appellant argued this note acknowledged the debt, but the Tribunal disagreed, stating the note lacked unequivocal acknowledgment, thus not extending the limitation period. As all contentions were rejected, the Tribunal upheld the dismissal of the application on limitation grounds, without delving into the case's merits. The appeal was consequently dismissed without costs.