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TMI Blog2021 (4) TMI 753X X X X Extracts X X X X X X X X Extracts X X X X ..... issed on the ground of limitation - it is clear that the principle of Section 9 of the Limitation Act is to be strictly adhered to, namely, that when time begins to run, it cannot be halted, except by a process known to law. One question that arises before this Court is whether Section 18 of the Limitation Act, which extends the period of limitation depending upon an acknowledgement of debt made in writing and signed by the corporate debtor, is also applicable under Section 238A, given the expression as far as may be governing the applicability of the Limitation Act to the IBC. Whether an entry made in a balance sheet of a corporate debtor would amount to an acknowledgement of liability under Section 18 of the Limitation Act? - HELD THAT:- Several judgments of this Court have indicated that an entry made in the books of accounts, including the balance sheet, can amount to an acknowledgement of liability within the meaning of Section 18 of the Limitation Act - Reliance placed in the case of MAHABIR COLD STORAGE VERSUS COMMISSIONER OF INCOME-TAX [ 1990 (12) TMI 3 - SUPREME COURT] . The majority decision of the Full Bench in V. PADMAKUMAR VERSUS STRESSED ASSETS STABILISATION FUND (SAS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owledged its liability, were signed before the expiry of three years from the date of default, and entries in such balance sheets being acknowledgements of the debt due for the purposes of Section 18 of the Limitation Act, 1963 ["Limitation Act"], the Section 7 application is not barred by limitation. In an appeal filed to the National Company Law Appellate Tribunal ["NCLAT"], the corporate debtor relied upon the Full Bench judgment of the NCLAT in V. Padmakumar v. Stressed Assets Stabilisation Fund, Company Appeal (AT) (Insolvency) No. 57 of 2020 (decided on 12.03.2020) ["V. Padmakumar"], in which a majority of four members [Justice (Retd.) A.I.S. Cheema, Member (Judicial), dissenting] held that entries in balance sheets would not amount to acknowledgement of debt for the purpose of extending limitation under Section 18 of the Limitation Act. After a preliminary hearing, a three-Member Bench passed an order on 25.09.2020 doubting the correctness of the majority judgment of the Full Bench and referred the matter to the Acting Chairman of the NCLAT to constitute a Bench of coordinate strength to reconsider the judgment in V. Padmakumar (supra). 2. A five-Member Bench of the NCLAT, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial creditors of the corporate debtor. He then referred to the rationale for enacting Section 238A by referring to the Insolvency Committee Report which introduced the aforesaid Section and strongly relied upon the fact that in all these cases, recovery proceedings were ongoing before the Debt Recovery Tribunal and/or the appellate authority under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 ["Recovery of Debts Act"] and that, by not applying Section 18 of the Limitation Act to the IBC, recoveries will not be thwarted. He also added that the main plank of the submission of the appellant was that a huge sum of ₹ 12,000 crore would otherwise go down the drain if acknowledgements in balance sheets were not to be looked at, and stressed the fact that this would be relevant only in recovery proceedings and not in proceedings before the IBC, which are not meant to be recovery proceedings at all, as has been held in several judgments of this Court. He then relied upon two High Court judgments, from the Andhra Pradesh High Court and Gauhati High Court, to buttress his submission that via Section 18 of the Limitation Act, entries made in balance sheet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation Act, 1963 28.1. The question of applicability of the Limitation Act, 1963 ("the Limitation Act") to the Code has been deliberated upon in several judgments of NCLT and NCLAT. The existing jurisprudence on this subject indicates that if a law is a complete code, then an express or necessary exclusion of the Limitation Act should be respected. [Ravula Subba Rao v. CIT, AIR 1956 SC 604] In light of the confusion in this regard, the Committee deliberated on the issue and unanimously agreed that the intent of the Code could not have been to give a new lease of life to debts which are timebarred. It is settled law that when a debt is barred by time, the right to a remedy is time-barred. [Punjab National Bank v. Surendra Prasad Sinha, 1993 Supp (1) SCC 499 : 1993 SCC (Cri) 149] This requires being read with the definition of "debt" and "claim" in the Code. Further, debts in winding-up proceedings cannot be time-barred [Interactive Media and Communication Solution (P) Ltd. v. GO Airlines Ltd., 2013 SCC OnLine Del 445 : (2013) 199 DLT 267] , and there appears to be no rationale to exclude the extension of this principle of law to the Code. 28.2. Further, non-application of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to, namely, that when time begins to run, it cannot be halted, except by a process known to law. One question that arises before this Court is whether Section 18 of the Limitation Act, which extends the period of limitation depending upon an acknowledgement of debt made in writing and signed by the corporate debtor, is also applicable under Section 238A, given the expression "as far as may be" governing the applicability of the Limitation Act to the IBC. 8. The aforesaid question is no longer res integra as two recent judgments of this Court have applied the provisions of Section 14 and Section 18 of the Limitation Act to the IBC. Thus, in Sesh Nath Singh v. Baidyabati Sheoraphuli Co-operative Bank Ltd., Civil Appeal No. 9198 of 2019 (decided on 22.03.2021), after setting out the issues that arose in that case in paragraph 57, and after referring to Section 238A of IBC, held: "66. Similarly under Section 18 of the Limitation Act, an acknowledgement of present subsisting liability, made in writing in respect of any right claimed by the opposite party and signed by the party against whom the right is claimed, has the effect of commencing of a fresh period of limitation, from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of Limitation Act shall, as far as may be, apply to the proceedings or appeals before the Adjudicating Authority, the NCLAT, the DRT or the Debt Recovery Appellate Tribunal, as the case may be. After enactment of Section 238A of the Code on 06.06.2018, validity whereof has been upheld by this Court, it is not open to contend that the limitation for filing application under Section 7 of the Code would be limited to Article 137 of the Limitation Act and extension of prescribed period in certain cases could be only under Section 5 of the Limitation Act. There is no reason to exclude the effect of Section 18 of the Limitation Act to the proceedings initiated under the Code. Section 18 of the Limitation Act reads thus: "18. Effect of acknowledgement in writing.-(1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgement 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 or liability, a fresh period of limitation shall be computed from the time when the acknowled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acknowledgement in writing signed by the party against whom such right to initiate resolution process under Section 7 of the Code enures. Section 18 of the Limitation Act would come into play every time when the principal borrower and/or the corporate guarantor (corporate debtor), as the case may be, acknowledge their liability to pay the debt. Such acknowledgement, however, must be before the expiration of the prescribed period of limitation including the fresh period of limitation due to acknowledgement of the debt, from time to time, for institution of the proceedings under Section 7 of the Code. Further, the acknowledgement must be of a liability in respect of which the financial creditor can initiate action under Section 7 of the Code." 10. Given the aforesaid, it is not possible to accede to the arguments made by Shri Sinha that Section 18 of the Limitation Act cannot be made applicable by reason of the arguments put forth by him. As has been held in Ambika Prasad Mishra v. State of U.P., (1980) 3 SCC 719, every argumentative novelty does not undo a settled position of law. Krishna Iyer, J., speaking for a Bench of five learned Judges, stated thus: "5. … But, af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , this Court which has been looked to as exhibiting consistency in adjudication, and a steadiness which would hold the balance even in the face of temporary ebbs and flows of opinion, should now itself become the breeder of fresh doubt and confusion in the public mind as to the stability of our institutions." (emphasis supplied) 11. Section 18 of the Limitation Act reads as follows: "18. Effect of acknowledgement in writing.-(1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgement 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 or liability, a fresh period of limitation shall be computed from the time when the acknowledgement was so signed. (2) Where the writing containing the acknowledgement 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) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances can always be considered. Stated generally courts lean in favour of a liberal construction of such statements though it does not mean that where no admission is made one should be inferred, or where a statement was made clearly without intending to admit the existence of jural relationship such intention could be fastened on the maker of the statement by an involved or far-fetched process of reasoning. Broadly stated that is the effect of the relevant provisions contained in Section 19, and there is really no substantial difference between the parties as to the true legal position in this matter." (at pages 144-145) 13. The next question that this Court must address is as to whether an entry made in a balance sheet of a corporate debtor would amount to an acknowledgement of liability under Section 18 of the Limitation Act. 14. Several judgments of this Court have indicated that an entry made in the books of accounts, including the balance sheet, can amount to an acknowledgement of liability within the meaning of Section 18 of the Limitation Act. Thus, in Mahabir Cold Storage v. CIT, 1991 Supp (1) SCC 402, this Court held: "12. The entries in the books of accounts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 138 of the NI Act and, therefore, the complaint was not maintainable. While dealing with the challenge to this order, this Court observed that Under Section 118 of the NI Act, there is a presumption that until the contrary is proved, every negotiable instrument was drawn for consideration. This Court further observed that Section 139 of the NI Act specifically notes that it shall be presumed unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 of the NI Act for discharge, in whole or in part, of any debt or other liability. This Court further observed that under Sub-section (3) of Section 25 of the Contract Act, a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits, is a valid contract. Referring to the facts before it, this Court observed that the complainant therein had submitted his balance sheet, prepared for every year subsequent to the loan advanced by the complainant and had shown the amount as dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irector and had not been passed either by the Board of Directors or by the company at its annual general meeting and it seems that the actual decision may be distinguished on the ground that the balance-sheet was not made or signed by a duly authorized agent of the company. 10. Mr. Banerji next contends that none of the balance-sheets contains an admission of liability subsisting on the date of which it is made. According to him the balance-sheet for the year ended 30-11-1936 which was made on 1-6-1937 contains an admission of past liability as on 30-11-1936 but not an admission of liability existing on 1-6-1937. Mr. Banerji contends that such an admission does not satisfy the test of an acknowledgement under section 19 of the Indian Limitation Act. His contention is supported by Jwala Prasad v. Jwala Bank Ltd., A.I.R. 1957 All. 143 at 145. In that case the Allahabad High Court held that the balance-sheet did not contain any acknowledgement of an existing liability and therefore could not be treated as an acknowledgement under section 19. Mr. Banerji also relied upon the decisions in Kandasami Reddi v. Suppammal, I.L.R. 45 Mad. 443, Venkata v. Partha Saradhi, I.L.R. 18 Mad. 220, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 19. Take the case of a banker and its depositor. Suppose the banker sends to the depositor a monthly statement of account made for the month of February 1961 and signed on March 15, 1961. The statement gives the balance due on February 28, 1961. The amount due on March 15 may be quite different; the banker might have been made payments for the customer, nevertheless the statement amounts to a sufficient acknowledgement under section 19. I am therefore unable to agree with the decision in Jwala Prasad v. Jwala Bank Ltd., A.I.R. 1957 All. 144. 11. To come under section 19 an acknowledgement of a debt need not be made to the creditor nor need it amount to a promise to pay the debt. In England it has been held that a balance-sheet of a company stating the amount of its indebtedness to the creditor is a sufficient acknowledgement in respect of a specialty debt under section 5 of the Civil Procedure Act, 1833 (3 and 4 Will - 4c. 42), see Re: Atlantic and Pacific Fibre Importing and Manufacturing Co. Ltd., 1928 Ch. 836 under section 1 of Lord Tentenden's Act, 1828 (9 Geo. 4, c. 14) read with section 13 of the Mercantile Law Amendment Act, 1856 (19 and 20 Vict. c. 97), see Re: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra) also dealt with the judgment in Kashinath Sankarappa v. New Akot Cotton Ginning & Pressing Co. Ltd., 1949 SCC OnLine MP 123 : AIR 1951 Nag 255 ["Kashinath"] by distinguishing the said judgment on the ground that the balance sheet in that case was not made or signed by a duly authorised agent of the company. Quite apart from this, if the said judgment is perused, what becomes clear is that the observation made in paragraph 20 is really an obiter observation, as the High Court went on to hold in paragraph 26 that the balance sheets that were produced were never proved in accordance with law, apart from being validly rejected by the shareholders, as a result of which, such balance sheets could not, therefore, operate as acknowledgements of liability under Section 19 of the Limitation Act, 1908. 18. In an appeal to the Supreme Court in Kashinath Sankarappa Wani v. New Akot Cotton Ginning and Pressing Co. Ltd., 1958 SCR 1331, this Court referred to Section 3(b) of the Commercial Documents Evidence Act (XXX of 1939) and then held that under the said Act, the balance sheet of the respondent company for the year 1940-1941 should have been admitted in evidence. This Court held that, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not, in any manner, even purport to lay down the law. That apart, the statement that an acknowledgement, as envisaged by the Limitation Act, has to be with the intention of accepting the debt with the object of extending the limitation for recovery is de hors Section 18 of the Limitation Act and directly contrary to Shapoor Fredoom Mazda (supra) which is, in fact, referred to in the very next paragraph of the aforesaid judgment. Shapoor Fredoom Mazda (supra) had made it plain that all that was necessary was that the acknowledgement establishes a jural relationship of debtor and creditor, which undoubtedly was established on the facts of that case. This judgment, therefore, cannot avail the respondents. 20. Reliance was also placed on a judgment of the Gauhati High Court in Ajit Chandra Bagchi v. Harishpur Tea Company (P.) Ltd., 1990 SCC OnLine Gau 24 : AIR 1991 Gau 92. In particular, paragraphs 9 and 10 were relied upon by learned counsel for the respondents. These paragraphs state: "9. I may now turn to the next submission of learned counsel for the appellants - defendants that the plaintiff failed to prove that the amounts in question were due from the defendants. The conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants in their written statement. In that view of the matter even on facts it has to be held that the plaintiffs failed to prove that the amount claimed in the suit was due from the defendants. In view of the aforesaid finding, I am of the opinion that the learned trial court was not justified in decreeing the suit. The suit was barred by limitation except in so far as it relates to recovery of a sum of ₹ 30/-. Besides, the plaintiff also failed to prove the debt in accordance with law. Under the circumstances, the suit should have been dismissed." This judgment also does not take the case of the respondents any further as, like the Nagpur High Court judgment in Kashinath (supra), the entries in the books of accounts were not proved on the facts of that case. 21. We must now examine the position under the Companies Act, 2013 ["Companies Act"] qua any compulsion of law for filing of balance sheets and acknowledgements made therein. Section 2(40) of the Companies Act defines financial statement as follows: "2. Definitions.-In this Act, unless the context otherwise requires,- xxx xxx xxx (40) "financial statement" in relation to a company, includes- (i) a balance sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribe abridged form of annual return for "One Person Company, small company and such other class or classes of companies as may be prescribed. (2) The annual return, filed by a listed company or, by a company having such paid up capital or turnover as may be prescribed, shall be certified by a company secretary in practice in the prescribed form, stating that the annual return discloses the facts correctly and adequately and that the company has complied with all the provisions of this Act. (3) Every company shall place a copy of the annual return on the website of the company, if any, and the web-link of such annual return shall be disclosed in the Board's report. (4) Every company shall file with the Registrar a copy of the annual return, within sixty days from the date on which the annual general meeting is held or where no annual general meeting is held in any year within sixty days from the date on which the annual general meeting should have been held together with the statement specifying the reasons for not holding the annual general meeting, with such fees or additional fees as may be prescribed. (5) If any company fails to file its annual return under subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standards: Provided further that nothing contained in this sub-section shall apply to any insurance or banking company or any company engaged in the generation or supply of electricity, or to any other class of company for which a form of financial statement has been specified in or under the Act governing such class of company: Provided also that the financial statements shall not be treated as not disclosing a true and fair view of the state of affairs of the company, merely by reason of the fact that they do not disclose- (a) in the case of an insurance company, any matters which are not required to be disclosed by the Insurance Act, 1938 (4 of 1938), or the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999); (b) in the case of a banking company, any matters which are not required to be disclosed by the Banking Regulation Act, 1949 (10 of 1949); (c) in the case of a company engaged in the generation or supply of electricity, any matters which are not required to be disclosed by the Electricity Act, 2003 (36 of 2003); (d) in the case of a company governed by any other law for the time being in force, any matters which are not required to be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be attached to statements laid before a company in general meeting, a report by its Board of Directors, which shall include- xxx xxx xxx (f) explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made- (i) by the auditor in his report; and (ii) by the company secretary in practice in his secretarial audit report; (g) particulars of loans, guarantees or investments under Section 186; xxx xxx xxx Provided that where disclosures referred to in this subsection have been included in the financial statements, such disclosures shall be referred to instead of being repeated in the Board's report: xxx xxx xxx (4) The report of the Board of Directors to be attached to the financial statement under this section shall, in case of a One Person Company, mean a report containing explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report. xxx xxx xxx (7) A signed copy of every financial statement, including consolidated financial statement, if any, shall be issued, circulated or published along with a copy each of- (a) any note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been incorporated outside India (herein referred to as "foreign subsidiary"), which is not required to get its financial statement audited under any law of the country of its incorporation and which does not get such financial statement audited, the requirements of the fourth proviso shall be met if the holding Indian company files such unaudited financial statement along with a declaration to this effect and where such financial statement is in a language other than English, along with a translated copy of the financial statement in English. (2) Where the annual general meeting of a company for any year has not been held, the financial statements along with the documents required to be attached under sub-section (1), duly signed along with the statement of facts and reasons for not holding the annual general meeting shall be filed with the Registrar within thirty days of the last date before which the annual general meeting should have been held and in such manner, with such fees or additional fees as may be prescribed. (3) If a company fails to file the copy of the financial statements under sub-section (1) or sub-section (2), as the case may be, before the expiry of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of liability because the balance-sheet is made under compulsion of the provisions in the Companies Act. There is no force in this argument. In the first place, section 18 of the Limitation Act, 1963, requires only that the acknowledgement of liability must have been made in writing, but it does not prescribe that the writing should be in any particular kind of document. So, the fact that the writing is contained in a balance-sheet is immaterial. In the second place, it is true that section 131 of the Companies Act, 1913 (section 210 of the Companies Act, 1956) makes it compulsory that an annual balance sheet should be prepared and placed before the Company by the Directors, and section 132 (section 211 of the Companies Act, 1956) requires that the balance-sheet should contain a summary, inter alia, of the current liabilities of the company. But, as pointed out by Bachawat J. in Bengal Silk Mills v. Ismail Golam Hossain Ariff, A.I.R. 1962 Calcutta 115 although there was statutory compulsion to prepare the annual balance-sheet, there was no compulsion to make any particular admission, and a document is not taken out of the purview of section 18 of the Indian Limitation Act, 1963 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doubt signed by two Directors, but they did not sign as duly authorised agents of the transferee company as required by explanation (b) to section 18 of the Limitation Act. There is no substance in this argument. The Companies Act, 1956, came into force in 1956. Section 210 of the Act requires the Board of Directors to lay a balance-sheet before the company at the Annual General Meeting. Section 211 prescribes the form and contents of a balance-sheet. The form of balance-sheet is given in Part 1 of Schedule VI to the Act, and according to it the current liabilities and provisions have to be set out in the balance-sheet. Section 215(i)(ii) requires that the balance-sheet should be signed on behalf of the Board of Directors, inter alia, by the Secretary of the Company and by not less than two Directors of the company. Section 215(3) provides that a balance-sheet shall be approved by the Board of Directors before it is signed on behalf of the Board of Directors in accordance with section 215(i)(ii) and before it is submitted to the Auditors for their report thereon. Thus, the statement of current liabilities and provisions in the balance-sheet has to be approved by the Board of Direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statements. Counsel appearing for petitioning creditor contended that under the statute the balance-sheet was a separate document and as such if there was unequivocal acknowledgement on the balance-sheet the statement of the Directors' report should not be taken into consideration. It is true the balance-sheet is a statutory document and perhaps is a separate document but the balance-sheet not confirmed or passed by the shareholders cannot be accepted as correct. Therefore, in order to validate the balance-sheet, it must be duly passed by the shareholders at the appropriate meeting and in order to do so it must be accompanied by a report, if any, made by the Directors. Therefore, even though the balance-sheet may be a separate document these two documents in the facts and circumstances of the case should be read together and should be construed together. It was held by the Supreme Court in the case of L.C. Mills v. Aluminium Corpn. of India Ltd., (1971) 1 SCC 67 : AIR 1971 SC 1482, that it was clear that the statement on which the plea of acknowledgement was founded should relate to a subsisting liability as the section required and it should be made before the expiration of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 185 DLT 428, the Delhi High Court held: "13. Having heard the parties, this Court is of the opinion that the petitioning-creditor has to satisfy the Court that the debt on which the petition is based was due and payable on the date of the petition. Certainly a time barred debt cannot be the basis of a winding up petition. However, admission of a debt either in a balance sheet or in the form of a letter duly signed by the respondent, would amount to an acknowledgement, extending the period of limitation. Section 18(1) of the Limitation Act, 1963 incorporates the said principle. Section 18(1) of the Limitation Act, 1963 reads as under: "18. Effect of acknowledgement in writing. (1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgement 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 or liability, a fresh period of limitation shall be computed from the time when the acknowledgement was so signed. xxx xxx xxx" 14. The Allahabad High Court in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imitation Act, 1963 provides for effect of acknowledgement in writing. It says where before the expiration of the prescribed period for a suit in respect of any property or right, an acknowledgement 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, a fresh period of limitation shall commence from the time when the acknowledgement was so signed. In an early case, in England, in Jones v. Bellgrove Properties, (1949) 2KB 700, it was held that a statement in a balance sheet of a company presented to a creditor-share holder of the company and duly signed by the directors constitutes an acknowledgement of the debt. In Mahabir Cold Storage v. CIT (1991) 188 ITR 91 : 1991 Supp (1) SCC 402, the Supreme Court held: "The entries in the books of accounts of the appellant would amount to an acknowledgement of the liability to Messrs. Prayagchand Hanumanmal within the meaning of Section 18 of the Limitation Act, 1963, and extend the period of limitation for the discharge of the liability as debt." In several judgments of this Court, this legal position has been accepted. In Daya Chand Uttam Prak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it collects all the relevant authorities on the issue, including some of the judgments cited before me on behalf of the petitioners. This judgment entirely supports the petitioners on this point." 29. In N.S. Atwal v. Jindal Steel and Power Ltd., 2013 SCC OnLine Del 3902, the Delhi High Court held: "11. This Court in ESPN Software India (P) Ltd. v. Modi Entertainment Network Ltd., [2012] 173 Comp Cas 465 (Delhi), noted that: "17. Admission in balance-sheet is per-se an admission of liability… xxx xxx xxx 19. This entry clearly states that an amount of ₹ 8,00,04,000/- is due and payable by the respondent in accordance with the terms of the contract. This document has been signed by the directors of the company and its Company Secretary on 31.10.2002." Similarly, in Bhajan Singh Samra v. Wimpy International Ltd., [2012] 173 Comp Cas 455 (Delhi), the Court noted: "13. Having heard the parties, this Court is of the opinion that the petitioning-creditor has to satisfy the Court that the debt on which the petition is based was due and payable on the date of the petition. Certainly a time barred debt cannot be the basis of a winding up petition. However, adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Board of Directors, and thereafter authenticated by the Manager or the Secretary if any and not less than two directors one of whom should be the Managing Director. (See S. 215). The Act also provides for supply of copies of the balance sheet to the members before the company in general meeting. Going by the above provisions, a balance sheet is the statement of assets and liabilities of the company as at the end of the financial year, approved by the Board of Directors and authenticated in the manner provided by law. The persons who authenticate the document do so in their capacity as agents of the company. The inclusion of a debt in a balance sheet duly prepared and authenticated would amount to admission of a liability and therefore satisfies the requirements of law for a valid acknowledgement under S. 18 of the Limitation Act, even though the directors by authenticating the balance sheet merely discharge a statutory duty and may not have intended to make an acknowledgement." 31. In Zest Systems Pvt. Ltd. v. Center for Vocational and Entrepreneurship Studies, 2018 SCC OnLine Del 12116, the Delhi High Court held: "5. In Shahi Exports Pvt. Ltd. v. CMD Buildtech Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.2020. 34. The NCLAT, in the impugned judgment dated 22.12.2020, has, without reconsidering the majority decision of the Full Bench in V. Padmakumar (supra), rubber-stamped the same. We, therefore, set aside the aforesaid impugned judgment also. 35. On the facts of this case, the NCLT, by its judgment dated 19.02.2020, recorded that the default in this case had been admitted by the corporate debtor, and that the signed balance sheet of the corporate debtor for the year 2016-2017 was not disputed by the corporate debtor. As a result, the NCLT held that the Section 7 application was not barred by limitation, and therefore, admitted the same. We have already set aside the majority judgment of the Full Bench of the NCLAT dated 12.03.2020, and the impugned judgment of the NCLAT dated 22.12.2020 in paragraphs 33 and 34. This appeal is, therefore, allowed, and the matter is remanded to the NCLAT to be decided in accordance with the law laid down in our judgment. Civil Appeal No. 3 of 2021 1. This appeal raises a direct challenge to the majority judgment of the Full Bench of the NCLAT dated 12.03.2020. Suffice it to say that Shri Shyam Divan, learned Senior Advocate appearing on beh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal No. 3765 of 2020 1. In this appeal, Shri Mukul Rohatgi, learned Senior Advocate appearing on behalf of the appellant, assails a judgment dated 14.10.2020 passed by the NCLAT. On the facts of this case, he candidly admits that despite the fact that an application under Section 7 of the IBC was filed on 23.07.2018, and amended once, no plea qua any acknowledgement of liability was made. The NCLT, by an order dated 14.12.2018, held that despite the fact that the corporate debtor's account was declared to be a non-performing asset from 2010 onwards, since, according to the NCLT, there was a continuing cause of action in the facts of this case, the Section 7 application was admitted. In an appeal filed by the suspended Managing Director of the corporate debtor to the NCLAT, by an order dated 26.09.2019, the NCLAT held that the relevant date from which limitation must be determined is 01.12.2016, i.e. the date on which the IBC came into force, and therefore, dismissed the appeal. This Court, by its order dated 21.10.2019, set aside the order of the NCLAT and remanded the matter to the NCLAT to re-examine the question of limitation, having regard to the judgments in B.K. Educational ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to NCLAT, which, on the second round, decided the appeal in favour of the respondents. 5. Shri Rohatgi countered this by presenting an application before us to amend the pleadings, stating that this can be allowed even at this stage, as per the judgments of this Court. 6. 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 the NCLAT, subject to costs of ₹ 1,00,000/- to be paid by the appellant to the respondents within a period of four weeks from today. 7. We, therefore, allow the appeal, set aside the judgment of the NCLAT dated 14.10.2020, and restore the appeal to the file to be decided in light of our judgment in Civil Appeal No. 323 of 2021. 8. Interim order passed by this Court on 16.12.2020 stands vacated. Civil Appeal No.3228 of 2020 1. In this appeal, the judgment of the NCLAT dated 07.02.2020 is assailed, in which the NCLAT has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the NCLAT, as a result of which the High Court ought not to have interfered with the judgment of the NCLT. On the other hand, Shri Poddar, learned counsel appearing on behalf of the respondent, has sought to support the judgment of the High Court with reference to Kamlesh Babu v. Lajpat Rai Sharma, (2008) 12 SCC 577, and paragraph 23 in particular, stating that a jurisdictional point was raised as to limitation, as a result of which the Calcutta High Court took up a petition filed under Article 227 of the Constitution of India and correctly set aside the orders of the NCLT. 4. There can be no doubt that the NCLT had, in its order dated 19.08.2019, stated that Article 63(a) of the Limitation Act would apply instead of Article 137, contrary to what has been held by us in several judgments. It cannot, therefore, be said that the Calcutta High Court wrongly exercised jurisdiction in setting aside this finding. However, the High Court then went on to refer to certain balance sheets that had been produced, thereby extending limitation under Section 18 of the Limitation Act, but held that given the judgment in Babulal (supra), such balance sheets could not extend limitation. 5. Give ..... X X X X Extracts X X X X X X X X Extracts X X X X
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