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TMI Blog2021 (6) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... to the present case, the Corporate Debtor was declared as a Sick Industrial Unit by BIFR vide order dated 09.05.2001. Sick Industrial Companies (Special Provisions) Act, 1985 came to be repealed by the inception of the Insolvency and Bankruptcy Code, 2016 which was enforced with effect from 01.12.2016. Thus, it is crystal clear that on account of statutory bar, the period commencing from 09.05.2001 to 01.12.2016 stood excluded under the aforesaid provisions rendering the Financial Creditor ineligible to file for recovery of outstanding debt. Therefore, for purposes of calculating limitation, such period is required to be excluded in terms of Section 22(5) of SICA. The Corporate Debtor, by way of their letter dated 14.03.2017 has acknowledged that they have overdue Term Loan of ₹ 772 Lakh from the Financial Creditor and requested for the OTS proposal of ₹ 450 Lakh. This letter in terms of Section 18 of the Limitation Act, 1963 extends the period of limitation. Thus, the present Application which is filed before this Tribunal on 05.07.2019, by taking into consideration the reasonings, is not barred by limitation. Whether there is any debt and default being commit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), the accumulated losses were exceeding its entire net worth and hence by their letter dated 18.08.2000 had stated that the Company has become sick and referred the matter to the Board for Industrial Financial Reconstruction (BIFR) as per Section 15(1) of SICA along with Form A. Pursuant thereto, by the Order of the BIFR dated 09.05.2001, the IDBI Bank was appointed as the Operating Agency by BIFR. 3. In the meantime, it is seen that the IDBI Bank by way of a Transfer Deed dated 30.09.2004 had transferred and assigned the loan in favour of Stressed Asset Stabilization Fund (SASF), who is the Financial Creditor herein. Thereafter, it is seen that the BIFR vide its order dated 09.11.2005 had directed the Corporate Debtor to show resourcefulness in rehabilitating the Company by depositing a sum of ₹ 1 Crore in a No Lien Account. In consonance of the said order, the Corporate Debtor had deposited the said sum of ₹ 1 Crore in a No Lien Account and taking note of the same and also the progress in preparing the Draft Rehabilitation Scheme (DRS) by the Corporate Debtor, the BIFR vide it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and order of stay against the implementation of the order passed by the BIFR dated 27.06.2007. Thereafter, it was alleged that the entire amount was appropriated by the IDBI Bank towards their dues and the monies were not discharged to the other secured creditors and since stay order was granted by the AAIFR, the proceedings before the BIFR was adjourned sine die vide its order dated 09.12.2010. 7. Subsequent thereto, after the advent of Insolvency and Bankruptcy Code, 2016, the BIFR and AAIFR were abolished and the proceedings before these fora stood abated. However, now, the Financial Creditor viz. SASF has filed the present Application under Section 7 of IBC, 2016 claiming a whooping sum of ₹ 346.53 Crore including interest and Liquidated damages from the year 1995 onwards, as the amount which is due and payable by the Corporate Debtor as against the Principal sum of ₹ 7.71 Crore. 8. The Learned Counsel for the Financial Creditor submitted that on 18.02.2017, the Financial Creditor has issued a Loan Recall notice to the Corporate Debtor calling upon them to repay a sum of ₹ 238.93 Crore together with further interest, to which the Corporate Debtor vide le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the said decision of the Hon'ble NCLAT has been overruled by the Hon'ble Supreme Court in the matter of Asset Reconstruction Company(India) Limited Vs. Bishal Jaiswal Anr. in Civil Appeal No. 321of 2021, wherein at para 22, 33 and 34 has held as follows; 22. A perusal of the aforesaid Sections would show that there is no doubt that the filing of a balance sheet in accordance with the provisions of the Companies Act is mandatory, any transgression of the same being punishable by law. However, what is of importance is that notes that are annexed to or forming part of such financial statements are expressly recognised by Section 134(7). Equally, the auditor's report may also enter caveats with regard to acknowledgements made in the books of accounts including the balance sheet. A perusal of the aforesaid would show that the statement of law contained in Bengal Silk Mills (supra), that there is a compulsion in law to prepare a balance sheet but no compulsion to make any particular admission, is correct in law as it would depend on the facts of each case as to whether an entry made in a balance sheet qua any particular creditor is unequivocal or has been entered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial Reconstruction (BIFR) as per Section 15(1) of SICA and the proceedings before the BIFR commenced on 09.05.2001 passed in Case No. 267/2000. At this juncture, it is relevant to refer to Section 22(5) of SICA, which is as follows; 22. Suspension of legal proceedings, contracts, etc. (1)......... (2)......... (3)......... (4)......... (5) In computing the period of limitation for the enforcement of any right, privilege, obligation or liability, the period during which it or the remedy for the enforcement thereof remains suspended under this section shall be excluded. 14. On a plain reading of above extracted provisions, it is made clear that the remedy for the enforcement of right by the Creditor to recover the outstanding debt from the Debtor through the medium of a suit for recovery of money remains suspended for the period during the pendency of inquiry under Section 16, 17 or appeal under Section 25 of SICA. 15. It is also pertinent to note that when a similar set of issue fell for consideration, the Hon'ble NCLAT in the matter of Gouri Prasad Goenka, Ex-Chairman of NRC Limited Vs. Punjab National Bank Anr. in Company Appeal (AT)(In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n regard to plea of limitation has to be repelled as being devoid of merit. It is also noted without adverting the acknowledgment, if any made by the Corporate Debtor in the balance Sheet, the claim of the Financial Creditor is proved to be falling within the period of limitation. 18. Next adverting to the issue as to whether there is any debt and default being committed by the Corporate Debtor, the letter dated 14.03.2017 written by the Corporate Debtor would operate on the maxim Res ipsa loquitur which means the thing which speaks for itself. Further, the letter dated 09.08.2018 wherein the Corporate Debtor has increased their OTS from ₹ 450 Lakh to ₹ 550 Lakh, which also came to be rejected by the Financial Creditor by their letter dated 06.02.2019. The sequence of all these OTS letters written by the Corporate Debtor shows that there exists a 'debt' and 'default' on the part of the Corporate Debtor. Further, the Hon'ble Supreme Court in the matter of Innoventive Industries Ltd. Vs. ICICI Bank and Ors. (2018) 1 SCC 407 wherein it was observed as below: 28. When it comes to a financial creditor triggering the process, Section 7 becomes re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 9 by an Operational Creditor, in relation to a Section 7 Application where there is an existence of a 'financial debt' and its default in excess of ₹ 1,00,000/-, (now increased to ₹ 1 Crore on and from 24.03.2020) this Tribunal is bound to admit the Application and as a consequence trigger the Corporate Insolvency Resolution Process (CIRP) and in relation to a Section 7 Application defence or set off or counter claim put forth by the Corporate Debtor cannot be considered as a dispute in relation to the Financial debt and default in relation to it. Thus, it is clear that there is a default on the part of the Corporate Debtor for a sum exceeding ₹ 1 Lakh. 20. Also the default arising in the present Application is much prior to the advent of the Covid-19 pandemic hence the Corporate Debtor cannot seek shelter also under Section 10A of IBC, 2016. 21. In relation to IA/963/IB/2020 filed by the Corporate Debtor, the following reliefs have been sought for; a. Permit appropriation of a sum of ₹ 50 lakhs, linked to consideration of OTS for the Corporate Debtor, by the Financial Creditor; and b. Permit further appropriation of funds to fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication to Adjudicating Authority) Rules, 2016. The proposed IRP who is appointed shall take forward the process of Corporate Insolvency Resolution of the Corporate Debtor. The IRP appointed shall take in this regard such other and further steps as are required under the Statute, more specifically in terms of Section 15,17,18 of the Code and file his report within 20 days before this Bench. The powers of the Board of Directors of the Corporate Debtor shall stand superseded as a consequence of the initiation of the CIRP in relation to the Corporate Debtor in terms of the provisions of IBC, 2016. 25. As a consequence of the Application being admitted in terms of Section 7 of the Code, moratorium as envisaged under provisions of Section 14(1) and as extracted hereunder shall follow in relation to the Corporate Debtor; a. The institution of suits or continuation of pending suits or proceedings against the respondent including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; b. Transferring, encumbering, alienating or disposing of by the respondent any of its assets or any legal right or beneficial interest th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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