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TMI Blog2020 (2) TMI 1644X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial Creditor has certified in his Form 2 that no disciplinary proceedings are pending against him, this application is liable to be admitted. Application admitted - moratorium declared. - CP (IB) No. 23/KB/2019 - - - Dated:- 19-2-2020 - Jinan K.R., Member (J) and Harish Chander Suri, Member (T) For the Appellant/Respondent: R. Banerjee, Pratik Ghose, Rahul Auddy, Avishek Roy Chowdhury, Manik Bose, M.S. Tiwari and S. Ganguly, Advocates ORDER Jinan K.R., Member (J) 1. Asset Reconstruction Company (India) Limited / Financial Creditor (FC) has filed this application under Sec. 7 of the Insolvency and Bankruptcy Code, 2016 (in short IB Code) read with Rule 4 of the Insolvency and Bankruptcy Code (Application to Adjudicating Authority) Rules, 2016 for initiation of corporate insolvency resolution process as against the Corporate Debtor (CD) / Corporate Power Limited alleging that the Corporate Debtor has committed default in repayment of Rs. 5997,80,02,973/- (Five Thousand Nine Hundred Ninety-Seven crore Eighty Lakhs Two Thousand Nine Hundred Seventy Three) due and payable to the Financial Creditor. 2. The brief facts for the consideration of this applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore, the applicant has filed this application for initiating corporate insolvency resolution process as against the Corporate Debtor under section 7 of the I. B Code 2016. 4. The Respondent/Corporate debtor (CD) entered appearance and filed reply affidavit contending mainly the following grounds :- a. This learned Tribunal does not have the jurisdiction to hear, try and determine the said application. b. The said application is hopelessly barred by limitation, which fact is evident from the allegations made in the application. c. In order to allege that the said application is filed within the period of limitation prescribed in law, the applicant financial institution has made a valiant attempt to make allegation, which are erroneous both on facts and in law. d. The said application is barred by principle of waiver, estoppel and acquiescence. e. The alleged dispute that has been raised by the financial creditor cannot be tried by this learned Tribunal as the same is grossly hit by the principles of res judicata. f. The corporate debtor states that the financial creditor has no cause of action to initiate and/or proceed against the corporate debtor. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hundred Eighty-Seven Crores) for Phase-II Project for setting up another 540 MW coal based plant from the various bankers referred to above. Execution of various loan agreements in between the Corporate Debtor and the above referred Banks as referred to in the applications are also not in dispute. Default in repayment of debt is also admitted by the Corporate Debtor in its reply but raised various disputes mainly alleging failure on the side of the lenders in fulfilling their part of obligations which are not liable to be entertained in an application filed under section 7 of the Code. The Hon'ble Supreme Court of India in Innoventive Industries Ltd v. ICICI Bank Ltd has declared the law as regards the scope and extent of enquiry at admission of insolvency application and what is the scope of hearing to be provided to a Corporate Debtor in a case default can be ascertained. Herein, this case default in repayment was not under challenge. But raised a dispute regarding cause of the default. The Hon'ble Supreme court also detailed in the said judgement as to what is the concept of default and extent of enquiry so as to ascertain the default to be entertained in an application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. Sr. Counsel for the Financial Creditor has taken us through a copy of the financial statement approved by the board of directors of the Corporate Debtor and signed by two of its directors on 29th May, 2017 and submits that the said financial statement is an admissible document under section 18 of the Limitation Act as a proof to prove the acknowledgement of liability. He stressed his said argument by citing SCC (2011) 11 Supreme Court Cases in USHA RECTIFER CORPORATION (INDIA) VS. COMMISSIONER OF CENTRAL EXCISE NEW DELHI; SCC Online Cal 128 : (1960-61) 65 CWN 856 : AIR 1962 Cal 115 in Bangal Silk Mills Co. (In Liquidation) vs. Ismail Golam Hossain Ariff and an England citation 1974 WLR 515 in the case of Re Gee Co.(Woolwich) Ltd. 12. The learned counsel appearing for the Corporate Debtor submits that there is no time wise indication of whose liability it would be. According to him, the proceeding before the Debt Recovery Tribunal (DRT) is still pending. The loan has been assigned by the consortium banks to the applicant herein was in the year 2015 and assignment was not related to the whole loan availed by the Corporate Debtor. He further would submit that the acknowledg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appears to us to be not at all significant to hold that the liability due to the ARCIL is not admitted. Admittedly the Financial Creditor/ARCIL has stepped into the shoe of the bankers and IFCL from whom the Corporate Debtor had availed the loan facility. Naming of the said Bankers and IFCL from whom the Financial Creditor derived the Corporate Debtor's liability would certainly come within the purview of acknowledgement of liabilities towards to creditors. 15. The above said Balance Sheet is not at all disputed by the learned counsel appearing for the Corporate Debtor. All the requirements to be meted out in order to authorise the Balance Sheet seen meted out in respect of the Balance Sheet referred to us. It has been signed by two Directors on 29th May 2017. So, According to the learned counsel appearing for the Financial Creditors fresh period of limitation shall be computed from the date when the acknowledgement/balance sheet was so signed and the said date being 29th May 2017 filing of this application is within time. He further would submit that the financial statement being prepared for the financial year ending 31st March 2017 and signed within the period of expiry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i conductors. Once the appellants have themselves made admission in their own balance sheet, which was not rebutted and was further substantiated in the Director's Report, the appellant now cannot turn around and make submissions which are contrary to their own admissions. (See Calcutta Electric Supply Corpn. V. CWT, SCC para 8.) Moreover, they have also clearly taken a stand in their reply to the aforesaid show cause notice that they bought various parts and components to develop the testing equipments for use within the factor and that such steps were undertaken to avoid importing of such equipments from the developed countries with a view to save foreign exchange . 18. It is submitted that the said judgement interprets Section 18 of the Limitation Act. Learned Counsel further referred to and relied upon the Calcutta High Court judgement in the case of Bangal Silk Mills Co. (In Liquidation) vs. Ismail Golam Hossain Ariff reported in 1961 SCC Online Cal 128 : (1960- 61) 65 CWN 856 : AIR 1962 Cal 115 and submitted that now the cause of action starts from the date of default and relied upon paras 9,12 and 13 of the judgement and it reads as under: 9. In support of the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e debt implies an authority to acknowledgment it, ... for if he could pay the amount of the claim, he could plainly also arrange to prevent time from becoming a bar to it , see Raja Braja Sundar Deb V. Bholanath: 24 C.W.N. 153: A.I.R. 1919 P.C. 120 Besides they had the general power to manage the affairs of the company and to do all acts and things in the name and on behalf of the company. But Mr. Banerji contends that the prima facie authority of the managing agents is taken away because in this case the creditor is one of its partners. Now it has been held that a director cannot make an acknowledgement of a debt due to himself so as to bind the company, see Re: Transplanters (Holding Company) Ltd. (1958) 2 A.E.R. 711 and Re: the Coliseum (Burrow) Ltd. 1930 3 Ch. 44. Similarly the managing agency firm cannot make an effective acknowledgement of a debt due to one of its partners so as to bind the company. The reason is that the managing agents are interested in the loan and by reason of their fiduciary capacity they are not competent to make the acknowledgement without the express consent and knowledge of the company. The company is entitled to repudiate an acknowledgment given by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of the company so as to take the matter out of the Limitation Act, 1939, if the acknowledgement had not been made by the directors in favour of one of themselves. 20. In answering the above said submission and relying upon the judgement, the learned counsel for the Corporate Debtor submitted that the judgement of the Hon'ble Supreme Court referred to is not applicable to the fact in this case. It is further stated that it was not discussed in the said judgement whether Section 18 of the Limitation Act would apply when the claim is otherwise barred by time. 21. The argument advanced on the side of the Corporate Debtor has not at all convinced us. The Hon'ble Supreme Court in the above referred judgement interpreted the effect of admission of a company in a balance sheet. The Hon'ble Supreme court in the said case observed that Once the appellants have themselves made admission in their own balance sheet, which was not rebutted and was further substantiated in the Director's Report, the appellant now cannot turn around and make submissions which are contrary to their own admissions . 22. It is pertinent to refer to one another judgement of Hon'ble Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n error in quashing the complaint proceedings. Under Section 118 of the Act, there is a presumption that until the contrary is proved, every negotiable instrument was drawn for consideration. Even under Section 139 of the Act, it is specifically stated 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 for discharge, in whole or in part, of any debt or other liability. It is also pertinent to note that under Sub-section (3) of Section 25 of the Indian Contract Act, 1872, 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. Moreover, in the instant, the appellant has submitted before us that the respondent, in his balance sheet prepared for every year subsequent to the loan advanced by the appellant, had shown the amount as deposits from friends. A copy of the balance sheet as on 3 1st March 1997 is also produced before us. If the amount borrowed by the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intiff. He also relies upon the judgements of this court in Shahi Exports Put. Ltd. v. CMD Buildtech Put. Ltd. 2013(202) DLT 735 and Bhajan Singh Sharma v. Wimpy International Ltd., 2011 (185) DLT 428 to contend that acknowledgement in the balance sheet by the defendant extends the period of limitation. 5. In Shahi Exports Put Ltd. v. CMD Buildtech Pvt. Ltd. (Supra) this court held as follows:- 7. It is hardly necessary to cite authorities in support of the well-established position that an entry made in the company's balance sheet amounts to an acknowledgement of the debt and has the effect of extending the period of limitation under section 18 of the Limitation Act, 1963. However, I may refer to only one decision of the learned Single Judge of this Court (Manmohan, J.) in Bhajan Singh Samra v. Wimpy International Ltd., 185 (2011)DLT 428 for the simple reason that it collects all the relevant authorities on the issue, including some of the judgements cited before me on behalf of the petitioners. This judgement entirely supports the petitioners on this point. 6. In view of the legal position spelt out in judgements noted above, the acknowledgement of the debt in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplete, by satisfying all requirements under section 7(5) of the Code, that the default as alleged has occurred and that the insolvency professional proposed by the Financial Creditor has certified in his Form 2 that no disciplinary proceedings are pending against him, this application is liable to be admitted. Accordingly the same is admitted upon the following :- ORDERS i) The application filed by the Financial Creditor under Section 7 of the Insolvency Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, Corporate Power Limited is hereby admitted. ii) Moratorium is declared for the purposes referred to in Section 14 of the Insolvency Bankruptcy Code, 2016. The IRP shall cause a public announcement of the initiation of Corporate Insolvency Resolution Process and call for the submission of claims under Section 15. iii) Moratorium under Section 14 of the Insolvency Bankruptcy Code, 2016 prohibits the following:- a) The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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