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TMI Blog2022 (8) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... etition of the Appellant is barred by limitation especially when the Corporate Debtor voluntarily disclosed and acknowledged the liability towards the appellant. In various cases, the Hon ble Apex Court has already settled the law that Balance Sheet dues so reflected appropriately in the Balance Sheet and that too a duly audited Balance Sheet will act as an acknowledgment of debt under Section 18 of the Limitation Act, 1963 hence initiation of CIRP is permissible under Section 7 of the Code . Keeping in mind the provisions of the Code law laid down on the subject, it is not in dispute that the dues of the CD are falling within the provisions of Section 18 of the Limitation Act and since debt and default is not in dispute dues are payable in fact law is in accordance with the provisions of the Code, so Section 7 of the Code is attracted - appeal allowed. - Company Appeal (AT) (Ins) No. 248 of 2021 - - - Dated:- 4-8-2022 - [ Justice Rakesh Kumar ] Member ( Judicial ) And [ Dr. Ashok Kumar Mishra ] Member ( Technical ) For the Appellant : Mr. Siddhartha Barua , Mr. Praful Jindal , Advocates For the Respondents : Mr. Aditya Pandya , Advocate JUDGMENT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DATES EVENTS 31.12.1997 IDBI Bank sanctions a foreign currency loan of USD 1.25 million vide sanction letter dated 05.12.1997 and Foreign Currency Loan Agreement dated 31.12.1997 29.03.2001 As the Respondent failed to pay the principal outstanding aggregating to Rs 5 Crores 20 Lacs hence principal outstanding loan amount was converted into subscription of NCD s vide a subscription agreement dated 29.03.2001. 01.05.2002 Subsequently the Respondent converted the funded interest term loan aggregating to 125.61 lacs into NCD s via letter of intent dated May 01, 2002. 19.01.2004 IDBI Bank declares the account of the Corporate Debtor as a Non-Performing Asset (NPA). 30.09.2004 IDBI Bank vide a Transfer Deed dated 30.09.2004, transfers the loan account of the corporate debtor to the Appellant together with all the underlying securities under the Financing Documents. 31.10.2006 Because of non-payment by the Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tstanding aggregating to Rs 5 Crores 20 Lacs hence principal outstanding loan amount was converted into subscription of NCD s vide subscription agreement dated 29.03.2001. Subsequently, the Respondent also converted the funded interest term loan aggregating to 125.61 lacs into NCD s via letter of intent dated May 01, 2002. 6. As per the Appellant, IDBI Bank vide a Transfer Deed dated 30.09.2004, transferred the loan account of the Corporate Debtor to the Appellant together with all the underlying securities under the Financing Documents. 7. It was also stated by the Ld. Counsel for the Appellant that as the Corporate Debtor had defaulted on its payment obligations under the NCD facility, hence the Appellant was constrained to recall principal amount under the NCD s and also the interest which was accruing under the NCD s and hence the Appellant issued a recall notice dated 31.10.2006. 8. It was also pointed out by the Ld. Counsel for the Appellant that the Corporate Debtor had made a Reference under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 ( SICA ), to the Board of Industrial Financial Reconstruction ( BIFR ) and after enquiry and cur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as an operating agency under section 17(3) of the Sick Industrial Companies (Special Provision Act) and the Corporate Debtor continued to be under purview of BIFR and same was pending until BIFR dissolved on 01.12.2016 and ( BIFR Dissolution Date ). Hence the period between BIFR Reference date and the BIFR Dissolution Date amounting to 4026 days ( Excluded Limitation Period ) should be excluded for the purposes of calculating the period of limitation. 13. It is submitted by the Ld. Counsel for the Appellant that on 19.04.2004, when the Appellant recalled the NCD Facility admittedly, the BIFR Reference Case of the Corporate Debtor under the provisions of Sick Industrial Companies Act (SICA), 1985, was pending for adjudication before the learned Board for Industrial Financial Reconstruction (BIFR). Accordingly, the Section 22 of SICA was applicable and hence the period under which the Corporate Debtor was under the purview of BIFR. Hence the Ld. Adjudicating Authority should have appreciated that the Excluded Limitation Period should have been excluded for the purposes of calculating limitation and if the said Excluded Limitation Period is excluded then the Section 7 Petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso failed to consider that Respondent is in continuous default of its payment obligations under the Recall Notice as the Appellant is entitled to recover compound interest on the outstanding amounts from the date of the recall and demand till the actual realization of the amounts due. The non-payment of interest for the year 2017-2018 is Rs.5,21,60,402/- which is over a lac, which itself on a standalone basis has entitled the Appellant to file an application under Section 7 of the Code, 2016. 16. In view of the above the Appellant has sought the relief as follows: a. Allow this appeal and set-aside the Impugned order of the Hon ble National Company Law Tribunal, Ahmedabad Bench, delivered on 12.01.2021 in CP (IB) No. 113/7/NCLT/AHM/2019; etc. 17. The Ld. Counsel for the Respondent has submitted as follows: (i) The order impugned is legal, correct and sustainable in the eyes of law and the Ld. NCLT, Ahmedabad has rightly held that the application of appellant under Section 7 of the Insolvency and Bankruptcy Code, 2016 ( I B Code ) is barred by law of limitation. (ii) The date of default as per FORM-1 is 19.01.2004 while the date of filing section -7 application i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Evidence Act dated 04.10.2018, copy of audited balance sheet of the CD for the year ended 31.03.2017 etc. All these reveals that the Financial Creditor has elaborately provided in the application form all related requirement for constituting an acknowledgment under the provisions of Limitation Act, 1963. 19. A reference is made to Section 238 (A) of the Code which reads as follows: 238-A. Limitation- The provisions of the Limitation Act, 1963 (36 of 1963) shall, as far as may be, apply to the proceedings or appeals before the Adjudicating Authority, the National Company Law Appellate Tribunal, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal, as the case may be . 20. We have also gone through the Balance Sheet as at 31.03.2017 of the CD wherein it is reflected in Annexure A-7 appearing from pg-201 to 237 (Reference page -225) where borrowings are reflected under the heading Long-term borrowings Note no. 4 item no. 2 . Even the Balance Sheet reflects the security created on the assets of the CD. Balance Sheets are signed by the Directors of the Corporate Debtor on 01.09.2017. 21. Now it is a settled law that all related provisions of the Limitat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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