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TMI Blog2023 (1) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... during the period, the Application was obviously filed beyond three years from the date when amount became due. The letter written by Corporate Debtor indicates that letter mentions about the default in compliance of allotment of 10 lac equity shares of 10 each. Letter never acknowledged any default of the original amount or the amount which became due in loan recall notice issued by the Appellant on 04.03.2004. As noted above by cancelling the negotiated settlement vide letter dated 11th July, 2014 original liability of the Respondent under the loan agreement was sought to be restored. When we look into the loan recall notice dated 04.03.2004, the amount which was claimed in the loan recall notice, was Rs. 24,69,59,120/- with further interest with effect from 01st January, 2004. The letter dated 2nd July 2015 is neither any acknowledgement of amount referred to in recall notice nor can be treated to be acknowledgement of the amount as claimed by the Appellant in the Section 7 Application. The next letter which has been relied on by the Appellant is letter dated 03.10.2017. Letter dated 03.10.2017 was written by the Corporate Debtor to the Appellant with regard to buy back s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate Debtor. The action of the Appellant in completely ignoring the negotiated settlement and after realizing the entire cash component again embarking on recovery of entire amount, is not in accordance with the object and purpose for which trust has been created. Appeal dismissed. - Company Appeal (AT) (Insolvency) No. 823 of 2022 - - - Dated:- 5-1-2023 - [ Justice Ashok Bhushan ] Chairperson , [ Dr. Alok Srivastava ] Member ( Technical ) And [ Barun Mitra ] Member ( Technical ) For the Appellant : Mr. Abhijit Sinha, Mr. Anand Varma, Ms. Apoorva Pandey, Mr. Aditya Sukla, Advocates For the Respondents : Mr. Sumesh Dhawan, Ms. Vatsala Kak, Mr. Shaurya Shyam, Ms. Koyal, Advocates JUDGMENT ASHOK BHUSHAN, J. 1. This Appeal has been filed by the Financial Creditor challenging the Order dated 07th April, 2022 passed by the Adjudicating Authority (National Company Law Tribunal, Kolkata Bench, Kolkata) in CP (IB) No. 772/KB/2019 by which Application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as The Code ) by the Appellant has been dismissed. 2. The brief facts of the case giving rise to this Appeal are:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the negotiated settlement. The Respondent wrote a letter dated 02nd July, 2015 to the Appellant informing that Respondent have already handed over 10 lakhs equity shares of each by one of promoter to the Appellant vide letter dated 28th January, 2011 along with share transfer deed for which no action has been taken. On 03.10.2017, the Respondent again wrote to the Appellant proposing and submitted a proposal to buy back of shares of Rs. 1 Crore within 60 days of your approval and payment of interest amounting to Rs. 271.69 lakhs and 13% yield on shares amounting to Rs. 117 Lakhs totaling Rs. 388.69 Lakhs to be paid in 24 equal monthly installments, the Appellant did not accept the proposal. On 5th April, 2019, Section 7 Application was filed by the Appellant before the NCLT, Kolkata to which a Reply was filed by the Respondent, in the Reply filed by the Respondent, plea was taken that Application is barred by time. It was pleaded that under the negotiated settlement between the parties dated 04.12.2008, the Respondent has discharged its obligation by paying the entire cash component of Rs. 750 Lakhs. By letter dated 28th May, 2014, the Appellant informed that over dues amount as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduce the age old obsolete practices so that it may raise heavy claim against Corporate Debtor. But claim has increased from Rs. 1 Crore to unimaginable figure of Rs. 265 Crores and odd which is unheard of in the modern commercial world, particularly when the Financial Creditor is stated to have been the creation of the Government of India. It reminds us of an old Mahajans/Sahukars (Money Lenders) who would suck each and every drop of the borrower but even then there interest would not be repaid. 45. Without going into the quantum of principal debt or interest, we are convinced that there was no claim of money that could have made the basis of this petition. After payment of Rs. 750 Lakhs on 30th April, 2014 it is very clear from the letter dated 11th July, 2014, that the remaining claim of Rs. 1 Crore was pledged with the Financial Creditor, which was not lodged for getting it transferred in its name. The only default of the Corporate Debtor, if at all, was its failure to buy back its shares of Rs. 1 Crore with minimum yield of 13% p.a. The Financial Creditor has based its claim on a glaringly unconscionable agreement just to pressurize the Corporate Debtor with all times h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wal of the negotiated settlement by the Letter dated 11.07.2014, the original liability of the Respondent stood restored and the Application was filed by calculating the original liability since 2004. It is submitted that Appellant is a trust established and controlled by the Government of India. The Appellant was legally bound to calculate and set default amount as per records maintained by it pursuant to Bankers Book Evidence Act, 1891 and the Appellant has stated the default amount of Rs. 265.02 Crores by relying upon the records maintained by it. It is further contended that issue of limitation raised by the Respondent is frivolous and baseless since Respondent has already appeared and acknowledged the liability towards the payment from time to time including its balance sheets and correspondence of the issue. Learned Counsel for the Appellant has relied on balance sheets of the Respondent for the years 2013-14, 2015-16, 2016-17 and 2017-18. The Appellant has also relied on letter dated 02.07.2015, 03.10.2017 given by the Corporate Debtor proposing one time settlement which clearly indicates that there was acknowledgement of debt and the Application was not barred by time. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y although the Application was rejected for the reasons which we have already extracted above. 8. Both the Learned Counsel for the parties have made their submissions on the issue of limitation and the Appellant has also filed additional affidavit bringing relevant materials including the balance sheets of the Corporate Debtor to show the acknowledgements. We thus proceed to first examine the question of limitation. 9. Section 7 Application which has been filed by the Appellant for amount of Rs. 265,02,59,410/- in Part-IV, date of default mentioned is 04.03.2004. Item No. 2 of Part-IV of the Section 7 Application is as follows: Part-IV PARTICULAR OF FINANCIAL DEBT 1. .. . 2. Amount claimed to be in default and total amount claimed to be in the date on which the default occurred (attach the workings for computation of amount and days of default in tabular form) (i) The outstanding amount claimed to be in default as on 01.12.2018 is Rs. 265,02,59,410/- (ii) The outstanding amount claimed to be in default on the date on whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gen Manager July 11, 2014 Endt: Ref No 232A/SASF/DIL opy forwarded for information to: 1. DGM, BIFR, Cell, IDBI Bank Ltd. (Operating Agency), Videocon Towers, 1st Floor, Jhandewalan Ext. New Delhi 110055 Munira S Manda Assistant Gen Manager 11. There can be no doubt that when the settlement was cancelled on 11th July, 2014, the amount became due with effect from 11th July, 2014. The Application under Section 7 has been filed on 05th April, 2019. We need to first examine as to whether there is any acknowledgement by the Corporate Debtor during the said period for the extension of limitation since without extension of limitation during the period, the Application was obviously filed beyond three years from the date when amount became due. 12. Learned Counsel for the Appellant to support his submissions contends that there has been numerous acknowledgements by the Corporate Debtor and has relied on balance sheets which has been brought on record along with the application seeking permission to file additional documents. Copy of the Letters written by the Corporate Debtor dated 02.07.2015 and 03.10.2017 relied on by the Appellant, has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the formalities relating to the transfer of 10 lacs equity shares in your name. This was also agreed by you during our meeting and you had observed that you would be makng an internal enquiry/investigation into the same. We once again request you to accept the scheme mentioned in DRS package as you are kindly aware that we have already paid the principal amount of Rs. 7.50 crores as per negotiated settlement. The outstanding dues have been provided in DRS as under: Buy-back of shares of Rs. 1 Crore with a yield @13% per annum in 18 nstallments and thereafter deferred interest on principal amount in next 18 equal monthly installments . More than three and half thousand workers affecting and more than 20,000 people are affected by your decision since the Mills, which are located in an isolated rural areas are lying closed in the absence of a sanctioned DRS. We once again request you to give your consent to AAIFR for sanction of DRS. Thanking you, Yours Faithfully, For Delta International Limited Director Encl: as above. 14. The above letter indicates that letter mentions about the default in compliance of allotment of 10 lac equi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the revocation of negotiated settlement on 11th July, 2014. The letter dated 03.10.2017 cannot be read to be any acknowledgement or dues as is now claimed by the Appellant in their application. 17. In Section 7 Application, date of default was mentioned as 04.03.2004 and the letter cannot be read to be acknowledgment of the dues which are now sought to be claimed in Section 7 Application nor can be said to be any acknowledgment of the amount as referred to in the Loan Recall Notice dated 04.03.2004 or the amount which according to the Appellant became due after cancellation of the negotiated settlement dated 11th July, 2014. 18. Now we come to the balance sheets on which reliance has been placed by the Appellant, for the purposes of deciding the issue of limitation. We permitted the Appellant to rely on and refer to the balance sheets. Learned Counsel for the Appellant has referred to note 30(c) of the balance sheets for the year 2012-13. Note 30(c) is as follows: Note 30 (a) .. (b) .. (c) After a protracted negotiations, the Company has arrived at a settlement with Stressed Assets Stabilization Fund (SASF) for the dues of Industrial Development Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be claimed are dues as per loan recall notice dated 04.03.2004 upto date interest as per payments calculation amount to Rs. 265.02 Crores. None of the letters noted above and the balance sheets contained any acknowledgement by the Corporate Debtor to make the payment of amount as per recall notice dated 04.03.2004 or amount upto date with interest. The Respondent has been contesting throughout that as per negotiated settlement out of 8.50 crores total amount of negotiated settlement, cash component of Rs. 7.50 crores was paid by the Respondent within time and only default is non-allotment of 10 Lakhs equity shares of Rs. 10 each to the Appellant and buy back of the share with 13% minimum yield p.a. which can be held to be only acknowledgement by the Respondent. The debt as claimed by the Appellant under Section 7 of the Application has never been acknowledged and taking into the consideration the date of last payment by the Corporate Debtor i.e. 30th April, 2014 or the date when the negotiated settlement was cancelled on 11th July, 2014 there has been no acknowledgement which may extend the limitation for the Appellant to file Section 7 Application on 05.04.2019. Application ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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