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2019 (12) TMI 1298 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - competency of person who has signed and filed the petition - existence of debt and dispute or not - Time Limitation. Whether the person who has signed and filed the petition is competent? - HELD THAT:- The corporate debtor has placed reliance on the decision of the Hon'ble NCLAT in the case of Palogix Infrastructure Private Limited Vs. ICICI Bank Limited [2017 (10) TMI 913 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] for the proposition that Power of Attorney holder was not competent to file an application on behalf of the Financial Creditor. However, it is observed that in para 36 of the said order it has been held that mere use of word " Power of Attorney" while delegating such power will not take away the authority of such officer and for all purposes, it was to be treated as an authorization by the financial creditor. Thus, in fact, this order supports the case of the Financial Creditor - The Hon'ble NCLAT in para 38 has also observed that if an officer was authorised to grant loan then it could not be said that such person did not the have power to recover the loan amount or to initiate Corporate Insolvency Resolution Process in spite of default in payment of a debt. In the present case there exists two documents which make the case of the Financial Creditor more strong. Thus, to give effect to the provisions of IBC,2016 a harmonious and liberal approach is needed. Further, Regulations made thereunder must confirm to be substantive provisions of IBC,2016 as prescribed in section 240 of IBC,2016 or to the overall object of IBC, 2016. Thus, on all counts this contention of the corporate debtor fails. Whether as per contract there exists liability to pay? - HELD THAT:- There is a event of default as an enumerated in the contract/ agreements read with the sanction letter. The consequences thereof follow accordingly. Thus, the amount disbursed till then along with interest becomes due and payable. Thus, this contention of the corporate debtor is rejected. Whether debt is barred by limitation? - HELD THAT:- The date of default has been stated as 05.08.2014. The financial statements for the year ended 31 st March, 2017, which also contain figures for the financial year ended 31 st March, 2016, show the amount of long term borrowings both secured and unsecured. In Clause 3.4 thereof,it has been stated that the company has made certain defaults payment of term loan and interest. •It is also mentioned that the continuing default as on 31 st March, 2017 was in respect of interest on term loan and the period of delay was more than 180 days.ln the Auditor's report also the fact of default in payment of interest and repayment of principal amount has been mentioned. Thus, there is an admission of continuing default in the financial statements - It is now a settled judicial position that presentation in the financial statements constitutes acknowledgement of debt within the meaning of provisions of section 18 of the Limitation Act, 1963. Impact of non mentioning of the name of the Financial Creditor in the balance sheet specifically - HELD THAT:- As per explanation to section 7 (1) of IBC,2016, the proceedings under section 7 of IBC,2016 get triggered even in case of a default by the debtor in respect of any financial creditor other than the applicant. In the present case, it is not in dispute that there is a default in respect of payment of financial debts. Thus, for this reason also, there is no merit in this contention of the corporate debtor. Promise under section 25 (3) of Indian Contract Act, 1872 - HELD THAT:- The presentation of a debt as liability in the balance sheet is a statement made by the corporate debtor to the world at large that this amount is payable by the corporate debtor. Even for commercial purposes such as credit ratings/ renewals, obtaining of financial assistance or fixation of drawing limits or additional loan facilities etc. such liability is taken into consideration for computing net-worth, current ratio, capital gearing debt equity ratio etc.,hence, such presentation is of paramount importance from all perspectives.Thus, the• same cannot be ignored for the purposes of proceedings under section 7 or 9 of IBC, 2016 - such presentation also amount to promise under section 25 (3) of Indian Contract Act, 1872. The application filed by the Financial Creditor under section 7 of IBC,2016 is complete in all respects - this application is liable to be admitted. Application admitted - moratorium declared.
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