TMI Blog2017 (6) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... ransferred like in a public limited company, these debentures cannot be called as marketable security and since the corporate debtor company already defaulted in making repayment after maturity date it can't in any way be considered as a security asking stamp duty. Hence this Bench has not found any merit in the argument of the Corporate Debtor counsel on this point. Whether the debt is time barred or not? - Held that:- The admission appearing in the financial statement of the company is an acknowledgement covered by section 18 of the Limitation Act, an acknowledgement need not be given to the financial creditor stating that debt is owed to him. If such debt is shown as due in the financial statements of the company which are rem in nature, it is to be construed as an acknowledgment of default. Since there has been express admission that the company has defaulted in repayment of principal toward the money received by issuing debenture certificates, this debt cannot be called as time barred debt. Thereby this bench has not found any merit in the argument taken by the corporate debtor counsel. Whether the pendency of arbitration proceeding between the parties will have any bea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2009 on the dates of maturity mentioned in the debenture certificates issued by the corporate debtor. 3. It is pertinent to mention that this financial creditor had filed CP 21/I BP/2017 seeking the relief as sought now, but whereas this Bench, by looking at the variation between the claim amount and default amount, dismissed that application with an observation that application was filed showing claim amount as ₹ 226,16,79,437 basing on the record and information disclosing default for repayment of principal amount of ₹ 51crores. While dismissing the above application, this Bench gave liberty to the financial creditor to file fresh application restricting its claim to ₹ 51crores to which record is available showing the corporate debtor defaulted in redeeming the debentures as agreed. 4. In pursuance of the liberty given above, the financial creditor has now filed this Company Application limiting its claim to ₹ 51 crores as against the default showing in the records placed by the creditor. Now the present Application is filed stating that corporate debtor, in consideration to the debt of ₹ 51 crores given by the financial creditor, issued cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debtor further submits that since sufficient stamp duty has not been paid over the debenture certificates, they cannot be taken into consideration to pass any order as those certificates have been hit by Section 35 of Indian Stamp Act, 1899. The corporate debtor has gone further saying that since three years limitation for seeking remedy basing on debenture certificates is expired since the date of maturity, this petition is liable to be dismissed. The Corporate Debtor counsel says that default showing in the Balance Sheets does not amount to acknowledgment of debt. The counsel appearing on behalf of the corporate debtor further submits that since this claim has already been disputed under Section 21 of Arbitration and Conciliation Act, 1996, no order could be passed simply by looking at the claim made in this application. The last objection of the corporate debtor counsel is since this applicant has been in a dual capacity as a shareholder of the debtor company and also as a financial creditor, this financial creditor cannot make any claim against the debtor company wherein this applicant itself is continuing as a shareholder. 7. On hearing the submissions of either side, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncy Resolution Process for Corporate Persons) Regulations. In pursuance of the said provision, for there being Regulation 8(2) saying existence of debt due to the financial creditor has to be proved on the basis of either on the records available on the information utility or other relevant documents including (i) a financial contract supported by financial statements as evidence of the debt, (ii) a record evidencing that the amounts committed by the financial creditor to the corporate debtor under a facility has been drawn by the corporate debtor; (iii) financial statements showing that the debt has not been repaid; or an order of a court or Tribunal that has adjudicated upon the non-payment of a debt, if any, satisfaction under any of the heads is sufficient. 10. In conjunction to the same, the corporate debtor referred rule 4 of I B (application to adjudicating authority) Rule 2016 to say that the documents accompanied with Form-1 shall be as specified in the Insolvency Bankruptcy Board of India (Insolvency Resolution Process for Corporate persons) Regulation 2016. He further submits the use of words record or evidence of default appearing in section 7(3)(a) cannot in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the word or , if the financial creditor is able to produce any of these three records showing default, then this Bench has invariably to consider that default of payment of debt has been proved. Here in this case for the financial creditor has produced the debenture certificate showing financial contract and thereafter financial statements of the company reflecting the payment above mentioned as remained overdue till date of filing this company application. 13. In view of that evidence let in by the financial creditor, we believe that the record placed by the financial creditor is sufficient enough to prove that the corporate debtor has defaulted in repayment of the aggregate principal amount of ₹ 51 crores to which OCDs have been issued by the corporate debtor. Point 2: Whether deficiency of stamp duty will invalidate the debenture certificate or not. 14. Whether argument advanced by the corporate debtor counsel is that the debenture certificates issued by the Corporate Debtor are not duly stamped as required under the provisions of the Indian Stamp Act 1899 and/or the Maharashtra Stamp Act 1985 conferring it as security. To justify this argument the corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e debtor counsel, it is clear that it is not his case that the debenture certificates have not been issued. It is also not his case that admission of default is not present in the financial statements. The only twist that is given to that admission is that it is a qualified admission for it has been mentioned in the director's report that it is in dispute. As to this point it need not be newly propounded to say that the admission appearing in the financial statement of the company is an acknowledgement covered by section 18 of the Limitation Act, an acknowledgement need not be given to the financial creditor stating that debt is owed to him. If such debt is shown as due in the financial statements of the company which are rem in nature, it is to be construed as an acknowledgment of default. Since there has been express admission that the company has defaulted in repayment of principal toward the money received by issuing debenture certificates, this debt cannot be called as time barred debt. Thereby this bench has not found any merit in the argument taken by the corporate debtor counsel. Point No 4.. Whether the pendency of arbitration proceeding between the parties will h ..... 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