TMI Blog2019 (4) TMI 1356X X X X Extracts X X X X X X X X Extracts X X X X ..... urses of a business is exempted from the purview of the said Act and hence no registration is required and hence lending money is legal and proper. However none of the provisions of the Act brought to my notice to uphold the submission of the ld. Counsel for the FC I am taking judicial notice of filing three similar applications under section 7 of the I B Code by the very same petitioner alleging lending money before this Bench. Sections 18 and 19 of the Limitation Act can apply only in cases of acknowledgment made within the period of limitation. The cheque cannot be considered as proof of payment as per section 19 of the Limitation Act. In view of the above said discussion I am also coming to a conclusion that the claim of the FC if any found sustainable, is barred by limitation. Whether the dishonour of cheque amount to be a default in repayment of a loan as per S. 3(12) of the I B Code? If so whether the cheque return memo can be a proof of record of default as alleged by the financial creditor? - HELD THAT:- A dishonour memo cannot be taken as a proof of default in the peculiar nature and circumstances of the case in hand. Therefore, the FC also failed in proving the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r want of funds vide cheque returning memo dated 01-11-2017. Since the cheque was dishonored, the petitioner/financial creditor had requested the respondent/corporate debtor company and its directors for repayment of the loan amount. But in spite of repeated requests and reminders the respondent/corporate debtor had failed to make repayment and thereby the petitioner/financial creditor is compelled to file the application. To support the abovesaid contentions, the following documents were produced by the petitioner/financial creditor along with the application: - Sl. No. Particulars Annexure Page No. 1 Copy of letter dated 01.11.2016 A 8 2 Copy of cheque No.328617 dated 30-10-2017 A 9 3 Copy of returning memo dated 01.11.2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idden in law and as such unenforceable there being no valid debt in the eye of law. As per the books of account of the respondent/corporate debtor a sum of ₹ 50,00,000.00 (Rupees Fifty Lac) only was disbursed on 09-04-2012 through RTG S and out of which a sum of ₹ 15,00,000.00 (Rupees Fifteen Lac) only was repaid on 08-03-2013 in the financial year 2012-2013 and other than that no loan was credited to the account of the respondent/corporate debtor company either on 01-04-2016 or on 01-11-2016 and as such the letter dated 01-11-2016 and the respective cheque issued by Mr. Sandeep Kumar Bhagat is not binding upon the company. Mr. Sandeep Kumar Bhagat has no independent power to borrow money as the power to borrow money is vested with the Board of Directors. Acknowledgment of debt if any after the period of limitation is bad in law. 5. The petitioner/financial creditor is not a financial creditor and the debt claimed by the petitioner/financial creditor is not a financial debt in terms of Section 5 (8) (a) of the I B Code. The documents produced on the side of the petitioner are inadmissible in law. The statement of account issued by the bank as per the Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fide intention to misrepresent the facts and on this count alone the reply affidavit filed by the respondent/corporate debtor is liable to be summarily rejected. 8. The Interim Resolution Professional proposed by the petitioner / financial creditor has not been disqualified and, therefore, proposal of the name of the Interim Resolution Professional in some other cases also is not a bar in appointing him as Interim Resolution Professional in this case. The loan amount clearly falls within the definition of financial debt as defined under section 5(8) of the I B Code. The respondent/corporate debtor failed to raise any dispute alleging as alleged even after receipt of the notice dated 20-11-2017 issued by the advocate of the petitioner/financial creditor demanding payment of its dishonoured cheque as per the provision of the Negotiable Instruments Act. Shri Sandeep Kumar Bhagat is one of the promoters of the respondent/corporate debtor and he had all along been managing its affairs and it issued various cheque towards the payment of interest as reflected in the ledger account submitted by the respondent/corporate debtor to the petitioner/ financial creditor. The do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain an application of this nature. Section 5(8) of the Code defines financial debt, which reads as follows: - Section: 5(8) (8) financial debt means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes- (a) money borrowed against the payment of interest; (b) any amount raised by acceptance under any acceptance credit facility or its dematerialized equivalent; (c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; (d) the amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as maybe prescribed; (e) receivables sold or discounted other than any receivables sold on non-recourse basis; (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this juncture referring to section 179 (3) of the Companies Act, 2013 submits that to borrow money by the respondent/corporate debtor, the Board of Directors of the company can only exercise its power to borrow by means of a resolution passed at the meeting of the Board. According to him the Annexure A does not bear the seal of the Director and the CD Company and it refers nothing about any resolution authorizing him to receive the money or acknowledging the liability. I find some force in the argument advanced on the side of the CD. In the absence of supporting receipt evidencing borrowing money by the CD the letter of acknowledgment Annexure A cannot be relied upon as a proof of acknowledgment of debt for an amount allegedly borrowed by the CD, especially when the Annexure A does not bear the seal of the CD, seal of the Director and not supported with any resolution of the Board of Directors of the CD. Annexure A is a copy of a typewritten letter in the letterhead of the respondent/corporate debtor company. Having no seal of the company, it cannot be taken as a proof to prove that the respondent/corporate debtor company received the money as referred to in the letter. So the FC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent/corporate debtor on the basis of the loan availed on 09.04.2012 by the respondent/corporate debtor is barred by law of limitation and therefore Annexure A even if it is construed as a letter of acknowledgment issued by the CD it would not save the period of limitation since it was purportedly executed on 01.11.2016 after a period of 3 years from 08.03.2013 which is the last payment from the CD. The above said contention of the respondent/corporate debtor is supported by the ledger account copy marked as Document No.1 in the reply affidavit. This ledger account has not been objected on the side of the petitioner. On the other hand, in the rejoinder filed by the petitioner/financial creditor it admits the genuineness of the ledger account submitted by the respondent/corporate debtor. At paragraph 6 of the rejoinder, the petitioner/financial creditor has submitted as follows: Furthermore, on perusal of the ledger account as submitted by corporate debtor itself, it is clearly established that it had taken loan amount as shown therein and it had made the part payment on 08.03.2013 to financial creditor and the balance amount payable remained at ₹ 35,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fault. According to him, the copy of dishonour memo cannot be taken as a proof of default. The learned counsel for the petitioner/financial creditor submits that the director Mr. Sandeep Kumar Bhagat had given a cheque for repayment of ₹ 35,00,000.00 (Rupees Thirty-Five Lac) and copy of the said cheque is produced at page 9 of the application. Admittedly, it is a cheque issued by Mr. Sandeep Kumar Bhagat in the name of the petitioner/financial creditor. It is signed by him as authorized signatory, but it does not refer as a cheque issued for repayment of the amount mentioned in the Annexure-A,because it only refers to ₹ 35,00,000.00 (Rupees Thirty-Five Lac) which does not include interest as per Annexure-A.The date of the cheque is 30-10-2017. That date was admittedly put by the FC. According to the ld. Counsel for the FC, as per an arrangement between the CD and the FC the FC can put the date and can present the cheque for clearance in the Bank. No document to support the above said submission is available in the case record. On the other hand that submission was strongly opposed by the CD. Therefore, putting date in a cheque suitable to the FC for saving the period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 09.09.1998 would not create the presumption that the revision petitioner had authorized the respondent to fill up the date as 28.03.2000, one and half years after the same was handedover to be presented for payment, and therefore, the alleged cause of action based on Ex.P.3 is not sustainable to maintain the criminal complaint against the revision petitioner. Upon the above said observation the Hon ble High court has held that Under section 138 of the Negotiable Instrument Act, as the validity of a cheque is only for 6 months from the date of issuance, the implied authorization for filling up the cheque should certainly be within the Limitation of six months and not more than the period of limitation . The above said proposition is squarely applicable in this case because to prove the default what is relied in the case in hand is an undated cheque used by the FC long after the period of expiry of the date of repayment of ₹ 15 Lac, a part of the admitted loan amount of ₹ 50 Lac 08.03.2013. In view of the above said discussion I am of the considered view is that a dishonour memo cannot be taken as a proof of default in the peculiar nature and circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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