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TMI Blog2019 (12) TMI 1297X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Corporate Debtor for purchase of Dumpers. The Corporate Debtor, however, failed to make repayment,hence, legal notice was issued from time to time and finally loan recall notice was issued on 7th April, 2015. Notice under section 434 of the Companies Act, 2013 was also served on 25th May, 2016. Finally, this petition has been filed. 3. The learned Senior counsel appearing for the Financial Creditor narrated these facts and specifically pointed out that the hurdle which was to be crossed at the first instance was whether debt/claim was barred by limitation or not. In this regard, he drew our attention to page 480 of the paper book, which contains financial statements Of the Corporate Debtor for the year ended as on 31 st March, 2016. It was pointed out that the name of the Financial Creditor was appearing therein under the head Of secured loans and the admission Of the Corporate Debtor regarding default being made in repaying the same had also been mentioned. Apart from this, he contended that on 20th June, 2014 payment of Rs. 10,000/- had been made. Based upon these facts, learned Sr.Counsel submitted that there was a continuous cause of action and therefore, claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted copy Of the order of the Hon'ble High Court. In this regard, he further pleaded that this amount had wrongly been adjusted by the Financial Creditor towards loan. It was also pleaded that there was a pending dispute with regard to amount of debt and hypothecated securities and therefore, this petition was not maintainable for this reason. 5. As regard to reliance placed by the Financial Creditor on the balance-sheet for year ended on 31st March, 2016 to make a plea of acknowledgement of debt, it was pleaded that in the said balance-sheet, it was specifically mentioned that EMI payable to all creditors including the Financial Creditor had expired but for one other Financial Creditor, hence, based upon these facts, it could be said that in fact there was no acknowledgement of its debt. 6. As regard to the applicability of provisions of section 18 of the Limitation Act, 1963 in there true sense, the learned counsel placed strong reliance on the. decision of the Hon'ble Supreme Court in the case of Prabhakaran & Ors Vs M. Azhagir Pillai ( Dead) by Lrs. & Ors as reported in A.I.R. 2006 SC 1567 and drew our attention to para 12 to 17 of the said order. Based upon the observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet being a instance of acknowledgement Of debt, the learned Sr. Counsel further placed reliance on the following judicial decisions, which are as under:- 1. Bhajan Singh Shanna v M/ s Wimpy International Ltd. (2011 SCC Online Del 4888, passed by the Delhi High Court in CO.PET 246/2006 & CA 1206/2006 dt. November 21,2011. 2. Bengal Silk Mills co. vs Ismail Golam Hossain Arif(AIR 1962 cal 115) passed by Calcutta High Court, in Appeal No. 120 of 1958 and suit No. 2261 of 1939 dated April 17,1961. 3. Edelweiss Asset Reconstruction Ltd. V M/S Birla Cotsyn( India) Limited (CP 579/1 & BP)/NCLT/MAH/2018) at. 2Ch November, 2018. 9. As regard to the fact of note in the balance-sheet regarding EMI being expired, the learned Sr. Counsel submitted that this was a factual position and after the expiry of repayment period obviously EMI could not be received but that would not go to show that there was no outstanding debt in the balance-sheet. Particularly,when the fact of default had also been mentioned therein. 10. We have considered the submission made by both the sides and material on record. The bone of contention is whether debt is barred by limitation or not. In this regard, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 Of Limitation Act, 1963 have been considered by this Tribunal in a few cases recently. In the case of Hari Omm Transport vs. MSP Metallics Ltd. cp (1B) No.116/KB/2019 Order dated 15/10/2019 wherein the Tribunal has held as under:- "8. It is not in dispute that the Operational Creditor has supplied material during the Financial Year 2014-15 It is also not in dispute that there were agreed deduction out of the bills raised by the Operational Creditor to the tune of Rs. 12,43,281/- resulting into impugned sum remaining unpaid. It is also noteworthy that thereafter there have been no supplies or payment by the respective parties. As far as Corporate Debtor is concerned the main plea is that the debt is barred by limitation. For this purpose, the e-mail dated 19th April, 2016 has been claimed as not a proper acknowledgement of debt under Section 18 of Limitation Act, 1963. It has been claimed so far the reason that the said e-mail was addressed to Baba Gora Transport and not to the Financial Creditor. On perusal ofthe records, it is noted that the said e-mail is, in fact, has been addressed to mail ID i.e. [email protected] which is not of the Financial Creditor but state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates that a communication may be addressed to a person other than a person related to the property or right. The Corporate Debtor has also not been able to produce any record to show that such person was not authorised to send such e-mail. Though such claim has been made, the e-mail ID contains particulars of the Corporate Debtor, hence, it cannot be said that e-mail has not been sent for and on behalf of the Corporate Debtor. Another aspect which needs to be considered is that though said e-mail to statement of account has only sent and no other facts have been mentioned, hence, can it be said to be an acknowledgement of debt. This question again leads us to explanation (a) above wherein it has been slated that an acknowledgement may be sufficient though it omits to specify exact nature of property or right. " 19.In the case of Trinetra Electronics Limited vs. McNally Bharat Engineering co. Limited in cp (1B) No.1506/KB/2018 Order dated 16/10/2019, this Tribunal has held as under:- "5. We have considered submissions made by both sides and have also perused the materials on record. The question for our consideration arises is that (i) whether debt is barred by limitation or not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent duly authorised in this behalf; and (c) An application for the execution of a decree or order, shall not be deemed to be an application in respect of any property or right. " From perusal ofthe explanation (a) to the said section it can safely be concluded that such letters constitute acknowledgement of debt by the corporate debtor, as it is not necessary that the letter should be written to the financial creditor only. It is further noteworthy that explanation (a) takes into its ambit the generally accepted commercial practices of communication between the parties whereby acknowledgement of debt can be inferred as no specific format has beén prescribed. 6. Having stated so, a question may arise that such communications are in respect of the debt outstanding in the books of account of corporate debtor as on 31/ 12/2017 and 30/6/2018 and have been sent on 29/ 1/2018 and 30/ 7/2018 respectively which are beyond three years period from 30/9/2014, hence, whether requirement of Sec. 18(1) ofLimitationAct, 1963 is complied with. To look into this aspect, we have to see whether presentation in the balance sheet by itself constitutes an acknowledgment Of debt or not. Now, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s incorporated in Insolvency & Bankruptcy Code, 2016 with the object that stale claims cannot be made alive through the mechanism of Insolvency & Bankruptcy Code, 2016. This is also so because Insolvency & Bankruptcy Code, 2016 is not a recovery mechanism rather a comprehensive code for insolvency resolution old and stale claims cannot be considered as a source or detecting of signs impending insolvency at an early stage. Hence, for this reason also the necessity was felt to make provision of Limitation Act, 1963 applicable to Insolvency & Bankruptcy Code, 2016. It has been settled judicially that Sec.238A is applicable since the implication of Insolvency & Bankruptcy Code. 2016. It is evident that Sec.238A the word "as far as may be" have been used which means that the provisions Of Limitation Act, 1963 would apply to the extent possible and any provision of Limitation Act 1963 being inconsistent to the provisions of Insolvency & Bankruptcy Code 2016 wilt not be applicable. Further the technicalities of Limitation Act 1963 would not be applicable as Insolvency & Bankruptcy Code. 2016 is an economic legislation and functions on the principles of summary procedure. As discussed earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the background of the current commercial environment and in accordance with the nature of proceedings of Insolvency & Bankruptcy code, 2016". 11. Thus, considering the various aspects as discussed above, we hold that in the present case, there is a continuous cause of action and an acknowledgement of debt resulting into continuation/ extension of limitation period before the expiry of the original limitation period. In this regard, we are further of the view, that presentation of outstanding loan in the financial statements for the year ended on 31st March, 2016 which also depict the figures of the same as on 31 st March,2015 is continuation of such outstanding loan from the earlier financial years as in such a case no other conclusion can be arrived i.e. the outstanding loan continues from earlier years except the figure of the same which may vary due to interest, if any, charged subsequently or due to repayment of loan, if any. 12. We further find no merit in the claim of the Corporate Debtor that no outstanding debt had been shown in CIBIL report or balance had been written off by the Financial Creditor in its books of account, hence, no debt was due and payable for the reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween financial debts, which are secured, and operational debts, which are unsecured, is in the relative importance of the two types of debts when it comes to the object sought to be achieved by the Insolvency Code. We have already seen that repayment of financial debts infuses capital into the economy in as as much as banks and financial institutions are able, with the money that has been paid back, to further lend money to other entrepreneurs for their businesses. This rationale creates an intelligible differentia between financial debts and operational debts, which are unsecured, which is directly related to the object sought to be achieved by the Code. In any case, workmen's dues, which are also unsecured debts, have traditionally been placed above most other debts. Thus, it can be seen that unsecured debts are of various kinds, and so long as there is some legitimate interest sought to be protected, having relation to the object sought to be achieved by the statute in question, Article 19 does not get infracted. For these reasons, the challenge to Section 53 of the Code must also fail. Epilogue 85. The Insolvency Code is a legislation which deals with economic matters a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Section 3(6) which defines "claim" to mean a right to payment even if it disputed. The Code gets triggered the moment default is of rupees one lakh or more (Section 4). The corporate insolvency resolution process may be triggered by the corporate debtor itself or a financial creditor or operational creditor. A distinction is made by the Code between debts otved to financial creditors and operational creditors. A financial creditor has been defined under section 5(7) as a person to whom a financial debt is owed and a financial debt is defined in Section 5(8) to mean a debt which is disbursed against consideration for the time value of money. As opposed to this, an operational creditor rneans a person to whom an operational debt is owed and an operational debt under section 5(21) means a claim in respect of provision of goods or services". 15. In the present case, it is not in dispute that undisputed claim remains more than Rs. One Lakh, hence, CIRP can be initiated. Thus, this claim of the corporate debtor is also rejected. 16. The petition is otherwise complete in all respects and defect free. The name of the IRP has also been proposed who has given his consent and it has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solvency resolution process period, if the Adjudicating Authority approves the resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of corporate debtor under Section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be. ix. Necessary public announcement as per Section 15 of the IBC, 2016 may be made. x. Mr. Jitendra Lohia, having registration No. IBBI/ IPA-OOI/ IP-P00170/ 2017-18/ 10339 email id [email protected] is appointed as Interim Resolution Professional for ascertaining the particulars of creditors and convening a Committee of Creditors for evolving a resolution plan. xi. The Financial Creditor to pay a sum of (Rupees Three lacs) to IRP as advance fee as per Regulation 33(2) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulation 2016 which shall be adjusted from final bill. In case further funds are required during Corporate Insolvency Resolution Process and if not provided by Committee of Creditors then IRP/RP can approach this Tribunal for that purpose. xii. The Resolution Professional shall conduct CIRP in time bound manner as per Regulation 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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