TMI Blog2020 (8) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... be an acknowledgement of an existing liability - More importantly, an acknowledgement of debt must relate to an admission of existing relationship of a Debtor and Creditor and then intention to continue it should also be evident. An acknowledgement is to be in writing, the same is to be within the period of limitation and is to be signed by a litigant party whom the property or right is claimed - In the present case, the 1st Respondent/ Bank had provided adequate opportunity to the Corporate Debtor to pay the balance amount and also admittedly issued a legal notice dated 26.06.2017 whereby and whereunder it was mentioned that they had sanctioned additional loan of ₹ 5 crores in the larger interests of the purchasers of the apartments to complete Phase-I works . The fact of the matter is that the Corporate Debtor had failed to complete the Phase-I works, although additional fund was granted and because of the non-completion of the Phase-1 work, the persons who had thought of purchasing the apartments had not deposited the money in respect of BWSSB and BESCOM. The impugned order dated 16th July, 2019 passed by the Adjudicating Authority (NCLT), Bengaluru Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of Security Interest Act, 2002 ( SARFAESI ACT ), calling upon them to repay the amount due, as on 15.02.2014, amounting to a sum of ₹ 19,32,25,988.22/- along with further interest and other charges, within sixty (60) days of their receipt of the notice. However, the Corporate Debtor failed to repay the amount. Therefore, the Assignor bank assigned the debt Company Appeal (AT) (Insolvency) No. 848 of 2019 arising under the Loan agreement to the applicant herein, namely Phoenix ARC Private Limited (in its capacity as Trustee of Phoenix Trust FY 16-15 scheme B) together with all the underlying securities, vide an Assignment agreement dated 29th March, 2016. 10. .., the assignment of the loan by the Bank to petitioner is not only accepted by the Respondent but it also obtained additional funding of ₹ 5,00,00,000/- Accordingly new loan agreement dated 09.06.2016 was executed by the parties and also furnished personal guarantees for the loan. The Corporate debtor failed to pay the outstanding amount even after repeated demands made to the Corporate Debtor for total amount of ₹ 35,33,34,286/- towards the dues of the Assigned Debt as well as the New Loan as o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serve Bank of India. 5. The Learned Counsel for the Appellant forcefully takes a plea that the Adjudicating Authority had overlooked the fact that the Company is still a solvent one and has impending cash flow from several avenues and because of the non-cooperative attitude of the 1st Respondent, failed to grant the No Objection Certificate and once the same is given, the customers shall be entitled to the amounts sanctioned by the Financial Institutions etc. 6. The learned Counsel for the Appellant brings it to the notice of this Tribunal that the 1st Respondent had informed about the Loan Assignment Agreement signed between Karnataka Bank and the ARC. Furthermore, on 24.08.2016, the Respondent/ARC further disbursed a loan of ₹ 5 crores to the Corporate Debtor with an interest of 24% compounding monthly and penal interest @ 6% per annum. Moreover, this was a fresh loan on different terms and conditions and this loan was treated separately and a substantial loan was repaid. In respect of this fresh/new loan, the rate of interest was charged @ 33% per annum. 7. It is represented on behalf of the Appellant that on 24.08.2017, ARC issued a Recall notice of loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore than ₹ 330 crores and by that time, the Corporate Debtor had already spent an amount of ₹ 240 crores on the project, whereas only ₹ 190 crores was collected from the customers. Therefore, the Corporate Debtor raised an additional demand from its customers during August 2013 in terms of Clause 3(1) of the Sale Agreement and some customers had agreed to pay the additional demand and some had challenged the same before the consumer Forums. 11. The Learned Counsel for the Appellant contends that the National Green Tribunal, Bangalore, issued a stay order on construction of the projects in Karnataka on account of the distance from local nullah and the stay was vacated by the Hon ble Supreme Court in Civil Appeal No.5016/2016 in March 2019. Also it is the version of the Appellant that the Appellant had appointed a sum of ₹ 11 crores by selling an Asset of the Corporate Debtor and the same is available for completion of the pending works in Block A, B C and that 300 flats are ready for registration in Block A B, which can be registered. Already 84 flats registered after obtaining NOC from the 1st Respondent/ Phoenix ARC and approximately 27 famil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the said credit facilities as per terms and conditions adumbrated in the Loan Agreement executed among other things by the Corporate Debtor . 16. The Learned Counsel for the 1st Respondent points out that the Corporate Debtor s account was classified as Non-Performing Asset ( NPA ) as per RBI directives and guidelines. Further, the Assignor Bank issued a Demand Notice dated 17.02.2014, as per Section 13(2) of the SARFAESI Act, 2002 to the Corporate Debtor to repay a sum of ₹ 19,32,25,988.22/- (due and payable as on 15.02.2014) together with interest and other charges within sixty days. 17. As a matter of fact, by virtue of the Assignment Deed dated 29.03.2016, Karnataka Bank/ Assignor Bank assigned its Non-Performing Asset in regard to the credit facility granted to the Corporate Debtor to the 1st Respondent/ Phoenix ARC Private Limited (in its capacity as Trustee of Phoenix Trust FY 16-15 Scheme-B) together with all the underlying securities. Therefore, it is the contention of the 1st Respondent that it has stepped into the shoes of the Assignor Bank and as such is entitled to receive the repayments and enforce payment of all Debts under the Loan Agreements. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1st Respondent that post 31.05.2017 the Corporate Debtor had defaulted and stopped making payments to the 1st Respondent/ Company and on 24.08.2017 the 1st Respondent issued a Recall Notice to the Corporate Debtor , whereby and whereunder the entire credit facilities were recalled and also a demand was made for the payment of ₹ 35,33,34,286/- outstanding sum as on 16.08.2017 together with further interest at contractual rate from 17.08.2017 till the date of realisation. 22. The Learned Counsel for the 1st Respondent submits that the Corporate Debtor / SDIL as on 02.09.2018 was due and liable to pay to the 1st Respondent an amount of ₹ 42,80,92,640/- to the 1st Respondent together with future interest at contractual rate and other charges. 23. At this stage, it is projected on the side of the 1st Respondent that the 1st Respondent filed O.A. No.1083 of 2017 before the Debts Recovery Tribunal, Bengaluru for recovering the sum of ₹ 35,33,34,286/- being the outstanding amount as on 16.08.2017. Later, the 1st Respondent filed C.P.(IB)No.167/BB/2018 before the Adjudicating Authority (National Company Law Tribunal), Bengaluru under Section 7 of the I B Cod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of ₹ 25 crores, ₹ 2.5 crores were never released and ₹ 2.5 crores was simply moved across the ledger in an attempt to windowdress accounts and the said sum of ₹ 2.5 crores were never realized to the Corporate Debtor , which was reflected in the account. Furthermore, these matters were not brought on record and accounts statement were also not produced, which amounted to willful suppression of material facts. 26. A cursory glance to the reply of the Corporate Debtor before the Adjudicating Authority shows that the Corporate Debtor at paragraph 2 and 3 had mentioned the following 2. It is respectfully submitted that the petitioner is an Asset Reconstruction Company who took an assignment, a loan obtained by the Respondent from Karnataka Bank. The Karnataka Bank had sanctioned a total of ₹ 25 crores as term loan. The sanction letter is being produced herewith as Annexure R-1. Though the Respondent had flagged several issued with the Karnataka Bank who had not disbursed the loan amounts as per terms of loan agreement and had not disbursed the entire loan amounts. Yet the Karnataka in a hurried and hastily manner assigned the loan to the Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Corporate Debtor had failed to pay the outstanding sum even after repeated demands made to it in respect of the sum of ₹ 35,33,34,286/-, not only in respect of the Assigned Debt, but also in respect of the New Loan as on 16.08.2017, which came to ₹ 42,80,92,640/- along with interest as on 02.09.2018. As seen from the letter dated 09.06.2016 of the 1st Respondent under the caption Settlement of Debt of the Corporate Debtor / SDIL (At page 180 of Volume-I of the Paper Book of the Appellant), it is crystalline clear that the 1st Respondent was agreeable to the settlement/ reschedulement and requested the Corporate Debtor to kindly convey its acceptance in regard to the terms and conditions contained in the said Letter of Acceptance by signing and returning etc. In fact, the Corporate Debtor had accepted the conditions and agreed to abide by the terms and conditions contained in the Letter of Acceptance . On page 182 of the Paper Book (Vol I) on behalf of the Borrower Company (SDIL), its authorised signatory Mr. Prakash Kumar Singh had signed as Managing Director/ Guarantor I . The Appellant had signed as Mortgagor/ Guarantor II and one Mrs. Sareeta Singh had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the New Loan Agreement in respect of the credit facility of ₹ 5 crores and re-scheduling of the other credit facilities, without any doubt, the Corporate Debtor had made several part payments towards principal and interest sum due and payable by the Corporate Debtor to the 1st Respondent and some of the periodical payments were made on 17.10.2016, 11.11.2016, 29.11.2016, 29.12.2016, 31.12.2016, 10.01.2017, 23.01.2017, 25.01.2017, 28.02.2017, 31.05.2017. The grievance of the 1st Respondent/ Financial Creditor is that the Corporate Debtor defaulted and stopped making payments to it and it transpires that the 1st Respondent filed O.A. No.1083 of 2018 before the Debts Recovery Tribunal, Bengaluru for recovery of the amount of ₹ 35,33,34,286/- being the outstanding sum as on 16.08.2017 and later on 05.09.2018 the 1st Respondent filed Section 7 Application before the Adjudicating Authority for commencement of CIRP. 32. It cannot be gainsaid that as per Section 18 of the Limitation Act, 1963, an acknowledgement is not limited in respect of the debt only, but in relation to any property or right , which is the subject matter of LIS between the parties. Needl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear in which last item admitted or proved as entered in the account established. It is also to be pointed out that an acknowledgment by a borrower shall bind the guarantors as well, as per decision Om Prakash v Uco Bank AIR 2005 MP p. 234 (DB). 35. It must be borne in mind that when a plaintiff has concurrent remedies availed one remedy and remained unsuccessful, then, he cannot seek the Company Appeal (AT) (Insolvency) No. 848 of 2019 benefit under Sec 14 of the Limitation Act, when instituting an alternate remedy as per decision Hasan Chand Sons v. Gaj Singh ILR 1961 11 Raj 365. It is to be remembered that pendency of DRT proceedings is not a bar for commencement of Insolvency Resolution Process . Further, time spent in insolvency proceedings is not to be excluded for filing an execution case based on money decree, secured against an insolvent, as per decision Yashant v. Walchand AIR 1951 SC p. 116 As Art. 113 of the Limitation Act relates to suits , Art. 137 of the Limitation Act pertains to Applications . In this connection, it is to be pointed out that in B.K. Educational Services Pvt. Ltd. v. Parag Gupta and Associates (Civil Appeal No.23988/2017), the Hon ble Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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