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TMI Blog2020 (10) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by shares and incorporated on 14.03.2007 under the Companies Act, 1956, with the Registrar of Companies (RoC), Maharashtra, Mumbai. Its Corporate Identity Number (CIN) is U51311MH2007PTC168736. Its registered office is at Nos. 58 & 59, 1st Floor, Nakshatra Cine Shoppe, Ranade Road, Dadar (W), Mumbai- 400028 within the State of Maharashtra. Therefore, this Bench has jurisdiction to deal with this petition. 3. The present petition was filed on 10.06.2019 before this Adjudicating Authority on the ground that the Corporate Debtor failed to make payment of a sum of Rs. 1,45,42,74,724.16 (Rupees one hundred and forty-five crore forty-two lakh seventy-four thousand seven hundred and twenty-four and paise sixteen only) as the total claim amount, comprising inter alia of a sum of Rs. 35,44,50,688.47 (Rupees thirty-five crore forty-four lakh fifty thousand six hundred and eighty-eight and paise forty seven only) as principal, Rs. 68,61,49,468.06 (Rupees sixty eight crore sixty-one lakh forty-nine thousand four hundred and sixty-eight and paise six only) as interest and Rs. 9,31,58,997.52 (Rupees nine crore thirty-one lakh fifty-eight thousand nine hundred and ninety-seven and paise fifty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther an Inter Se Agreement between the Financial Creditor and IDBI Bank Limited was executed on 17.02.2012 and the same is placed as Exhibit G at pp.115-134. ii) A Deed of Guarantee dated 17.02.2012 between Mr. Dinesh G. Jaiswal, director of Corporate Debtor, Ms. Sunita D. Jaiswal, wife of director of the Corporate Debtor, as Personal Guarantors, D.J. Exim (India) Private Limited as Corporate Guarantor in favour of Punjab National Bank (Lead Bank of the Consortium) is placed as Exhibit I at pp.137-153 of the petition. Further a Deed of Guarantee dated 17.02.2012 between Mr. Dinesh G. Jaiswal, director of Corporate Debtor, Ms. Sunita D. Jaiswal, wife of director of the Corporate Debtor, as Personal Guarantors, D.J. Exim (India) Private Limited as Corporate Guarantor in favour of Punjab National Bank as security for the Term Loan is placed at pp.154-167 of the Petition. iii) A Deed of Hypothecation dated 17.02.2012 between the Corporate Debtor and the Financial Creditor and a Joint Deed of Hypothecation between the Corporate Debtor and Financial Creditor and IDBI Bank Limited are placed as Exhibit J (Colly) at pp.168-228. iv) On 31.07.2012 the Financial Creditor sanctioned tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RFAESI Act, secured immovable properties were sold between 27.12.2018 and 30.04.2019. Sale Certificates regarding the same are placed as Exhibit Y (Colly) at pp.490-494. 6. In its reply dated 17.09.2019, the Corporate Debtor has set up the following defence: a) The present Petition is barred by the law of limitation. The cause of action arose on 30.09.2013, the day on which the Corporate Debtor was declared as Non-Performing Asset (NPA). The present petition was filed on 10.06.2019, hence the petition is time barred. b) Further the Financial Creditor initiated a recovery action under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 by notice dated 25.10.2013. Pursuant to the initiation of action the Financial Creditor sold a few properties of the Corporate Debtor which were mortgaged as per 'para 1 and 2' at pp. 1-3 of the reply. c) The Corporate Debtor has relied on section 238-A of Insolvency and Bankruptcy Code, 2016 along with the judgment of the Hon'ble Supreme Court in B. K. Education Services Private Limited V. Parag Gupta and Associates MANU/SC/1160/2018 : (Exhibit A pp.6- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le by any party to the consortium. (Exhibit D p. 109 of the rejoinder). Further a Joint Lenders Meeting was held on 22.10.2018 to discuss about the revised proposal. Minutes of meeting rejecting the revised offer is placed as Exhibit F at pp. 114-116 of the rejoinder. f) Further in pursuance of the action initiated by the Financial Creditor under the SARFAESI Act, secured immovable properties were sold between 27.12.2018 and 30.04.2019. Three secured assets, one immovable property at Charni Road and two cars are still available with the Financial Creditor against their claims but the claim amount is much greater than the value of these remaining secured assets. Findings: 8. We have heard the arguments of both sides and perused the records. 9. The objection of the Ld. Counsel for the Corporate Debtor is on the ground of Limitation and defences raised can be classified as follows on the subject of limitation: (a) Continuing wrong; (b) Balance confirmation and acknowledgement of liability in the Balance Sheet; (c) Settlement offers made. 10. The date of default is taken to be 30.09.2013, the day on which the Corporate Debtor was declared as a Non-Performing Asset (NPA) by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter of 'default' not being a continuing wrong 15. The Corporate Debtor submits a default cannot be regarded as continuing wrong so as to invite the application of section 23 of the Limitation Act. 16. The Corporate Debtor has relied on the judgment of the Hon'ble Supreme Court in the case of Vashdeo R. Bhojwani V. Abhudaya Co-operative Bank Limited & Anr. 79(IBC)10/2019 (Exhibit 'B' pp. 61-63 of the reply) by which it was clarified that a default cannot be regarded as a continuing wrong in para 4 as follows: "4. .. If the wrongful act causes an injury which is complete, there is no continuing wrong even though the damage resulting from the act may continue. If, however, a wrongful act is of such a character that the injury caused by it itself continues then the act constitutes a continuing wrong. In this connection it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described as the effect of the said injury. It is only in regard to acts which can be properly characterised as continuing wrongs that s. 23 can be invoked. Following this judgment, it is clear that when the Recovery Certificate dated 24.12.2001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the profit and loss account at best be an acknowledgment made by a director of a debt due to himself is the further question posed by the defendant. Reliance is placed on P. S. Thirumalai Iyengar v. Official Liquidator [AIR 1962 Madras 253(DB)] and A. C. K. Krishnaswami v. M/s. Stressed Concrete Constructions Pvt. Ltd. [AIR 1964 Madras 191]. But the precise question has been answered in Re Gee & Co's case (supra) as follows: 'It seems to me plain that an acknowledgment signed by the directors in relation to their own debt would be fully effective if sanctioned by every member of the company .......... The general meeting of the company at which the accounts were adopted and the state of the Eccles account confirmed was in fact a meeting attended by, or by the representative of, every member of the company ................ In these circumstances, it seems to me plain that all the corporators must be taken to have agreed to the directors' written acknowledgment of the debt.' Nobody has a case that Ext.A1 balance sheet and the profit and loss account was not placed in the annual general body meeting of the defendant and got approved by the board of directors a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to have accrued at the date of the balance-sheet, being the date to which the signature of the directors relates." In view of the above judgments, it appears to us that the date of signatures of the directors be construed as the date of effective acknowledgement of the state of indebtedness of the company. On the matter of Settlement Offers made: 23. The Financial Creditor has argued by relying on the judgment of the Hon'ble Supreme Court in the case of ITC Limited vs. Blue Coast Hotels Ltd. & Ors. which reads as follows: "Letter of Undertaking 'Without Prejudice' 35. Much was sought to be made of the words "without prejudice" in the letter containing the undertaking that if the debt was not paid, the creditor could take over the secured assets. The submission on behalf of the debtor that the letter of undertaking was given in course of negotiations and cannot be held to be an evidence of the acknowledgement of liability of the debtor, apart from being untenable in law, reiterates the attempt to evade liability and must be rejected. The submission that the letter was written without prejudice to the legal rights and remedies available under any law and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontinuous cause of action under Section 19 filed by the respondent - 'Financial Creditor' which is pending before the DRT. 29. Part V (First Division) of Limitation Act relates to 'Suits relating to immovable property' to recover possession of the property mortgaged and afterwards transferred by the mortgagee for a valuable consideration. The period of limitation is 12 years since the transfer becomes known to the plaintiff [Article 61(b)]. 30. In view of the aforesaid position of law, the property having mortgaged, we also hold that the claim is not barred by limitation as the period of limitation is 12 years with regard to mortgaged property and in terms of Section 5(7) read with Section 5(8) as the property is mortgaged, Respondent No. 2 also comes within the meaning of 'Financial Creditor'." 26. In view of the law laid down by the Hon'ble Supreme Court in ITC Limited (supra), we hold that the offer of one Time Settlement (OTS) made by the Corporate Debtor to the Financial Creditor constitutes an acknowledgement of liability within the meaning of section 18 of the Limitation Act, 1963. The Judgment of the Hon'ble Allahabad High Court in Shibc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein; (iii) Any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002; (iv) The recovery of any property by an owner or lessor where such property is occupied by or in possession of the Corporate Debtor. (c) Notwithstanding the above, during the period of moratorium: (i) The supply of essential goods or services to the corporate debtor, if continuing, shall not be terminated or suspended or interrupted during the moratorium period; (ii) That the provisions of sub-section (1) of section 14 of the IBC shall not apply to such transactions as may be notified by the Central Government in consultation with any sectoral regulator; (d) The moratorium shall have effect from the date of this order till the completion of the CIRP or until this Tribunal approves the resolution plan under sub-section (1) of section 31 of the IBC or passes an order for liquida ..... X X X X Extracts X X X X X X X X Extracts X X X X
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