TMI Blog2020 (10) TMI 964X X X X Extracts X X X X X X X X Extracts X X X X ..... present application filed under section 7 of the Code fails the test of limitation in so far as the Code is concerned - Application dismissed. - CP (IB) No.4276/MB.II/2018 - - - Dated:- 16-10-2020 - Mr. Rajasekhar V.K. : Member (Judicial) And Mr. Ravikumar Duraisamy : Member (Technical) For the Financial Creditor : Dr SK Jain a/w Mr Yahya Batatawala, Advocates For the Corporate Debtor : Ms Falguni Shete i/b Intralegal, Advocates ORDER Per : Rajasekhar V. K., Member ( Judicial ) 1. Preamble 1.1. This is a Company Petition filed under section 7 of the Insolvency Bankruptcy Code, 2016 (IBC) by P.H. Combines, a proprietorship concern represented by its proprietor, Mr Pravinkumar Sureshchandra Bhoot ( the Financial Creditor ) seeking to initiate Corporate Insolvency Resolution Process (CIRP) against MDA Agrocot Private Limited ( the Corporate Debtor ). 1.2. The Corporate Debtor is a private company limited by shares and incorporated on 19.12.2011 under the Companies Act, 1956, with the Registrar of Companies, Maharashtra, Mumbai. Its Corporate Identity Number (CIN) is U15122MH2011PTC225134. Its registered office is Shop No.21 22, Gulshan Tower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect matter of a dispute in Suit No.225/2013 which was filed by the Financial Creditor before the Second Joint Civil Judge (Senior Division), Amravati, against the Corporate Debtor. In the said suit, the Financial Creditor dismissed the application of the Financial Creditor for attachment before judgment (para 3 at page 1 of the Reply); (c) Aggrieved by the said order, the Financial Creditor filed an appeal before the Hon'ble Bombay High Court, Nagpur Bench, which dismissed the same vide order 25.06.2015 (para 4 at page 1 of the Reply); (d) The Financial Creditor has suppressed the above material facts from this Authority. The Financial Creditor has not mentioned about the orders passed by the Hon'ble High Court or the Civil Judge (Senior Division), Amravati. The petition must be dismissed solely for suppressing material facts (para 6 at page 1-2 of the Reply); (e) The amount lying with the Corporate Debtor belongs to Manoharlal Bhoot in his capacity as the karta of the HUF (para 7 at page 2 of the Reply); (f) The petition is barred by limitation, as the transaction pertains to the year 2012, whereas the present application has been filed only in the year 2018 (p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he balance sheets has the effect of extending the period of limitation in terms of section 18 of the Limitation Act, 1963. He has quoted a number of judgments in support of his contention. 7. Supreme Court s judgment in Babulal Vardharji Gurjar v Veer Gurjar Aluminium Industries Pvt Ltd another 7.1. Be that as it may, in Babulal Vardharji Gurjar v Veer Gurjar Aluminium Industries Pvt Ltd another, 2020 SCC OnLine SC 647 decided by the Hon ble Supreme Court on 14.08.2020, the Hon ble Supreme Court had occasion to consider a very similar case. In that matter, a section 7 application was filed in March 2018 by the Financial Creditor with the date of default being mentioned as 08.07.2011. It was specifically argued that the liability in relation to the debt in question was consistently acknowledged by the corporate debtor in its balance sheets and therefore, a fresh period of limitation was available from the date of every such acknowledgement and hence, the application was within time. It is worth noting the rival contentions of the contesting parties in that case. Rival contentions of the contesting parties 7.2. It is apposite to note the rival contentions in Babula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facie evidence and the balance sheet disclosing loans and borrowings and forming part of annual returns, indeed constitute the admission and acknowledgement of the corporate debtor of its indebtedness. Therefore, the loan amount acknowledged to be due and payable by the corporate debtor in the balance sheets and annual reports, continuously from the year 2011 and until the year 2017, becomes an admitted fact of evidence and thereby, the period of limitation is extended by dint of applicability of section 18 of the Limitation Act (para 46); Respondent No.1 s contentions (IRP) 7.5. According to the learned counsel (for the IRP), (a) the application filed by the respondent No.2 remains within limitation for the reasons: (a) that the liability of loan is long standing and same is recorded in the balance sheets of corporate debtor for the Financial Years 2011-12, 2012-13, 2013-14, 2014-15, 2015-16 and 2016-17; (b) that by way of letter dated 31.07.2018, request for OTS was made on behalf of the corporate debtor; and (c) OA No.172/2013 was filed before DRT well within the stipulated time period and the same is pending (para 51); (b) The mere date of default or date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e around which the contentions have revolved, is about applicability of section 18 of the Limitation Act, and the effect of the observations occurring in paragraph 21 of the decision in Jignesh Shah (supra). 7.8. The Hon ble Supreme Court emphasised that the Court had consistently applied the declaration of law in BK Educational Services (supra). Application of the rules of limitation to CIRP does not, in any manner, deal with any of the rights of respondent No.2, it only bars recourse to the particular remedy of initiation of CIRP under the Code. Equally, the other submissions made on behalf of the respondent about any stringent application of the law of limitation which was introduced to he Code only after filing of the application by respondent No.2; or about the so-called prejudice likely to be caused to other banks and financial institutions are also of no substance, particularly in the light of the principles laid down and consistently followed by that Court right from the decision in BK Educational Services (supra). 7.9. Observing thus, the Hon ble Supreme Court dismissed the Appeal in Babulal Vardharji Gurjar (supra). 8. Findings 8.1. Article 141 of the Constitu ..... 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