9911796707
TMI Blog2021 (12) TMI 1018X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate Debtor seeking confirmation of accounts between the parties which was not answered by the Corporate Debtor. Communication dated 16.01.2020 and legal notice dated 30.01.2020 were issued for repayment which also remained unanswered. An Application under Section 7 of the 'I&B Code' was filed by the Appellant on 20.03.2020 before the Adjudicating Authority claiming that the Corporate Debtor owed an amount of debt amounting to Rs. 39 Lacs. The Application was rejected by the Adjudicating Authority on two grounds firstly that last repayment having been made on 15.03.2016 and the Application under Section 7 having been filed on 20.03.2020 i.e. beyond three years, Application is barred by time. Secondly, the Appellant/ Applicant does not come within the definition of 'Financial Creditor' since there is no document to show any interest has ever been paid to the Applicant by the Corporate Debtor in lieu of the amount. Challenging the impugned judgment this Appeal has been filed. Notices were issued in the Appeal on 04.06.2021 although the Respondents were served but neither any one appeared for the Respondents nor filed any reply. At the time of hearing also, no one appeared for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce with the provisions of the Companies Act is mandatory, any transgression of the same being punishable by law. However, what is of importance is that notes that are annexed to or forming part of such financial statements are expressly recognised by Section 134(7). Equally, the auditor's report may also enter caveats with regard to acknowledgements made in the books of accounts including the balance sheet. A perusal of the aforesaid would show that the statement of law contained in Bengal Silk Mills (supra), that there is a compulsion in law to prepare a balance sheet but no compulsion to make any particular admission, is correct in law as it would depend on the facts of each case as to whether an entry made in a balance sheet qua any particular creditor is unequivocal or has been entered into with caveats, which then has to be examined on a case by case basis to establish whether an acknowledgement of liability has, in fact, been made, thereby extending limitation under Section 18 of the Limitation Act. xxx xxx xxx 40. In CIT-III v. Shri Vardhman Overseas Ltd., 2011 SCC OnLine Del 5599 : (2012) 343 ITR 408, the Delhi High Court held: "17. In the case before us, as rightly p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has the effect of extending the period of limitation for the purposes of Section 18 of the Limitation Act. In Ambika Mills Ltd. Ahmedabad v. CIT Gujarat (1964) 54 ITR 167, it was further held that a debt shown in a balance sheet of a company amounts to an acknowledgement for the purpose of Section 19 of the Limitation Act and in order to be so, the balance sheet in which such acknowledgement is made need not be addressed to the creditors. In light of these authorities, it must be held that in the present case, the disclosure by the assessee company in its balance sheet as on 31st March, 2002 of the accounts of the sundry creditors' amounts to an acknowledgement of the debts in their favour for the purposes of Section 18 of the Limitation Act. The assessee's liability to the creditors, thus, subsisted and did not cease nor was it remitted by the creditors. The liability was enforceable in a court of law." 6. In another recent judgment of the Hon'ble Supreme Court in "Dena Bank vs. C. Shivakumar Reddy and Ors.- Civil Appeal No. 1650 of 2020", after referring to the judgment of "Asset Reconstruction Company (India) Limited" (supra), the Hon'ble Supreme Court again reiterated that Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o show that any interest has ever been paid to the Petitioner by the Corporate Debtor in lieu of the amount, hence, Appellant is not covered in the definition of 'Financial Creditor'. Without entering into the facts of the present case as to whether there was any evidence to show that any interest has ever been paid or not, suffice it to notice the definition of 'financial debt' as defined in Section 5(8). Section 5(8) defines 'financial debt' in following words:- (8) "financial debt" means a debt alongwith 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 de-materialised 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 may be prescribed; (e) receivables sold or discounted other than ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
