TMI Blog2022 (9) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... rity. There is no iota of doubt that the debentures being a long term borrowing a debt under Section 5 (8) - it is very much clear that the debt is due and payable in law and the amount is exceeding the basic threshold of the Code and hence, we are in agreement with the order of Adjudicating Authority and accordingly, the order of Adjudicating Authority is upheld. The Appeal is accordingly dismissed. - Company Appeal (AT) (Ins) No. 15 of 2021 - - - Dated:- 22-9-2022 - [Justice Rakesh Kumar] Member (Judicial) And [Dr. Ashok Kumar Mishra] Member (Technical) For the Appellant : Mr. Arvind Kumar Gupta, Ms. Henna George, Ms. Shivani Sharma, Advocates For the Respondents : Mr. Sidharth Barua, Mr. Praful Jindal, Advocates for R-1. Mr. Jigar P Shah, CA/RP of R-2 JUDGMENT Dr. Ashok Kumar Mishra , Technical Member The Appeal has been preferred under Section 61 of the Insolvency and Bankruptcy Code, 2016 (herein after referred as Code ) against the impugned order dated 13.03.2020 passed by the Adjudicating Authority (National Company Law Tribunal, Ahmedabad, Indore Bench) in TP No. 152/2019 CP (IB) No. 99/2019. The Adjudicating Authority has admitted the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 1) against M/s. Hotline Glass Ltd. (Corporate Debtor Company) is time barred. (ii) The Insolvency Petition was filed by SASF without the requisite authority. (a) The Appellant has also stated that the Petition filed under Section 7 by Respondent No.1/SASF is time barred. (b) The Ld. Counsel for the Appellant has stated that the date of default is fixed and the sacrosanct even in IBC and the date of loan recall notice does not extend the limitation. (c) The Petition under the Code has been filed on 19.01.2019 which is clearly filed beyond three years from the date of default. Accordingly, the Insolvency petition is time barred and hit by limitation. (d) The Hon ble Apex Court has repeatedly held that Article 137 of the Limitation Act, 1963, will apply to the insolvency proceedings which means that Limitation period applicable to the code is three years. This three years begins to run from the date of default and the date of default is fixed. (e) The various judgments cited by the Appellant are stated below: B.K. Educational Services Pvt. Ltd. vs. Parag Gupta and Associates (2019) 11 SCC 633. Sagar Sharma vs. Phoenix ARC Pvt. Ltd. (2019) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial assistance to M/s. Hotline Glass Ltd. ( Corporate Debtor )/( Respondent No. 2 ) in terms of the Sanction Letter dated 18.02.1999 and subscribed to Non-Convertible Debentures (NCDs) aggregating to sum of Rs. 31.71 Crores issued by the Corporate Debtor under the Subscription Agreement dated 16.03.1999. 24.03.1999 Corporate Debtor allotted NCDs to the IDBI Bank Ltd. 10.09.2003 Corporate Debtor defaulted in its repayment obligations under the Subscription Agreement and IDBI Bank Ltd. declared the account of the Corporate Debtor as a Non- Performing Asset ( NPA ). 30.09.2004 IDBI Bank ltd. transferred and assigned the facilities with all rights, titles and interest, therein with the underlying securities in respect of the facilities availed by Corporate Debtor in favour of the Respondent No.1. 19.03.2005 Corporate Debtor submits a One Time Settlement ( OTS ) thereby acknowledging outstanding dues payable to the Respondent No.1. 20.04.2005 Respondent No.1 accepts/approves the O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent No.1 refuted the contentions raised by Corporate Debtor in its Letter dated 26.08.2008 and reiterated its right to enforce security interest as per law.(Annexure R/9@ Pg. No. 177; Vol I of Reply) 22.09.2008/ 24.09.2008 Corporate Debtor issued letter stating that it has plans to settle its liabilities owed to Respondent No. 1 in an amicable matter and requested Respondent No. 1 to defer legal actions/ proceedings. This Letter further highlights the jural relationship between the Corporate Debtor and Respondent No. 1 as debtor and creditor . (Annexure- R/10 @ Pg. No. 179; Vol I of Reply) 04.05.2009 BIFR dismissed the First Reference Case filed by the Corporate Debtor being non-maintainable . (Annexure R/11 @ Pg. No. 181; Vol I of Reply) 2009 Corporate Debtor aggrieved by the Order of BIFR, filed an Appeal before the Learned Appellate Authority for Industrial and Financial Reconstruction ( AAIFR ). 21.06.2010 AAIFR remanded the matter/First Reference to BIFR for fresh consideration. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 318; Vol II of Reply) N.B. Prior to the expiry of limitation (on 30.08.2016), Corporate Debtor accepts and acknowledges-in-writing its obligations in ABS dated 31.08.2015 for FY 2014-15 (as on 31.03.2015). Thus, period of limitation further extends to a period of 03 years from 31.08.2015 till 31.08.2018. 25.11.2016/01.12.2016 The Second Reference continued till SICA, 1985, was repealed in view of the Notification of the Government of India. ( SICA Repealed ) 04.09.2017 In view of ABS dated 04.09.2017 for FY 2016-17 (as on 31.03.2017), Corporate Debtor has acknowledged its debt owed and payable to Respondent No.1. (Annexure-R/14 @ Pg. No. 336; Vol II of Reply) N.B. Prior to the expiry of limitation (on 31.08.2018), Corporate Debtor accepts and acknowledges-in-writing its obligations in ABS dated 04.09.2017 for FY 2016-17 (as on 31.03.2017). Thus, period of limitation further extends to a period of 03 years from 04.09.2017 till 03.09.2020 (Page No. 350 of Volume II of Appeal Paper Book enclosing Copies of the Balance-Sheets and Annual Reports for the years 2007-08,2008-09,2009-10,2010-11,2011-12,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OTS ) to the present Financial Creditor on 19.03.2005 and such proposal was got approved by the Financial Creditor vide its letter dated 20.04.2005 for payment of 100% of principal amount of Rs. 300 Lakh within three months. It is also evident that the Corporate Debtor duly accepted by signing the above stated one-time proposal. This fact has been further admitted by the Corporate Debtor vide its reply dated 26.08.2008 to the statutory demand notice (under Section 13(2) of the SARFAESI Act) by the Petitioner, wherein, the Corporate Debtor took such plea that company is still keen for OTS and was looking for alternative source of funding including sale of its surplus land. Further, the Company vehemently denied that it defaulted the payment of OTS, but made an attempt to explain that such payment could not be realised due to alleged non- cooperation from its banker, i.e. PNB who fall back from its assurance of finance. Therefore, the company was forced to default on OTS. Hence, such accepting the terms of OTS by the company can be treated a valid and legal acknowledgment of debt under Section 18 of the Limitation Act. 25. Thus, it has held that the Corporate Debtor has accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iary no. 071010203077201812, dated 15.03.2019 which are as follows:- a. Financial Creditor submits that by virtue of transfer deed dated September 30, 2004 executed by IDBI in favour of the applicant i.e. SASF, IDBI unconditionally and irrevocably sold, assigned, transferred and released to and unto the SASF, the financial assistance sanctioned to the corporate debtor along with the underlying securities with an intent that the SASF shall be full and absolute legal owner and the only person to receive the amounts due and payable by the corporate debtor to IDBI. b. That the corporate debtor based on the balance sheet as on 31.12.2006 filed an application under Section 15(1) of Sick Industrial Companies Act, 1985 before the Board of Industrial and Financial Reconstruction (BIFR) in January 2007 and the application was admitted as case No. 09/2007, which was pending before BIFR till SICA was repealed. In view of Section 22 of Sick Industrial Companies Act, 1985, the applicant could not take any steps against the Corporate Debtor for recovery. c. It is further submitted that Corporate Debtor had submitted a settlement proposal which was accepted by applicant on 23.04.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount in default excess of Rs. 1,00,000/- being the minimum threshold limit fixed under IBC, 2016. Considering the circumstances this Tribunal is inclined to admit this petition and initiate CIRP of the Respondent. 28. It is also reported that the present Corporate Debtor belongs to the same group of company. Hence, we find no cogent reason to go for different stand and take a different view from what has been observed and taken by the Adjudicating Authority of NCLT, New Delhi because the fact and circumstances of both cases are based on similar footings. Hence, we follow and reiterate the same in the present matter also. Thus, the present I.B. Petition deserves for admission . 12. We have carefully gone through the pleadings of the parties, the judgments cited by the parties, submissions made by the Ld. Counsels of the parties and are having following observations: (i) It is not in dispute that Non-Convertible Debentures (NCD) has not been taken by the Corporate Debtor/Appellant. (ii) It is also not in dispute that the Date of Default originally is 10.09.2003. (iii) It is also not in dispute that the R-1/Financial Creditor the then existing - IDBI has taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hegde Golay Ltd. v. State Bank of India and held that an acknowledgement of liability that is made in a balance sheet can amount to an acknowledgement of debt. 97. To sum up, in our considered opinion an application under Section 7 of the IBC would not be barred by limitation, on the ground that it had been filed beyond a period of three years from the date of declaration of the loan account of the Corporate Debtor as NPA, if there were an acknowledgement of the debt by the Corporate Debtor before expiry of the period of limitation of three years, in which case the period of limitation would get extended by a further period of three years. (viii) The above Hon ble Apex Court Judgment has made it very clear that entries in the Books of Accounts or Balance Sheet of a Corporate Debtor would amount to an acknowledgement under Section 18 of the Limitation Act. (ix) However, it is to be noted that Notes of Accounts reflecting reconciliation is only depicting inter se tallying of the balances. In any case such large amount of debt will not have any impact on reconciliation. The Balance Sheet also reflects at page no. 357 of Affidavit in Reply that the debentures non-paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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