Court Upholds Debt Payment Orders Based on Balance Sheet Admission

The court upheld the orders of the Debts Recovery Tribunal (DRT) and Debts Recovery Appellate Tribunal (DRAT), dismissing the petitioner's challenge against the debt payment directives based on an admission in the balance sheet. The court interpreted that admissions need not be made during proceedings but could be made before the institution of proceedings. Additionally, the court considered the balance sheet and profit and loss account as admissions of liability under the Indian Companies Act. The court also ruled that the application was filed within the limitation period, ultimately finding no merit in the petition and vacating any interim orders without costs.

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Issues Involved:
1. Validity of the orders passed by the Debts Recovery Tribunal (DRT) and Debts Recovery Appellate Tribunal (DRAT).
2. Interpretation of "admission" u/s 19(20) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and Rule 12(5) of the Debts Recovery Tribunal (Procedure) Rules, 1993.
3. Limitation period for filing the original application before the DRT.

Summary:

1. Validity of the Orders Passed by DRT and DRAT:
The petitioner challenged the orders dated 16-12-2003 by the DRT and 22-3-2006 by the DRAT, which directed the petitioner and respondents to pay a debt amount based on an admission in the balance sheet. The petitioner argued that the application was misconceived and that the admission should be made during the proceedings, not at the interim stage. The Tribunal, however, held that the admission in the balance sheet constituted an admission of liability, and the application was allowed. The DRAT upheld this decision, interpreting that admissions need not be made during the proceedings but could be made before the institution of proceedings.

2. Interpretation of "Admission" u/s 19(20) and Rule 12(5):
The court examined whether an admission in the balance sheet/profit and loss account, not in pleadings or before the Tribunal, could be considered an admission warranting an order for payment. The court referred to Order XII, Rule 6 of the Civil Procedure Code, which allows for judgment on an admission either in the pleading or otherwise. The court concluded that an admission could be in any document or mode provided u/s 17 of the Indian Evidence Act. The balance sheet and profit and loss account, being statutory requirements under the Indian Companies Act, were deemed admissions of liability. The court found no material or explanation from the petitioner to displace this admission.

3. Limitation Period:
The petitioner contended that the original application was barred by limitation, as the cause of action arose from the Profit and Loss Account of 31st March 2000, and the application was filed on 16-6-2003. The court dismissed this argument, noting that the profit and loss account was signed on 1-9-2000, making the application within the limitation period.

Conclusion:
The court found no merit in the petition, upheld the orders of the DRT and DRAT, and discharged the rule. The interim order, if any, was vacated, and there was no order as to costs.

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