2022 (10) TMI 437 - AT - Insolvency and Bankruptcy

Dismissal of Appeal Challenging Liquidation Under Insolvency Code due to Debt Acknowledgment

MANOJ JAYASWAL Versus PUNJAB NATIONAL BANK, JAS INFRASTRUCTURE AND POWER LIMITED

The appeal challenging the liquidation of 'Jas Infrastructure and Power Limited' under the Insolvency and Bankruptcy Code, 2016 was dismissed. The court ... Liquidation of Corporate Debtor - correctness of the approach of the Adjudicating Authority in opining that the period of limitation would start running from the date of acknowledgment of debt in the balance sheet by the Appellant - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - 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. The appeal is denuded of merits and the same is hereby dismissed. Issues:1. Application for liquidation of Corporate Debtor allowed under the Insolvency and Bankruptcy Code, 2016.2. Contention regarding the limitation period for filing the application under Section 7 of the Code.3. Appeal against the order dismissing the application for recalling the previous order.4. Challenge to the order dated 16.10.2019 on the grounds of limitation for filing the application under Section 7 of the Code.Issue 1: Application for Liquidation:The appeal was against the order allowing the liquidation of the Corporate Debtor, 'Jas Infrastructure and Power Limited,' under the provisions of the Insolvency and Bankruptcy Code, 2016. The Resolution Professional had filed an application under Section 33(2) of the Code, which was granted by the Adjudicating Authority.Issue 2: Contention on Limitation Period:The Respondent No. 2 contested the application under Section 7 of the Code, arguing that it was time-barred as it was filed after three years from the date the account was declared as NPA. The Adjudicating Authority rejected this contention, stating that the acknowledgment of the debt in the balance sheet of the Respondent No. 2 on 31.03.2016 constituted an acknowledgment under Section 18 of the Limitation Act, thus making the application within the limitation period.Issue 3: Appeal Against Dismissal Order:The Appellant had previously filed an application for recalling an order but it was dismissed on the grounds that the Tribunal lacked the power to recall its own order. Subsequently, an appeal against this dismissal was withdrawn by the Appellant with liberty to pursue legal remedies in another Company Appeal.Issue 4: Challenge on Limitation Grounds:The Appellant challenged the order dated 16.10.2019 primarily on the basis that the application under Section 7 of the Code was time-barred. The argument focused on the start date of the limitation period, contending that it should have been from the date the account was declared as NPA, i.e., 15.06.2015, rather than the date of acknowledgment in the balance sheet on 31.03.2016.The judgment dismissed the appeal, emphasizing that the acknowledgment of debt in the balance sheet constituted an acknowledgment under Section 18 of the Limitation Act. The legal position was supported by various court decisions, leading to the conclusion that the appeal lacked merit. No other points were raised, and the appeal was dismissed without costs.