AI Drafter 
TaxTMI 
TaxTMI 
2019 (7) TMI 1558
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.... concern who has provided financial assistance by providing loan to the Corporate Debtor, a company registered under the Companies Act, 1956. 3. The Petitioner submits that a sum of Rs.26,80,666/- (Rupees Twenty Six Lakhs Eighty Thousand Six hundred and Sixty Six) was granted and disbursed as a loan to the Corporate Debtor by the Petitioner from 24.05.2006 to 31.03.2007. It is stated that out of the total amount in default of Rs.74,33,697/-(Rupees Seventy-Four Lakhs) ,Thirty-Three Thousand Six hundred and Ninety-Seven Only) as on 31.03.2018, the Corporate Debtor failed to pay a sum of Rs.26,80,666/- (Rupees Twenty Six Lakhs Eighty Thousand Six Hundred and Sixty Six only)that is the principal amount in default and an interest of Rs.47,53,031.94/- (Rupees Forty Seven Lakhs Fifty Three Thousand and Thirty One and Ninety Four paise only) compounded at the rate of 12% per annum. The working for computation of the claim amount and the Ledger Account of the Corporate Debtor in the Books of the Petitioner is annexed to the Petition. 4. The Petitioner submits that the proprietor of the Petitioner concern, Mr Ashok B. Saraf, was the Director in the Respondent Company until 12.03.2008, ....
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....tition is pertaining to the charge created in favour of the Oriental Bank of Commerce for the Corporate Guarantee given by the Respondent for the Credit facility extended by the Oriental Bank of Commerce to M/s Ajanta Extractions, a Partnership firm and the same has no connection with the present Petition. Further, the No Dues Certificate has already been obtained from Oriental Bank of Commerce against the said charge. A copy of the Charge Satisfaction Certificate is annexed to the Objections. 10. It is submitted by the Respondent that the Petition is barred by limitation. The Respondent submits that the Hon'ble Supreme Court of India in the matter of "B. K Educational Services Private Limited v. Parag Gupta and Associates", Civil Appeal No.23988 of 2017, has held that the Limitation Act, 1963 will apply to the applications that are made under section 7 and section 9 of the Insolvency and Bankruptcy Code, 2016 on and from the commencement of the I&B Code on 01.12.2016. 11. It is further submitted by the Respondent that the amount claimed to be in default is in dispute. The Petitioner provided the money to the Respondent Company in the year 2006-07, while the Petitioner was in....
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....eet acknowledging a loan is considered as an acknowledgement as per section 18 of the Limitation Act, 1963. 19. Further, the Board Report of the Respondent Company for the Financial year 2017-18 clearly states that the Respondent has withheld the loan from the Petitioner due to acts of mismanagement by the Petitioner during his tenure as a director of the Respondent Company. The relevant portion of the Board Report is extracted below: "There is an unsecured loan due to A.K Corporation amounting to Rs.26,80,666/-. The proprietor of A.K Corporation is Ashok Kumar Saraf. The amount due to the firm is being withheld by the Company because Mr. Ashok Kumar Saraf resorted to malpractices and embezzlement of funds while he was Director of the Company and as a result of his malpractices was removed as Director of the Company by the shareholders. Also, he did not hand over the records of the Company, and because of that, many tax matters and cases with various Tax Authorities are still pending. In a few cases, the Department has levied heavy penalty due to non-availability of records and lack of information from Mr Ashok Kumar Saraf but to no avail. The Company also informs that ....
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....nent of interest is not a sine qua non for bringing the debt within the fold of 'financial debt'. The amount disbursed as a debt against the consideration for the time value of money may or may not be interest bearing. What is material is that the disbursement of debt should be against consideration for the time value of money. Clauses (a) to (i) of Section 5(8) embody the nature of transactions which are included in the definition of 'financial debt'. It includes money borrowed against the payment of interest. Clause (f) of Section 5(8) specifically deals with the amount raised under any other transaction having the commercial effect of a borrowing, which also includes a forward sale or purchase agreement. It is manifestly clear that money advanced by a Promoter, Director or a Shareholder of the Corporate Debtor as a stakeholder to improve financial health of the Company and boost its economic prospects, would have the commercial effect of borrowing on the -9- Company Appeal (AT) (Insolvency) No. 616 of 2018 part of Corporate Debtor notwithstanding the fact that no provision is made for interest thereon. Due to fluctuations in market and the risks to which it is exposed, a Company....
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....ply accrues." 27. A plain reading of Article 137 of the Limitation Act, 1963 makes it crystal clear that the limitation commences from the date when the right to apply accrues. In this regard it is relevant to mention that the Hon'ble National Company Law Appellate Tribunal in the case of Pushpa Shah & Anr v. IL & FS Financial Services & Anr in Company Appeal (AT) No.521 of 2018, the Hon'ble Appellate Tribunal has held that the Code has come into force on 01.12.2016, the right to file application under Section 7 of the Code accrues on or after 01.12.2016 and therefore the application cannot be held barred by limitation. The Hon'ble Appellate Tribunal has reiterated the position of law regarding limitation in the case of Gaurav Hargovinda Dave, v. Asset Reconstruction Company (I) Limited & Anr in Company Appeal (AT)(Insolvency) No.655 of 2018 by order dated 02.05.2019 held that the right to file an application under section 7 of the I & B Code, 2016 accrues on or after 01.12.2016. The position of law is well established that the right to apply to section 7 of the I & B Code, 2016 accrues on or after 01.12.2016, the present Petition is filed well within the limitation and deserves....