TaxTMI 
TaxTMI 
2019 (11) TMI 1401
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....assistance to the corporate debtor by way of various loans and foreign currency loans for setting up its plant for manufacture of mild steel structural, allow steel, profiles etc. at Pune. 3. IFCI and IDBI had disbursed loans to the corporate debtor between April 1986 till July 1991. Subsequently, in March 1994 at the request of the corporate debtor IFCI, being a lead banker, along with other associate banks viz. IDBI and ICICI converted the loans into a non convertible debenture on the agreed terms and conditions. It was further agreed that the interest accrued on principal term loan/NCDs for the period April 1994 till March 1996 would be converted into Zero Rate Debentures (ZRDs) which were to be redeemed in three equal instalment on 31/3/ 1997, 31/3/ 1998 and 31/3/ 1999 respectively. In 1997 a Debenture Trust Deed was also executed between the corporate debtor and IFCI, being lead banker, whereby IFCI was appointed as Debenture Trustee in respect of NCDs/ZRDs) in favour of the bank. In June 1997, IFCI issued a letter to the corporate debtor requesting for redemption of two instalment of NC s which fell due on 31/3/ 1997 and 31/3/1998. It was also requested utaneously to issue f....
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....ed on 29/1/2016. On 25/7/2016 the application filed by the corporate debtor before the Hon'ble High Court, Calcutta under the provisions of Companies Act, 1956 was also dismissed. However, the said order was remitted back by the Division Bench of the Hon'ble High Court, Calcutta on 20/4/2017 to get the views of the secured creditors on the reference of BIFR vide its order dated 1/ 1/2014 for winding up of corporate debtor which was pending for final consideration and approval before the Hon'ble High Court. 8.On 24/9/2004 Government of India created special purpose vehicle which acquired the stressed assets of IDBI including account of corporate debtor. Such Stressed Assets Stabilization Fund has filed the present application under Sec.7 Insolvency & Bankruptcy Code, 2016. 9. Ld. Sr. Counsel for the financial creditor narrated the sequence of events which have been stated herein before and contended that initial loans were converted into NCDs/ZRDs which were also renewed/reissued on aforesaid term from time to time. Ld. Sr. Counsel contended that when a reference was filed under SICA before the BIFR on 30/9/2001 and it was registered, hence, by virtue of ....
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.... company and approval of the scheme proposed by the corporate debtor. He also placed reliance on the decision of the Kolkata Bench in the case of Rakesh Pandey vs. JHV Distilleries and Sugar Mills Ltd. CP (IB) No.221/KB/2018 for the proposition that the acknowledgment of loan amount in the balance sheet constituted fresh cause of action and extended the period of limitation. However, nothing worked out. Ld. Counsel contended that based upon the above facts, it was cl that debt was not barred by limitation and application under Sec. 7 of the InsoIvency & Bankruptcy Code, 2016 had been filed within the time, hence, this petition was liable to be admitted. 12. Ld. Sr. Counsel appearing on behalf of the corporate debtor submitted that the account had become NPA on 31/3/2004 which was evident from para 3 of the Transfer Deed signed between IDBI and financial creditor on 30/9/2014, hence debt was barred by limitation. It was also pleaded that in Form 1 Part IV date of default had not been mentioned and, therefore, it was a case of no default. It was an incurable defect and for this reason itself, the petition was liable to be dismissed. 13. Ld. Sr. Counsel further argued th....
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....cable. However, the fact remains that there have been continuous acknowledgment of liability by the corporate debtor either by way of proposal for revival package, presentation in balance sheet or through various letters to the lenders wherein fact of loan/ outstanding debt has been either directly or as a part of correspondence. There have been promises as well to repay the loan. Thus, taking into consideration these aspects, we are of the considered opinion that this constitute an acknowledgment of debt, hence, for this reason the debt is not barred by limitation. 1. We also submit that various aspects relating to the acknowledgment of debter under Sec. 18 of Limitation Act, 1963 have been considered by this Tribunal in a few cases recently. In the case of Hari Omm Transport vs. MSP Metallics Ltd. CP (IB) No.116/KB/2019 Order dated 15/10/2019 wherein the Tribunal has held as under:- 8. It is not in dispute that the Operational Creditor has supplied material during the Financial Year 2014-15. It is also not in dispute that there were agreed deduction out of the bills raised by the Operational Creditor to the tune of Rs. 12,43,281/- resulting into impugned sum remaining unpaid.....
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....ity must be made before expiry of limitation period for filing the suit. If limitation has already expired, it would not revive under section 18. In the present case, last payment has been made in July, 2015 and e-mail has been sent in April, 2016, which is well before the expiry period of three years. Hence, first hurdle is crossed. Now, we have to look whether such e-mail can be construed as acknowledgement of debt as it has been claimed that such mail has not been addressed to the Operational Creditor. From the perusal of the explanation (a) above, it is clear that the claim of the Corporate debtor is not valid because such explanation clearly states that a communication may be addressed to a person other than a person related to the property or right. The Corporate Debtor has also not been able to produce any record to show that such person was not authorised to send such e-mail. Though such claim has been made, the e-mail ID contains particulars of the Corporate Debtor, hence, it cannot be said that e-mail has not been sent for and on behalf of the Corporate Debtor. Another aspect which needs to be considered is that though said e-mail to statement of account has only sent and....
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....ut subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received. Explanation: For the purposes of this section,- (a) An acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set-off, or is addressed to a person other than a person entitled to the property or right; (b) The word "signed" means signed either personally or by an agent duly authorised in this behalf; and (c) An application for the execution of a decree or order, shall not be deemed to be an application in respect of any property or right." From perusal of the explanation (a) to the said section it can safely be concluded that such letters constitute acknowledgment of debt by the corporate debtor, as it is not necessary that the letter should be written to the financial creditor only. It is further noteworthy that explanation (a) takes into its ambit the generally accepted commercial practices of communication....
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....ing the debt alive for the purpose of the winding up proceeding. " The above findings also support our view. 8. Having stated so, we also take into consideration the provision of Sec.238A of the Insolvency & Bankruptcy Code, 2016 which is re-produced as under:- "The provisions of the Limitation Act, 1963 (36 of 1963) shall, as far as may be apply to the proceedings or appeals before the Adjudicating Authority, the National Company Law Appellate Tribunal, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal, as the case may be." 9. Before looking into the ambit and scope of this section, it is stated that this provision was incorporated in Insolvency & Bankruptcy Code, 2016 with the object that stale claims cannot be made alive through the mechanism of Insolvency & Bankruptcy Code, 2016. This is also so because Insolvency & Bankruptcy Code, 2016 is not a recovery mechanism rather a comprehensive code for insolvency resolution old and stale claims cannot be considered as a source or detecting of signs impending insolvency at an early stage. Hence, for this reason also the necessity was felt to make provision of Limitation Act, 1963 applicable to Insolvency ....
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....mitation Act, 1963 are applicable. Even otherwise, in our considered view, such averments made before the Hon'ble High Court amount to promise within the meaning of provisions of ec.25(3) of the Indian Contract Act, 1872 and, therefore, if such promise is made after expiry of original limitation period also, the limitation period gets extended as condition of acknowledgment before expiration exists only under Sec. 18 of the Limitation Act, 1963." 20. From the perusal of the above judicial decisions, it may be noted that the explanation (a) of Sec. 18 of Limitation Act, 1963 is wide in scope and has to be interpreted in the background of the current commercial environment and in accordance with the nature of proceedings of Insolvency & Bankruptcy Code, 2016 21.In this chain, lastly a proposal by way of application under Sec.391 of the Companies Act, 1956 has also been made on 26/4/2016. Hence, if counted from this date, the petition filed under section is also not barred by limitation. We are further of the view of such claims/ proposals also amount to enforceable promise under Sec.25(3) of Indian Contract Act, 1872. Hence, for this reason also neither the claim nor applicatio....
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....nsent of such person has also been filed. It has been claimed that no disciplinary proceedings are pending against the proposed IRP. Thus, we approve his name as IRP. The application is otherwise complete and defect free. Accordingly, we admit the same and order as follows:- ORDER i. The application filed by the Financial Creditor under section 7 of the Insolvency & Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, Ispat Profiles India Limited is hereby admitted. ii. We declare a moratorium and public announcement in accordance with Sections 13 and 15 of the IBC, 2016. iii. Moratorium is declared for the purposes referred to in Section 14 of the Insolvency & Bankruptcy Code, 2016. The IRP shall cause a public announcement of the initiation of Corporate Insolvency Resolution Process and call for the submission of claims under Section 15. The public announcement referred to in clause (b) of sub-section (1) of Section 15 of Insolvency & Bankruptcy Code, 2016 shall be made immediately. iv. Moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016 prohibits....