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2020 (8) TMI 381
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.... Cold Storage Pvt. Ltd. (Corporate Debtor) claiming that there was debt and default of Rs. 21,61,12,013/- not paid by the Corporate Debtor. The Adjudicating Authority heard the parties and by Impugned Order dated 30th September, 2019, brushing aside question of limitation admitted the Application under Section 7. The present Appeal has been filed by Ex-Director/Promoter of Corporate Debtor taking up the case for the Corporate Debtor. 2. Briefly stated, the facts are that Respondent No.2 - United Bank of India (Bank - in short) had sanctioned fresh seasonal cash credit facility, working capital loan and extended bank guarantee facility to the Corporate Debtor in 2006. As per the Application under Section 7 of IBC filed by the Financial Creditor (Annexure A-10 at Page - 205), it is claimed that there was default in repayment of the facilities on 31st December, 2013 and the Bank declared the Corporate Debtor as NPA (Non-Performing Asset) on 30th March, 2014. The Respondent No.1 - Financial Creditor appears to have been assigned the loan on 29th March, 2017. It is stated that earlier the Bank had moved DRT by way of O.A. No. 530 of 2015 which was pending. The Application under Sectio....
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....h, 2014. The Adjudicating Authority found that the claim was within limitation on the following basis:- "16. However, there is one more dimension as far as case in hand is concerned. The financial creditor and even corporate debtor have produced on record the corporate debtor's balance-sheet for the year ending March, 2016 (page no.300 onwards in paper book). From the perusal of those financial papers of the corporate debtor, it is seen that corporate debtor noted that they have to pay the debt of United Bank of India. Their account is declared as NPA. In short, in the year 2016, the corporate debtor in its balance-sheet acknowledged the debt to be payable by them which is claimed herein by the financial creditor. This acknowledgement of debt in its balance-sheet by the corporate debtor in the year 2016 has brought the claim of financial creditor within period of limitation. It is filed well within period of limitation. We hold that the debt is not time-barred. We answer point no.2 in the negative." 6. Thus, the Adjudicating Authority relied on the balance sheet to hold that there was acknowledgement and thus, the claim was within limitation. 7. Before us, the learned Couns....
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....Judgement in the matter of "In re. Padam Tea Company Ltd." AIR 1974 Calcutta 170 and referred to the said Judgement as under:- "10. Let me first deal with the case of Padam Tea Co. Ltd. (supra). This case relied upon by learned Counsel for the respondent company in support of his plea that acknowledgement contained in the balance sheet could not be relied upon by the petitioner. However, on going through this judgment, one would clearly notice that it does not lay down the proposition which is sought to be advanced by the learned Counsel. That was a case where balance sheet was not confirmed or passed by the shareholders. The Court observed that such a balance sheet, before it could be relied upon, must be duly passed by the shareholders at the appropriate meeting and must be accompanied by a report, if any, made by the Directors for its validation. The principle of law laid down was that statement in the balance sheet indicating liability is to be read along with the Directors' report to see whether both so read would amount to an acknowledgement. There is no dispute about this proposition of law. However, in that case, the Court refused to accept entry in the balance sheet ....
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....ment in question must, however, relate to a present subsisting liability and indicate the existence of a jural relationship between the parties such as, for instance, that of a debtor and a creditor and the intention to admit such jural relationship. Such an intention need not, however, be in express terms and could be inferred by implication from the nature of the admission and the surrounding circumstances. Generally speaking, a liberal construction of the statement in question should be given. That of course did not mean that where a statement was made without intending to admit the existence of jural relationship, such intention should be fastened on the person making the statement by an involved and far-fetched reasoning. In order to find out the intention of the document by which acknowledgement was to be construed the document as a whole must be read and the intention of the parties must be found out from the total effect of the document read as a whole." [Emphasis supplied] 10. Then the High Court after referring to the Judgement in the matter of "Padam Tea Company" examined the case, which was before the Hon'ble High Court, and in the facts of that matter, found that th....
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....ations given that the Company has not defaulted in the repayment of loan or borrowings to the financial institution. What is further recorded is statement of fact that bank has declared the Corporate Debtor NPA and proceedings are pending before DRT. In effect, Company claimed to the Auditors that Company has not defaulted in the repayment of loans or borrowings. This cannot be read as Acknowledgement. 14. We have already referred to the Judgements in the matters of "Sheetal Fabrics" and "Padam Tea" which show that the Balance Sheet would be required to be read with Directors' Report. In the Directors Report which is before us, there does not appear to be any acknowledgement of debt. The statement recorded by the Auditor with regard to the pending litigation in the facts of the present matter, we find, cannot be read as an acknowledgement by Company under Section 18 of the Limitation Act. The Adjudicating Authority did not go into the particulars. In present matter, we are not deliberating whether entry in Balance Sheet can be termed Acknowledgement in law. In our view, even if we are to consider that contents in Balance Sheet could be read as acknowledgment even then if we read t....