TaxTMI 
TaxTMI 
2020 (2) TMI 1342
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....her securities in 2010. By a Deed of Assignment dated 31st December, 2012, the financial creditor stepped into the shoes of Assignor. The financial creditor did the last restructuring on 21st March, 2013. The loan was recalled on 3^rd February, 2015 by virtue of revocation of settlement package. The corporate debtor, on 23 rd July, 2015, wrote a letter to the financial creditor requesting for re schedulement of the outstanding amount in terms of the 'term sheet' dated 21st March, 2013 entered into with the financial creditor. This was followed by another correspondence vide letter dated 14th August, 2015, wherein reasons for delays in past and other facts were also disclosed. Proposal was also given as to how the restructuring / re schedulement could be done. Again, a letter was written on 2nd September, 2015. Thereafter, vide letter dated 9th November, 2015, the financial creditor rejected the settlement proposal and in such letter, it was also made clear that right to take recourse of appropriate legal remedy was always with the financial creditor. The corporate debtor again, vide its letter dated 5th April, 2016, submitted a revised proposal for re schedulement of the ou....
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....er infirmities as well and thus, the application did not confirm to the requirements of IBC, 2016 and regulations made thereunder, hence, liable to be dismissed. It was also contended on behalf of the corporate debtor that mortgage of the land was no more a valid ground as the same had already been divested from the corporate debtor. 5. In the rejoinder, the Ld. Counsel for the financial creditor again placed reliance on the decision of this Authority in the case of associated concern and contended that all these aspects had duly been considered therein. 6. We have considered the submissions made by both parties and have also perused the material on record. The dispute surrounds around the aspect whether the letters written by the corporate debtor constitute acknowledgement of debt or not in accordance with the provisions of Section 18 of the Limitation Act, 1963. First letter written to the financial creditor dated 23rd July 2015 is reproduced hereunder, which would sufficiently help us in arriving at a conclusion as subsequent letters are more or less on the same lines. "This is in regard to the term sheet dated March 21, 2013 executed between Asset Reconstruction ....
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.....78 lacs asfollows: a) Rs. 205.89 lacs to ARCIL on account of Interest Dues (Net of TDS) b) Rs. 58.89 lacs TDS on Interest dues has been deposited till date. The balance unpaid dues as per the above table is outstanding for payment as on date. The same is summarised as follows: a) Unpaid Outstanding Interest Dues (After deducting the aforesaid payment Made directly to you and also the TDS deposits) Rs. 639.77 lacs b) Unpaid Outstanding Principal Dues Rs. 844.82 lacs 2) Future Dues as per the aforesaid term sheet The future dues as per the aforesaid term sheet are as follows: All figures in R. Lacs Due Date Interest Due Interest Due Interest Due Principal Due Principal Due Principal Due MJML RPPL Total MJML RPPL Total 31 Jul 15 12.39 3.40 15.79 31 Aug 15 12.39 3.40 15.79 30 sep 15 11.99 3.29 15.28 331.54 90.87 422.41 31 Oct 15 6.19 1.70 7.89 30 Nov 15 ....
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....rising, we will settle and pay in line with the other settled cases. This process involved substantial amount of our time, effort, resources and funds which had to be diverted away from the process ofproject development. B) Substantial Expenses incurred to settle matters In the past 3-4 of years, we had to spend substantial funds to settle various related matters. These include: Labour Dues Rs. 400 lacs Statutory Dues Rs. 90 lacs Professional / Legal/ Liaisoning Expenses Rs. 30 lacs Site Office Admin / Other Expenses Rs. 100 lacs During these problems, we also paid you approx Rs. 265 lacs (including TDS) till date. Promoters had to keep pumping more funds and apply more time & resources to settle these problems. C) Recessionary market conditions In addition to the above, there was a general economic downturn prevailing in the country More specifically the real estate market in India was going through a severe downturn. Even in the leading metro cities of the country, huge inventory of empty space remained unoccupied for lack of customers. The situation....
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....arent that the letter has been written by the corporate debtor to the financial creditor. It has been addressed accordingly and duly signed by the director of the corporate debtor. In the aforesaid letter, as apparent, the first detail is regarding present outstanding dues and related payments made. Second point is regarding future dues as per the agreed term sheet. In third point, reason for delays in past have been explained. In fourth point, a proposal has been made to sanction the reschedulement and terms & conditions so as to enable the corporate debtor to meet its obligations. 8. In our view, the above observations sufficiently establish the fact of acknowledgement of debt / liability by the corporate debtor, hence, the period of limitation needs to be computed from the date of such proposal. Having said so, we further find that such acknowledgement is well within original period of limitation from the date of last restructuring which was done on 21st March 2015, hence, this condition of Section 18 of the Limitation Act, 1963 is also met. 9. As regards the nature of acknowledgment, this Bench had dealt with the same in a few decisions on earlier occasions, hence, we con....
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.... in the case of Hari 0m Transport vs MSP Metallics Ltd. CP(IB) No. 116/KB/2019 Order dated 15.10.2019 wherein the Tribunal 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. It is also noteworthy that thereafter there have been no supplies or payment by the respective parties. As far as Corporate Debtor is concerned the main plea is that the debt is barred by limitation. For this purpose, the e-mail dated 19th April, 2016 has been claimed as not a proper acknowledgement of debt under Section 18 of Limitation Act,1963. It has been claimed so far the reason that the said e-mail was addressed to Baba Gora Transport and not to the Financial Creditor. On perusal of the records, it is noted that the said e-mail is, in fact, has been addressed to mail ID i.e. babaqoratransport@amai/.com which is not of the Financial Creditor but statement of account of Financial Creditor has been attached. To express our view about the ....
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....ssed 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 no other facts have been mentioned, hence, can it be said to be an acknowledgement of debt. This question again leads us to explanation (a) above wherein it has been stated that an acknowledgement may be sufficient though it omits to specify exact nature of property or right. " Further, in case of Trinetra Electronics Ltd. Vs McNally Bharat Engineering Co. Ltd. In CP (1B) No. 1506/KB/2018 Order dated 16.10.2019, Tribunal held as under : "5. We have considered submissions made by both sides and have also perused the materials on record. The question for our consideration arises is that (i) whether debt is barred by limitation or not; (ii) whether the letters dated 29/1....
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....ent 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 acknowledgement 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 between the parties whereby acknowledgement of debt can be inferred as no specificformat has been prescribed. 8. Having stated so, we also take into consideration the provision ofSec.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 s....
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....ebt then that would render such averment meaningless. Legally such averment bind party making them. Doctrine of estoppel applies without any restriction in commercially and legally. Accordingly, we hold that such statement constitute acknowledgment. In this regard, we further take the assistance of the provision of explanation (a) of Sec.18(1) of Limitation Act, 1963 wherein scope of acknowledgment has been given in a widest possible manner. It is also to be noted that writ petition was filed within a period of 3 years from the date of issue of recall notice and, hence, for this reason also provisions of Sec.18 of the Limitation 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 Sec.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 acknowledgement before expiration exists only under Sec.18 of the Limitation Act, 1963. " 21. From the perusal of the above judicial decisions, it may be noted that the explanation (a) o....
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....therfunding to save their Bank accountfrom getting NPA. The last three paragraphs of the aforesaid letter show that to save the Bank Account from getting NPA and citing the good reputation and goodwill, the 'Corporate Debtor' agreed to pay the amount and acknowledged the dues. In view of the letter dated 18th March, 2016 written to the Bank, NCLAT has held that the period of limitation stands shifted to the date on which the Corporate Debtor agreed to pay and thus, held that the Application under Section 7 of the Code was not barred by limitation. " Thus, the Hon'ble NCLAT itself has reconsidered the issue and decided that such kind of letters / applications constitute acknowledgement of debt within the meaning of the provisions of Section 18 (explanation (a) to Section 18) of Limitation Act, 1963. Thus, in view of the subsequent decision, the case relied on by the corporate debtor is not binding on us. 12. Although we have already held that such kinds of letters constitute an acknowledgement of debt. However, considering the general importance of the issue and its recurring nature, we consider it pertinent to reproduce the findings of the Hon'ble Sup....
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....statement. ... Stated generally courts lean in favour of a liberal construction of such statements though it does not mean that where no admission is made one should be inferred, or where a statement was made clearly without intending to admit the existence of jural relationship such intention could be fastened on the maker of the statement by an involved or fa-fetched process of reasoning. . in construing words used in the statements made in writing on which a plea of acknowledgement rests oral evidence has been expressly excluded but surrounding circumstances can always be considered. 7. The effect of the words used in a particular document must inevitably depend upon the context in which the words are used and would always be conditioned by the tenor of the said document. " 13. We are further of the view that the contents of letter clearly indicates the existence of jural relationship between the parties such as that of a debtor and a creditor and there is also an admission of the liability of a debt, hence, based on the parameters as set out by the Hon'ble Supreme Court in the aforesaid decision, there remains no iota of doubt that such letter constitutes an ack....
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....Here, the respondent, Mr. Rashid was not offering any concession. On the contrary, he was seeking one in respect of an undisputed debt. Neither an offer ofpayment nor actual payment. " We, thus, find that the mere introduction of the words "without prejudice" have no significance and the debtor clearly acknowledged the debt even after action was initiated under the Act and even after payment of a smaller sum, the debtor has consistently refused to pay up. In view of the above findings, we do not find any force in this contention of the corporate debtor. 15. The issue on hand can also be looked from other angle, i.e., whether such letter also constitutes a promise to pay within the meaning of Section 25(3) of Indian Contract Act, 1872. It is further to be noted that acknowledgement may not always be a promise to pay as to constitute such acknowledgement as promise to pay, there must be an express/explicit statement to pay. Thus, a promise to pay has element of acknowledgement and in addition to that, there must be an express confession to pay. Thus, considering this legal position as applicable to these letters, in our considered view, it is not merely an acknowledgement....
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....ee. Hence, we admit the same and order as under: ORDER i) The application filed by the operational creditor under section 7 of the Insolvency & Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the corporate debtor, Raigarh Properties Private Limited, is hereby admitted. ii) We declare a moratorium and cause 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 the following: a) The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration pane....