TaxTMI 
TaxTMI 
2020 (1) TMI 1260
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....Work Order No. 047 dated 16.10.2007 for supply of Sand Plant Equipment which involved erection, installation and commissioning as well. The total value of the Work Order was Rs. 71,98,668/- out of which two invoices aggregating to Rs. 45,94,309/-, i.e., invoice No. WEFE-09111/09-10 dated 31.10.2009 for Rs. 33,09,179/- and invoice No. WEFE-09194/09-10 dated 27.02.2010 for Rs. 12,85,130/-, have remained pending for payment. 3. The Ld. Counsel for the Operational Creditor narrated the basic facts and contended that as per the terms and conditions of the Purchase-cum-Work Order, the Operational Creditor made the supplies, provided the requisite services and raised invoices from time to time. The Corporate Debtor made payments. However, the impugned invoices were not paid in spite of several reminders and discussions from time to time. As regards the aspect of debt being barred by limitation, the Ld. Counsel drew our attention to page no.39 of the Paper Book to submit that this was a letter of acknowledgement, hence, the debt was not barred by limitation as the petition has been filed within the limitation period of three years therefrom. It was further contended that even in reply t....
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.... per provisions of Limitation Act, 1963, hence for this reason as well, the petition is liable to be dismissed. It was also pleaded that these contentions were also substantiated by minutes of meeting. For legal propositions as regards the limitation, the Ld. Counsel for the Corporate Debtor relied on the following decisions:- i) Bharat Petroleum Corporation Ltd. & anr. V. Punjab State Electricity Board & ors., reported in 2018 (3) ICC 535 (Pb. & Hry.) ii) Dr. Prabir Kumar Pal vs. Dr. Dilip Choudhury, reported in 2017(4) CHN (CAL), page 553 iii) Jeevan Diesels & Electricals Ltd. Vs. Jasbir Singh Chadha, reported in (2010) 6 Supreme Court Cases, page 601. 5. In the rejoinder, Ld. Counsel submitted that in this case suit had been filed after filing of petition under section 9, hence, it was an instance of afterthought and hence, not of any relevance for the purpose of admissibility of this petition. 6. We have considered the submissions made by both the sides and material on record. It is not in dispute that supplies have been made before 2010. As per the purchase order, both supplies and erection are included in the scope of work. It is also not in d....
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.... of Attorney. The corporate debtor has placed reliance on the decision of the Hon'ble NCLAT in the case of Palogix Infrastructure Private Limited Vs. ICICI Bank Limited Company Appeal (AT) (Insol.) Nos. 30, 37 and 54 of 2017 order dated 20.09.2017 for the proposition that Power of Attorney holder was not competent to file an application on behalf of the Financial Creditor. However, it is observed that in para 36 of the said order it has been held that mere use of word " Power of Attorney" while delegating such power will not take away the authority of such officer and for all purposes, it was to be treated as an authorization by the financial creditor. Thus, in fact, this order supports the case of the Financial Creditor. The Hon'ble NCLAT in para 38 has also observed that if an officer was authorised to grant loan then it could not be said that such person did not have the power to recover the loan amount or to initiate Corporate Insolvency Resolution Process in spite of default in payment of a debt. In the present case there exists two documents which make the case of the Financial Creditor more strong. 10. In this regard, we also take this opportunity to express....
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....wing event of default, if necessary. This clause also covers a situation where the borrower commits any breach or default in the performance of observance of the material covenants of the facility agreement. Part H relating to documentation also provides that the borrower was to comply with customary covenants such as financial covenants, representation and warranties of the borrower, conditions precedent to the loan and conditions precedent to each disbursement, events of default and consequences of the events of default. It has also been provided that terms and conditions stipulated by other bankers to the extent considered necessary by the Financial Creditor may also be applied. This takes us to study of common loan agreement. In Clause 7.1 of Article VII containing specific events of defaults and remedies for various situations have been provided for. Clause (m) provides that on happening/occurrence of extra ordinary circumstances, the implementation of the project becomes improbable. It also provides that such situation may result into non-fulfilment of obligations by the corporate debtor. Clause(q) provides that event of default would have occurred if one or more events, cond....
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....018 in CA(IB) No. 1005/ KB/ 2019) dated 03.12.2019 are reproduced as under:- "10. We have considered the submission made by both the sides and material on record. The bone of contention is whether debt is barred by limitation or not. In this regard, it is noted that in the financial statements for the year ended 31st March, 2016, the amount of secured loan has been shown. The fact of default has also been mentioned. The said balance-sheet also contain figures of such loan in financial year ended on 31st March, 2015. It has been also noted that in financial year 2011-12 and 2012-13 cheques given by the Corporate Debtor as EMI have been presented by the Bank which have got dishonoured. Such cheques were neither recalled nor any instructions had been issued as regard to cancellation/ non encashment. The Financial creditor has also produced the demand promissory note and other documents to establish the fact of continuation of limitation till December, 2012. Thus, a prima facie case of a alive claim has been established. Various arguments have been made regarding what would constitute acknowledgement and how it is to be determine/ ascertained. In this regard, we state that the....
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....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. [email protected] which is not of the Financial Creditor but statement of account of Financial Creditor has been attached. To express our view about the validity of such e-moil is an acknowledgement of that we consider it necessary to reproduce Section 18 of the Limitation Act, 1963 as under: Section 18(1): Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from time when the acknowledgement was so signed. Section 18(2): Where the writing containing the acknowledgement is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 187....
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....tra Electronics Limited vs. McNally Bharat Engineering Co. Limited in CP (IB) No.1506/KB/2018 Order dated 16/10/2019, this Tribunal has 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 29/1/2018 and 30/7/2018 constitute acknowledgement as per provision of Sec. 18 of the Limitation Act, 1963. It is not in dispute that these letters have been written by the corporate debtor regarding confirmation of outstanding balance of ICD as on 31/12/2017 and 30/6/2018 as per the books of account of Financial Creditor. The confirmation of outstanding balance is to be given to the statutory auditors of the corporate debtor. This exercise cannot be considered in a light manner because reliance on the accuracy of the books of account and financial statement is based upon such standard auditing practice. In the letter dated 29/1/2018 it has been clearly mentioned that such confirmation was in respect of amounts payable in respect ICD as on 31/12/2017 which by itself establishes the fact of acknowl....
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.... the books of account of corporate debtor as on 31/12/2017 and 30/6/2018 and have been sent on 29/1/2018 and 30/7/2018 respectively which are beyond three years period from 30/9/2014, hence, whether requirement of Sec. 18(1) of Limitation Act, 1963 is complied with. To look into this aspect, we have to see whether presentation in the balance sheet by itself constitutes an acknowledgment of debt or not. Now, there have been catena of decisions of NCLT and NCLAT that presentation of debt in the balance sheet constitutes acknowledgment of debt. Since the corporate debtor, in the present case has asked for conformation of balance from the financial creditor as on 31st December 2017 and 30th June 2016 in respect of loan taken in 2014 which itself implies that such loan is continuously outstanding in the balance sheet of corporate debtor from earlier financial years ending on 31st March 2015, 31st March 2016 and 31st March 2017. Thus, this fact by itself goes against the corporate debtor and irrespective of these emails, there exists acknowledgment of debt due and payable which is not barred by limitation. This being so, hence, such emails also fall in the period specified for filing of ....
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...." have been used which means that the provisions of Limitation Act, 1963 would apply to the extent possible and any provision of Limitation Act, 1963 being inconsistent to the provisions of Insolvency & Bankruptcy Code, 2016 will not be applicable. Further, the technicalities of Limitation Act, 1963 would not be applicable as Insolvency & Bankruptcy Code, 2016 is an economic legislation and functions on the principles of summary procedure. As discussed earlier that explanation (a) of Sec.18 of Limitation Act, 1963 provides much flexibility and takes into consideration various factors/situations for explaining as to what would constitute acknowledgement and in view of Sec. 238 and 238A of the Insolvency & Bankruptcy Code, 2016, such provision has to be read further in conjunction with the wider meaning given to the term "claim" in Sec. 3(6) of the Insolvency & Bankruptcy Code, 2016 which includes right to payment even on equitable ground. (Emphasis supplied). 10. In view of above discussion, we hold that there is no merit in the claim of the corporate debtor that the said emails cannot be said to be an acknowledgement within the meaning of provision of Sec.18 of Limitation ....
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....rs as in such a case no other conclusion can be arrived i.e. the outstanding loan continues from earlier years except the figure of the same which may vary due to interest, if any, charged subsequently or due to repayment of loan, if any. 12. We further find no merit in the claim of the Corporate Debtor that no outstanding debt had been shown in CIBIL report or balance had been written off by the Financial Creditor in its books of account, hence, no debt was due and payable for the reason that such action is required as per the guidelines of the RBI as well as the Bank itself and such unilateral action can not result into waiver of loan or in any way lead to a conclusion that debt is extinguished by financial creditor and no claim is to be made by the financial creditor in accordance with law. This view is further fortified by the fact that financial creditor in spite of writing it off have perused various legal options to realise the same and even petition under section 434 of Companies Act, 2013 had been filed. Further, the default of this debt has been shown in the Balance-sheet of Corporate Debtor which by itself negates this plea of Corporate Debtor. Similar is our vi....
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....n's dues, which are also unsecured debts, have traditionally been placed above most other debts. Thus, it can be seen that unsecured debts are of various kinds, and so long as there is some legitimate interest sought to be protected, having relation to the object sought to be achieved by the statute in question, Article 19 does not get infracted. For these reasons, the challenge to Section 53 of the Code must also fail. Epilogue 85. The Insolvency Code is a legislation which deals with economic matters and, in the large sense, deals with the economy of the country as a whole. Earlier experiments, as we have seen, in terms of legislations having failed, 'trial' having led to repeated 'errors' ultimately led to the enactment of the Code. The experiment contained in the Code, judged by the generality of its provisions and not by so-called creditors and inequities that have been pointed out by the petitioners, passes constitutional muster. To stay experimentation in things economic is a grave responsibility, and denial of the right to experiment is fraught with serious consequences to the nation. We have also seen that the working of the Code is be....
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.... money. As opposed to this, an operational creditor means a person to whom an operational debt is owed and an operational debt under section 5(21) means a claim in respect of provision of goods or services". 15. Apart from the above decision, we consider it pertinent to reproduce findings of the Tribunal in the case of Punjab National Bank Vs. M/s. Jas Infrastructure and Power Ltd. in CP (IB) No. 1290/KB/2018 order dated 01.10.2019 as under:- "7. The first objection raised by the Corporate Debtor in regard to competency of person, who has signed and filed application under section 7 of IBC, 2016. We have perused the contents of the relevant documents, which are wide enough in scope and also authorise the signatory of the petition to initiate Corporate Insolvency Resolution Process against the Corporate Debtor. In this regard particular reference of para d(iv) read with para d(ii) can be taken. We are further of the view that the decision of the Hon'ble NCLAT in the case of Ramesh Chander Gupta(Supra) also supports the claim of the Financial Creditor. We are further of the view that in sum and substance, the authority appears to have been vested in the....
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....t a suit for recovery, which is a separate and independent proceeding distinct from the remedy of winding up would, in no manner, impact the limitation within which the winding up proceeding is to be filed, by somehow keeping the debt alive for the purpose of the winding up proceeding." 10. In the present case, it is not in dispute that in the balance-sheet for the financial year ended on 31.03.2016, the Corporate Debtor has categorically admitted the amount outstanding, amount of instalment payable and default in payment of interest. Copy of the relevant pages have been placed on pages 930 and 931 of Paper Book. It is also not in dispute that Corporate Debtor submitted a proposal for revival on 16.02.2015 in which the amount of loan has been admitted. The limitation, if counted from that date, ends on February 15, 2018. As per provisions of Section 18 of the Limitation Act, 1963 if the acknowledgement of debt happens before the expiry of said period, the limitation gets extended. As held in catena of decisions that presentation of debt in the balance-sheet amounts to acknowledgement of debt. Thus, taking into consideration of provisions of Section 18 of Limitation Act, 19....
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....licant. In the present case, it is not in dispute that there is a default in respect of payment of financial debts. Thus, for this reason also, there is no merit in this contention of the corporate debtor. 17. It is further considered necessary to mention that presentation of a debt as liability in the balance sheet is a statement made by the corporate debtor to the world at large that this amount is payable by the corporate debtor. Even for commercial purposes such as credit ratings/ renewals, obtaining of financial assistance or fixation of drawing limits or additional loan facilities etc. such liability is taken into consideration for computing net-worth, current ratio, capital gearing debt equity ratio etc., hence, such presentation is of paramount importance from all perspectives. Thus, the same cannot be ignored for the purposes of proceedings under section 7 or 9 of IBC, 2016. We are further of the view that after taking into consideration above aspects, such presentation also amount to promise under section 25 (3) of Indian Contract Act, 1872. " 8. In the written notes, the Corporate Debtor has taken a plea that notice was not served on the registered office but....