TaxTMI 
TaxTMI 
2022 (3) TMI 117
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....cation filed by Respondent No. 1/Asset Reconstruction Company (India) Limited (hereafter called 'ARCIL') and ordered initiation of Corporate Insolvency Resolution Process (hereafter called 'CIRP')in respect of Respondent No. 2/Uday Estates Private Limited. 2. The brief facts of the case, as stated and argued by the Appellant, are that the Corporate Debtor/Uday Estates Private Limited received financial facilities from the Bank of Baroda through two term loans - the first loan(Term Loan - I) for an amount of Rs. 60 crores vide loan agreement dated 28.7.2009 and the second loan (Term Loan - II) for an amount of Rs. 13 crores vide loan agreement dated 8.1.2011.As the Corporate Debtor could not adhere to the schedule of payment as per the loan agreements, the account of the Corporate Debtor was declared as Non-Performing Asset (NPA) on 31.12.2011. Thereafter, the Bank of Baroda sent a demand notice dated 11.6.2012 under Section 13(2) of the SARFAESI Act, 2002 demanding payment of total amount in default Rs. 79,93,84,596 (Rupees Seventy Nine Crore Ninety Three Lakh Eighty Four Thousand Five Hundred and Ninety Six only) as on11.6.2012. The Bank of Baroda, through a deed of assignment ....
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.... admitted by the Adjudicating Authority vide the impugned order dated 15.11.2021. 4. We heard the arguments advanced by Learned Counsel for both the parties. The Ld. Counsel for the Appellant based his arguments on two issues viz. (i) The appeal is time-barred; and (ii) The Section 7 application, filed by the Respondent No. 1 purporting to be financial creditor, is not maintainable since he is not an investor but a partner of the corporate debtor. 5. The Learned Counsel for Appellant has referred to the two letters dated 3.7.2018 (attached at pp. 517-526 of the Appeal Paperbook Vol.-3) and 11.8.2018 (attached at pg. 527 of the Appeal Paperbook Vol.-3) to claim that these letters were written "Without Prejudice" and, therefore, these letters cannot be relied upon for extension of limitation of the Section 7 application. He has referred to the judgments of the Hon'ble Supreme Court in BK Educational Services Private Limited versus Parag Gupta and Associates (2019 11 SCC 633) and Jignesh Shah and Anr. versus Union of India and Anr.(2019 10 SCC 750) to claim that Limitation Act and its provisions are applicable to the applications under IBC. He has argued that any communication w....
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.....7.2009 and 8.1.2011 respectively. The loan account of Corporate Debtor was declared as NPA on 31.12.2011 and the Bank of Baroda assigned the debt of the Corporate Debtor to ARCIL vide deed of assignment dated 13.3.2013. Earlier, the Bank of Baroda sent a demand notice dated 11.6.2012 under Section 13(2) of SARFAESI Act, 2002 demanding payment of Rs. 79,93,84,596 which is the debt amount in default of payment as on 11.6.2012 from the Corporate Debtor. He has further argued that after declaration of the loan account of the Corporate Debtor as NPA, the Corporate Debtor acknowledged the outstanding loan amounts along with interest in its balance sheet for financial Year 2011-12, signed on 3.9.2012 and again in its balance sheet for financial year 2012-13 signed on 4.9.2013. He has also claimed that the ARCIL, which had stepped into the shoes of the erstwhile financial creditor/Bank of Baroda, filed a case before DRT and obtained judgment in its favour on 29.4.2016whereby the Corporate Debtor was directed to pay the dues of the Respondent No. 1/ARCIL within nine months by three quarterly instalments. A review filed by the Corporate Debtor against DRT's judgment dated 29.4.2016 was ....
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....ut Prejudice" for acknowledgement of the loans, the Learned Counsel for Respondent No.1 has cited the judgment of Hon'ble Supreme Court in ITC Limited versus Blue Coast Hotels Limited and Ors (supra) to emphasize that the note "Without Prejudice" does not have any significance in the present matter, and both the letters dated 3.7.2018 and 11.8.2018, which contain the remark "Without Prejudice", provide valid acknowledgment of the debt by the Corporate Debtor and that is what is relevant for calculating limitation of the Section 7 application. He has also pointed out that the corporate debtor has explicitly admitted the debt amount which was adjudicated by the DRT-III which is also an implicit admission/acknowledgement of the debt. He has also claimed that in view of the acknowledgment of the debt in the balance sheets for FY 2011-12, FY 2012-13, FY 2017-18, FY 2018-19 and FY 2019-20, all of which are on record, his case of extension of limitation is made out, even if he doesn't rely on the two letters dated 3.7.2018 and 11.8.2018 for extension of limitation. 12. On the basis of his arguments, the Learned Counsel of Respondent No. 1 has urged that since the debt is clearly wi....
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....ght of the submissions of both the parties. 16. The letter dated 3.7.2018 (attached at pg. 517 of Appeal paperbook Vol.-3) includes the following: - "Dear Sir, This is in reference to our meeting held on 26 June, 2018 at the office of ARCIL in Mumbai, where Uday Estates were represented by the Director of the company Mr. Ajay Gupta and Mr. S.M. Sharma CFO with the officers of the ARCIL, where it was decided that the company will submit afresh settlement proposal and will engage Jones Lang LaSalle (JLL), the esteemed real estate company, to sell the project of the company in parts. The submission of the settlement proposal is "Without Prejudice" to our rights and contentions as the matter is presently pending at the courts. This settlement proposal is being given in principle-to-principle for this proposal only and without going in the merits and demerits of this case." 17. This letter then goes on to provide calculation of interest in three scenarios and a proposal is then put forward regarding disposal of various floors, basements and terrace of the hotel to achieve the best sale price. The letter goes on to state as follows: - "If proposal i....
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....g of "Without Prejudice". We tend to agree with the view that the two judgments do not provide support to the contentions of the Appellant. 19. On the other hand, the Learned Counsel for the Respondent No. 1/ARCIL has relied on another paragraph 35 of Hon'ble Supreme Court's judgment in ITC Limited case(supra) which is as follows:- "LETTER OF UNDERTAKING "Without Prejudice" "35. Much was sought to be made of the words 'without prejudice' in the letter containing the undertaking that if the debt was not paid, the creditor could take over the secured assets. The submission on behalf of the debtor that the letter of undertaking was given in the course of negotiations and cannot be held to be an evidence of the acknowledgment of liability of the debtor, apart from being untenable in law, reiterates the attempt to evade liability and must be rejected. The submission that the letter was written 'without prejudice' to the legal rights and remedies available under any law and therefore, the acknowledgment or the undertaking has no legal effect must likewise be rejected. This letter is reminiscent of a letter that fell for consideration in Spencer's case as pointed out ....
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....rties. It is not a precondition that the correspondence bears the heading without prejudice. If it is clear from the surrounding circumstances. That the parties were seeking to compromise the action, evidence of the content of those negotiations will, as a general rule, not be admissible. The converse is that there are some circumstances in which the words are used but where the documents do not attract without prejudice privilege. This may be because although the words without prejudice were used, the negotiations were not for the purpose of a genuine attempt to settle the dispute. The most obvious cases are first, where the party writing was not involved in genuine settlement negotiations, and secondly, where although the words were used, they were used in circumstances which had nothing to do with negotiations. Surveyors' reports, for example, are sometimes headed without prejudice, although they have nothing to do with negotiations. The third case is where the words are used in a completely different sense." 22. We find that the said letter dated 11.8.2018 (supra) very clearly mentions the debt as it is crystallized in the judgment of DRT-III and also shows inclination to pa....