TaxTMI 
TaxTMI 
2022 (4) TMI 882
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....herein approved a Cash Credit of Rs. 10.35 crores, warehouse funding of Rs. 12.50 crores and Bank Guarantee of Rs. 0.80 Crore in favour of M/s Deegee Orchards Pvt Ltd, Corporate Debtor. On 04.10.2006, the Appellant renewed the sanction of a total of Rs. 20.35 crores. On 07.03.2008, 05.11.2008, 25.11.2011 and 23.12.2011 the Appellant remodified the terms of sanction and renewed the Credit Facilities extended to the Corporate Debtor. The agreed rate of interest was 11.70% per annum. On 30.06.2014, it is averred that a sum of Rs. 43,04,08,269.00 was due and payable and the account of the Corporate Debtor was declared as NPA. By the impugned order, the Adjudicating Authority, while dismissing the 'Application' has observed as follows:- "22. In sum - (a) The date of default is 30.06.2014. (b) The balance confirmation letter placed on record is dated 30.06.2013/ (c) The letter informing the Corporate Debtor about the accounts having become NPA is dated 13.11.2014. (d) There is nothing on record to show that there is any acknowledgement of debt after the accounts were declared as NPA on 13.11.2014. (e) The OTS proposal is dated 01.08.2018 i.e. long after the expiry of the pres....
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....Act, 1963 as 'Part Payment' was made within three years from the last acknowledgement of liability made in the Balance Sheet of the Corporate Debtor for the Year ending 31.03.2017. The Learned Counsel placed reliance on the judgements of the Hon'ble Supreme Court in Jignesh Shah V. Union of India (2019)10 SCC 750; V. Padmakumar V. Stressed Assets Stabilisation; Asset Reconstruction Company (India) Ltd V. Bishal Jaiswal 2021 SCC OnLine SC 321; Laxmi Pat Surana V Union Bank of India 2021 SCC OnLine SC 267 and Sesh Nath Singh V Baidyabati Sheoraphull Cooperative Bank Ltd 2021 SCC OnLine SC 244. The Learned Counsel for the Appellant contended that merely because of the word "Without Prejudice" in the OTS letters will not bar the Court from scrutinizing such letter and import the true purport and intent of the maker of such documents. In the instant case, the Corporate Debtor has acknowledged the subsisting liability and existence of a jural relationship between the parties and also intended to make payment of the outstanding dues of the Appellant. The Balance Sheet of the Financial Year 2016-17 were signed by the Director on 05.09.2017 which clarifies that there was an admission ....
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....imitation. The Hon'ble Supreme Court in the case of Asset Reconstruction Company (India) Ltd Vs Bisal Jaiswal and other 2021 SCC OnLine SC 321 has held that even though the Balance Sheet is not filed under the statutory requirements of the Companies Act, 2013, the parties can plead for amendment and file the same as an Additional Document. The AGM where the Balance Sheet was considered was held on 13.09.2017 and was filed with ROC much thereafter, beyond the expiry of three years from the date of the said 'default' and hence does not meet the essential requisites under Section 18 of the Limitation Act, 1963. Therefore, the Adjudicating Authority has rightly dismissed the Application filed under Section 7 of the Code as barred by Limitation. Assessment 5. The brief point that falls for consideration is whether the Learned Adjudicating Authority was justified in dismissing the Application filed under Section 7 of the Code, as barred by Limitation. 6. Admittedly the date of default is 30.06.2014 and the letter informing the Corporate Debtor about the accounts having become NPA is 13.11.2014. At the outset, we address to the contention of the Learned Counsel for the Appellant/UC....
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....r, the facts remains that First letter of the OTS proposal was made in June, 2018, whereas the "prescribed period" of three years have already lapsed in June, 2017. 9. The issue of acknowledgement in the Balance Sheet for the Financial Year 2016-17 is required to be decided on the touchtone of the ratio laid down by the Hon'ble Supreme Court in the case of Asset Reconstruction Company (I) Ltd Vs Bishal Jaiswal, 2021 SCC OnLine SC 321. "32. A perusal of the aforesaid Sections would show that there is no doubt that the filing of a balance sheet in accordance with the provisions of the Companies Act is mandatory, any transgression of the same being punishable by law. However, what is of importance is that notes that are annexed to or forming part of such financial statements are expressly recognised by Section 134(7). Equally, the auditor's report may also enter caveats with regard to acknowledgements made in the books of accounts including the balance sheet. A perusal of the aforesaid would show that the statement of law contained in Bengal Silk Mills (supra), that there is a compulsion in law to prepare a balance sheet but no compulsion to make any particular admission, is correc....
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....s in balance-sheets of companies were held to amount to acknowledgements of liability of the companies. 47. Shri Rameshwar Dial referred to the decision of the Privy Council in Consolidated Agencies Ltd. v. Bertram Ltd., (1964) 3 All. E.R. 282. We shall advert to this decision presently when we deal with another argument of Shri Rameshwar Dial, and it is sufficient to state so far as the argument under consideration is concerned that even in this decision of the Privy Council it has been recognised that balance-sheets could in certain circumstances amount to acknowledgements of liability. It cannot, therefore, be said as a general proposition of law that statements in balance-sheets of a company cannot operate at ll as acknowledgements of liability as contended by Shri Rameshwar Dial. 48. The learned counsel next argued that the words used in the entry in the balance-sheet in the present case did not amount to any acknowledgement of liability. We do not think so. The words used in the entry apparently show that in explaining its current liabilities and the provisions made for the same, it was stated that there was a sum of Rs. 7,87,150.42 held in share- holders' suspense ac....
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....t. The balance-sheet together with the Auditors report and the Board's report are then required to be placed before the company at the annual general meeting for adoption of the balance-sheet. After the balance- sheet has been so laid before the company at the annual general meeting, Section 220 requires that three copies of the balance-sheet should be filed with the Registrar. In the present case, the balance-sheet (Schedule D to Annexure J) was signed by the Secretary and two Directors, and Annexure J contains the Auditors' report and the Board's report. It was stated in the judgment of the learned single Judge that the balance-sheet was adopted by the company and the same was not disputed before us. It is thus quite clear that the balance- sheet was signed by duly authorised agents of the company." 34. The judgment of Sabyasachi Mukharji, J. (as His Lordship then was), sitting singly in the Calcutta High Court, has, in Pandam Tea Co. Ltd., In re, 1973 SCC OnLine Cal 93 : AIR 1974 Cal 170, held as follows: "4. Now the question is whether the statements, which are contained in the profits and loss accounts and the assets and liabilities side indicating the liability of the....
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....etween 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. ..." 10. It is the case of the Respondent that the Balance Sheet for the Financial Year 2016-17 was signed by the Directors on 05.09.2017, was adopted by the Members on 13.09.2017 and filed with the ROC on 13.09.2017. At this juncture, we find it relevant to rely on Note 27 of the Balance Sheet for the Year ending 2016-17 which is disclosed in th....
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....016-2017, as observed above, constitute acknowledgement of liability which extended the limitation by three years, apart from the fact that a Certificate of Recovery was issued in favour of the Appellant Bank in May 2017. The NCLT rightly admitted the application by its order dated 21st March, 2019. 140. To sum up, in our considered opinion an application under Section 7 of the IBC would not be barred by limitation, on the ground that it had been filed beyond a period of three years from the date of declaration of the loan account of the Corporate Debtor as NPA, if there were an acknowledgement of the debt by the Corporate Debtor before expiry of the period of limitation of three years, in which case the period of limitation would get extended by a further period of three years. 141. Moreover, a judgment and/or decree for money in favour of the Financial Creditor, passed by the DRT, or any other Tribunal or Court, or the issuance of a Certificate of Recovery in favour of the Financial Creditor, would give rise to a fresh cause of action for the Financial Creditor, to initiate proceedings under Section 7 of the IBC for initiation of the Corporate Insolvency Resolution Process, w....
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....ted Balance was never filed before the Adjudicating Authority and, therefore, cannot be considered at this Appellate Stage. This argument is not sustainable keeping in view the ratio of the Hon'ble Supreme court in the case of Asset Reconstruction Company (I) Ltd Vs. Bishal Jaiswal & Anr (Supra) in which the Hon'ble Supreme court in Civil Appeal No.3765/2020, addressing to the submissions made by the Learned Counsel that no opportunity should be given to the Appellant to go back to NCLAT, the Appellant having already amended its pleadings once, and the Hon'ble Supreme Court having already remitted the matter to NCLAT, still gave one further opportunity to the Appellant to amend its pleadings so as to incorporate what was stated in the written submissions. Even in Civil Appeal No.3228/2020 the Hon'ble Apex Court had given an opportunity to the Appellant to amend its pleadings on payment of cost of Rs. 1 lakh. 15. The Hon'ble Supreme Court in Dena Bank (Supra) has noted that there is no bar in law with respect to amendment of pleadings or filing additional documents before the Adjudicating Authority. Though the Appellant has not brought the Balance Sheet on record before the Adjudic....