TaxTMI 
TaxTMI 
2022 (8) TMI 880
X X X X Extracts X X X X
X X X X Extracts X X X X
..../2019, the Director of 'M/s. Turning Point Estates Private Limited'/the 'Corporate Debtor' preferred this Appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as 'The Code'), challenging the Order of Admission of the Section 7 Application filed by the Respondent/'JM Financial ARC Ltd.'/the 'Financial Creditor'. 2. The Adjudicating Authority, held that the Section 7 Application was well within the period of Limitation and observed as follows: "10. The Applicant has stated that Rs.25,87,87,909.98 was due and payable by the Corporate Debtor to the Applicant as on 22.10.2016. The account of the Corporate Debtor was declared as Non-Performing Asset by the Financial Creditor w.e.f. 31.03.2013. The Applicant filed original Application on 30.09.2013 under section 19 of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 for Recovery of Debts. The Decree passed by Debt Recovery Tribunal, Jabalpur is in favour of Applicant stating that, "the Original Application is partly allowed and ordered as: i. The Defendant No.1 and 7 are liable to pay jointly and severally Rs.65,33,48,041.98 with pendentelite and future in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat the ground of winding up Petition under Section 434(1)(b) of the Companies Act, 1956 is not a case covered under the Code. The ground 'a Company shall be deemed to be unable to pay its debt if execution or other process issued on decree or Order of any Court or Tribunal in favour of a Creditor of the Company is returned and satisfied in whole or in part', is absent in the Code and hence the Petition is not maintainable. * The first Respondent for the first time in their Reply before this Tribunal have pleaded extension of Limitation on new grounds which were never pleaded before the Adjudicating Authority. * A conjoint reading of Sections 3(6), 3(10), 3(11) & 3(12) of the Code does not state that the 'default' accrues upon the date being crystallized by a Court or a Tribunal and therefore it is to be construed that the default occurred on 30.06.2013 which is 3 months (90 days) subsequent to the date of NPA i.e., 31.03.2013. * In support of his contentions that the Section 7 Petition is 'barred by Limitation', Learned Sr. Counsel for the Appellant relied on the following Judgements: 'B.K. Educational Services Private Limited' Vs. 'Parag Gupta ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... * The 'Corporate Debtor' in its Audited Financial Statement pertaining to Financial Year ending on 31.03.2017, admitted their liability towards the Answering Respondent to the tune of Rs.23,59,17,493/-. Further, the Auditor's report dated 26.08.2017 further discloses that "in our opinion and according to the information and explanation given to us, except as stated hereunder the Company has not defaulted in repayment of dues to a Financial Institutions, Bank or Debenture Holders: Particulars Amount Principal Interest Indian Overseas Bank 308,954,152 54,799,736 UCO Bank 198,249,906 37,667,587 Punjab National Bank 198,019,222 45,423,072 Total 70,52,23,280 13,78,90,395 * The Learned Sr. Counsel relied on the following Judgements in support of his case: 'M M Ramachandran' Vs. 'South Indian Bank Ltd. & Ors.', Company Appeal (AT) (Insolvency) No. 1509 of 2019. 'Laxmi Pat Surana' Vs. 'Union Bank of India & Anr.', (2021) 8 SCC 481. 'Sesh Nath Singh & Anr.' Vs. 'Baidyabati Sheoraphuli Co-Operative Bank Ltd. & Anr.', (2021) 7 SCC 313. 'V. Padmakumar' Vs. 'Stressed Assets Stabilisation Fund (SASF) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0, held that Order/decree of the DRT and the Recovery Certificate in favour of the 'Financial Creditor' would extend the period of Limitation to initiate proceedings under Section 7 of the Code. At this juncture, we find it apt to reproduce the relevant portions of the Judgement: "128. In the instant case, Rs.111 lakhs had been paid towards outstanding interest on 28th March, 2014 and the offer of One Time Settlement was within three years thereafter. In any case, NCLAT overlooked the fact that a Certificate of Recovery has been issued in favour of Appellant Bank on 25th May 2017. The Corporate Debtor did not pay dues in terms of the Certificate of Recovery. The Certificate of Recovery in itself gives a fresh case of action to the Appellant Bank to institute a petition under Section 7 of IBC. The petition under Section 7 IBC was well within three years from 28th March 2014"................ .............................................................................. "132. We see no reason why the principles should not apply to an application under Section 7 of the IBC which enables a financial creditor to file an application initiating the Corporate Inso....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nitiate proceedings under Section 7 of the IBC for initiation of the Corporate Insolvency Resolution Process, within three years from the date of the judgment and/or decree or within three years from the date of issuance of the Certificate of Recovery, if dues of the Corporate Debtor to the Financial Debtor, under the judgement and/or decree and/or in terms of the Certificate of Recovery, or any part thereof remained unpaid. (Emphasis Supplied) 7. In the instant case, as can be seen from the dates, the decree passed by the DRT is on 22.10.2016 and the Section 7 Application was filed within three years on 17.12.2019. Keeping in view, the ratio of the Hon'ble Apex Court in 'Dena Bank (now Bank of Baroda)' (Supra) the contention of the Learned Sr. Counsel for the Appellant that a "decree" is not a ''Financial Debt' as per Section 5(8) of the Code is untenable. The question here is not whether a decree is a 'Financial Debt'. The issue here is whether a Recovery Certificate/decree can extend the period of Limitation which has already been answered by the Hon'ble Apex Court in 'Dena Bank (now Bank of Baroda)' (Supra). 8. The Hon'ble Apex Court in 'Laxmi Pat Surana' Vs. 'Un....
X X X X Extracts X X X X
X X X X Extracts X X X X
....an acknowledgement of liability has, in fact, been made, thereby extending limitation under Section 18 of the Limitation Act." 10. In the instant case, it is not disputed that the debt has been acknowledged in the Audited Financial Statements pertaining to the Financial Year ending 31.03.2017, wherein the 'Corporate Debtor' has admitted their liability to the tune of Rs.23,59,17,493/-. The Auditor's Report dated 26.08.2017 also states that 'in our opinion and according to the information and the explanation given to us, except as stated hereunder the Company has not defaulted in repayment of dues to a Financial Institutions, Bank or Debenture Holders: Particulars Amount Principal Interest Indian Overseas Bank 308,954,152 54,799,736 UCO Bank 198,249,906 37,667,587 Punjab National Bank 198,019,222 45,423,072 Total 70,52,23,280 13,78,90,395 11. Having regard to the ratio of the Hon'ble Apex Court in 'Asset Reconstruction Company India Ltd.' Vs. 'Tulip Star Hotels Ltd. and Ors.', Civil Appeal No. 84-84 of 2020, wherein it has been stated that acknowledgement in Balance Sheets further extends the period of Limitation and has observed....