TaxTMI 
TaxTMI 
2025 (8) TMI 1148
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....eal are : (i) The CD - M/s MKM Diamonds Pvt. Ltd. (formerly known as 'Eurostar Diamonds India Pvt. Ltd.') is a company registered under the Companies Act, 1956. The sister company of the CD - Eurostar Diamond Traders NV, Antwerp Belgium (Eurostar Diamond Traders NV) is a company registered at Belgium. (ii) The SBI, Antwerp Branch, Belgium granted a financial facilities in the nature of bill discounting facility to the Eurostar Diamond Traders NV. The sister concern of the CD has business transaction under which raw and polished diamonds are transacted between the parties. An Invoice No.9001602957 dated 03.10.2016 was issued by Eurostar Diamond Traders NV to Eurostar Diamonds India Pvt. Ltd. (earlier name of the CD), with regard to polished natural diamonds for an amount of USD 1394214.56, which was payable by 31.01.2017. Another invoice issued by Eurostar Diamond Traders NV to Eurostar Diamonds India Pvt. Ltd. vide Invoice No.9001602984 for polished natural diamonds for an amount of USD 14191407.00, which was payable by 02.02.2017. Invoices were accepted and endorsed by the CD. (iii) The SBI, Antwerp, Belgium discounted the Invoices and made the payment t....
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....e ground raised by the CD on limitation was not accepted by the Adjudicating Authority and it was held that application is not barred by time. (vii) Aggrieved by the said order, this Appeal has been filed. 3. Present Appeal was filed by the Appellant on 06.09.2023. The Appeal was taken for consideration on 27.09.2023 and on that date of hearing, learned Counsel appearing for SBI made a statement that Bank has already received the principal amount and with regard to other amount of interest, the Bank is already negotiating with the CD. Recording the said statement, this Tribunal passed an interim order directing that impugned order shall not be given effect to, till the next date. In the Appeal, reply and rejoinder have been filed by the parties. The Appellant has also filed an additional affidavit on 13.09.2023. 4. We have heard Shri Ramji Srinivasan, learned Senior Counsel appearing for the Appellant and Shri Girish Utangale, learned Counsel for the Respondent No.1. 5. Shri Ramji Srinivasan, learned Senior Counsel appearing for the Appellant challenging the order submitted that the application filed by the SBI was barred by time. It is submitted that two Invoices....
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....7,732.21/- has been paid to the Operational Creditor, but the amount of interest is still due, hence the CIRP against the CD be allowed to continue. 7. We have considered the submissions of learned Counsel for the parties and have perused the records. 8. Learned Counsel for the Appellant during submissions has raised only two grounds for challenging the proceedings initiated by Operational Creditor, firstly, the application filed by the Operational Creditor was barred by time and secondly, no interest is payable on the principal amount and the claim of the Operational Creditor by adding interest in the principal amount is unsustainable. Learned Counsel for the Appellant has not raised any other ground to challenge the impugned order. 9. In view of the submissions of learned Counsel for the parties and the materials on record, following two issues arise for consideration in the Appeal: (I) Whether the application filed by the Operational Creditor on 12.07.2022 relying on two invoices dated 03.10.2016 and 05.10.2016, which became due for payment on 31.01.2017 and 02.02.2017, was barred by limitation. (II) Whether the Operational Creditor was entitled to add....
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....reditor has pleaded extension of credit facilities to Eurostar Diamond Traders NV, who had drawn two Invoices dated 03.10.2016 and 05.10.2016 of Eurostar Diamonds India Pvt. Ltd. (now known as M/s MKM Diamonds Pvt. Ltd.). It was pleaded that the CD has accepted the said bills drawn upon them by endorsing their signatures thereon and promised to pay the said Invoice amount. It is useful to notice following statement made under Column-8 in Part-V, which is in paragraph-3 : "Part-V 8.1 & 8.2 xxx xxx xxx 8.3 State Bank of India, Antwerp ("Applicant") had granted certain credit facilities to one Eurostar Diamond Traders NV, Antwerp. During the course of business, said Eurostar Diamond Traders NV (Drawer) had drawn two Invoices bearing invoice no. 9001602957 dated 3 October 2016 and 9001602984 dated 5 October 2016 respectively on Eurostar Diamonds India Pvt. Ltd. now known as MKM Diamonds Private Limited ("Corporate Debtor"). The Corporate Debtor has duly accepted the said bills drawn upon them by Eurostar Diamond Traders NV, Antwerp by endorsing their signature thereon and promised to pay the said invoice amount on the respective due dated 31 January 2017 and ....
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....2017. Another Invoice No.9001602984 for an amount of USD 14191407.00, which was payable by 02.02.2017 was issued. The submission of the Appellant is that from the date when payment became due, limitation was only three years and the application having been filed after the period of three years from the due date, the application is clearly barred by time. On the other hand, the submission of the learned Counsel for the Respondent is based on part payments made by the CD on 15.05.2017 and 26.09.2017, as noted above. The Operational Creditor in his Section 9 application has pleaded the part payments in Part-V, Column-8 in paragraph-4 of the application, as extracted above. The submission, which has been raised by learned Counsel for the Appellant is that payments were not made to the SBI, hence, the conditions, which are required to be fulfilled for acknowledgment within the meaning of Section 19 of the Limitation Act, 1963, are not fulfilled. 15. Learned Counsel for the Appellant relying on the judgment of Hon'ble Supreme Court in Shanti Conductors Pvt. Ltd. vs. Assam State Electricity Board and Ors. - (2020) 2 SCC 677 submits that the Appellant neither issued acknowledgment in wr....
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....star and the balance payment of USD 37,978 was remitted on 4th April, 2018 to SBI wherein the remittance request letter clearly mentioned about set off of USD 11,82,022." 17. Further, when we look into the pleadings, in the Appeal itself, there is a clear pleading by the Appellant with regard to part payments. It is useful to extract following part of the Synopsis given by the Appellant in support of the Appeal. In Synopsis, following two statements have been made by the Appellant at pages-B and C: "Page-B xxx xxx xxx .....Vide Invoice No.900I602957 dated 3.10.2016, Belgium Company sent polished diamonds to appellant-company worth USD 1394214.56.I1 was completely transaction and document outside India i.e. admittedly at Belgium. SBI, Antwerpen, Belgium Branch allowed discounting of the same invoice No.900I602957 to Belgium Company (Eurostar). Appellant Company on 15.5.2017 made part payment of USD 174214.56 in the aforesaid loan account of Belgium Company Eurostar meted with SBI, Antwerpen, Belgium Branch. Page-C xxx xxx xxx Same way, Belgium Company (Eurostar) supplied polished diamonds worth USD 1491407 vide Invoice No.900I602984 dated 5.10.....
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....perations two conditions are essential : first, the payment must be made within the prescribed period of limitation and secondly, it must be acknowledged by some form of writing either in the handwriting of the payer himself or signed by him. We agree with the Subordinate Judge that it is the payment which really extends the period of limitation under Section 20, Limitation Act; but the payment has got to be proved in a particular way and for reason of policy the legislature insists on a written or signed acknowledgment as the only proof of payment and excludes oral testimony. Unless, therefore, there is acknowledgment in the required form, the payment by itself is of no avail. The Subordinate Judge, however, is right in holding that while the section requires that the payment should be made within the period of limitation, it does not require that the acknowledgment should also be made within that period. To interpret the proviso in that way would be to import into it certain words which do not occur there. This is the view taken by almost all the High Courts in India and to us it seems to be a proper view to take. (See Mohd. Moizuddin Mia v. Nalini Bala Devi [Mohd. Moizuddin Mia ....
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....hich was akin to present Section 19 of the Limitation Act, 1963. The Court was considering the question as to what shall be the date of a postdated cheque, whether it shall be the date on which cheque bears or the date the cheque is handed over to compute the start of fresh period of limitation. The Court held that the date which postdated cheque bears subject to payment by the bank shall be treated as a date for start of the fresh period of limitation. In para 8 of the judgment, it was observed that the proviso to Section 20 shall be treated to be complied with for the cheque itself is an acknowledgment of the payment in the handwriting of the person giving the cheque. Para 8 of the judgment is as follows : (Jiwanlal Achariya case [Jiwanlal Achariya v. Rameshwarlal Agarwalla, AIR 1967 SC 1118], AIR p. 1122) "8. This brings us to the question of limitation. The facts are not in dispute now. The promissory note was executed on 4-2-1954. On the same date a postdated cheque bearing the date 25-2-1954 was given by the defendant-appellant to the plaintiff-respondent, the intention being that on being realised it would be credited towards part payment. It was realised sometime a....
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....ate and it had been honoured. The fact that he presented it later and was then paid is immaterial for it is the earliest date on which the payment could be made that would be the date where the conditional acceptance of a postdated cheque becomes actual payment when honoured. We are, therefore, of opinion that as a postdated cheque was given on 4-2-1954 and it was dated 25-2-1954 and as this was not a case of unconditional acceptance, the payment for the purpose of Section 20 of the Limitation Act could only be on 25-2-1954 when the cheque could have been presented at the earliest for payment. As in the present case the cheque was honoured it must be held that the payment was made on 25-2-1954. It is not in dispute that the proviso to Section 20 is complied with in this case, for the cheque itself is an acknowledgment of the payment in the handwriting of the person giving the cheque. We are, therefore, of opinion that a fresh period of limitation began on 25- 2-1954 which was the date of the postdated cheque which was eventually honoured."" 22. In the present case there is specific pleading in the application under Section 9, regarding above two part payments. The present is als....
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....si- judicial proceedings. Consequently, the period from 14.05.2020 to 28.02.2022 shall stand excluded from taking into consideration, the aforesaid order of the hon'ble Supreme Court, if a period from 15.03.2020 till 28.02.2022 is excluded from reckoning, the instant Petition which was filed in L2.07 .2022 cannot be said to be barred by limitation by any stretch of imagination. Therefore, the plea that the Application is barred by time also deserves to be repelled." 23. In view of the aforesaid we answer Question No.(I) in following manner : (I) The application filed by Operational Creditor was well within time. The Operational Creditor was entitled for extension of limitation under Section 19 of the Limitation Act along and the benefit of order of the Hon'ble Supreme Court in Sue Motu Writ Petition (Civil) No.3 of 2020. Question No. ( II ) 24. The submission of the Appellant that there is no agreement with regard to payment of interest with respect to delay in discounting facility. The present is not a case that there is anything on record to prove that there was any agreement between the parties for payment of interest. There was also nothing on record to sh....
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.... which is the liability in respect of the claim which can be made from the Corporate Debtor. 5. In the present appeals, as we find that the principle amount has already been paid and as per agreement no interest was payable, the applications under Section 9 on the basis of claims for entitlement of interest, were not maintainable. If for delayed payment Appellant(s) claim any interest, it will be open to them to move before a court of competent jurisdiction, but initiation of Corporate Insolvency Resolution Process is not the answer." ( Emphasis supplied ) " 25. We may also refer to the judgment of this Tribunal in Shaitanshu Bipiin Vora Suspended Director of Exclusive Linen Fabrics P. Ltd. vs. Shree Hari Yarns P. Ltd. and Anr. - (2025) SCC OnLine NCLAT 694, where considering the said issue regarding inclusion of interest by Respondent No.1, while raising its Invoices, this Tribunal in paragraphs 46, 47, 48 and 49 laid down following: "46. The respondent has also relied upon the judgment of this Tribunal in Prashat Agarwal v. Vikash Parasrampuria [2022 SCC OnLine NCLAT 3781.] in Company Appeal (AT) (Insolvency) No. 690 of 2022 decided on July 15, 2022,....
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....ies, regarding payment of interest on delayed payment, the claim with respect to interest on pending invoices is not sustainable, and on this ground the captioned application is liable to be dismissed. 48. The appellant has relied upon the judgments of this Appellate Tribunal in Krishna Enterprises v. Gammon India Ltd. [2018 SCC OnLine NCLAT 360.] wherein vide order dated July 27, 2018 it was held that "debt" in terms of the Code does not include interest, unless payable in terms of any agreement among parties. The relevant extract of the judgment passed by the Appellate Tribunal is reproduced below : "4. It is submitted that the 'debt' includes the interest, but such submission cannot be accepted in deciding all claims. If in terms of any agreement interest is payable to the operational or financial creditor then debt will include interest, otherwise, the principle amount is to be treated as the debt which is the liability in respect of the claim which can be made from the corporate debtor." (emphasis supplied) 49. It is also contended that the respondent is attempting to misuse the provisions of the code to initiate the corporate insolvency res....
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....rporate debtor are removed and replaced by entrepreneurs. When, therefore, a resolution plan takes off and the corporate debtor is brought back into the economic mainstream, it is able to repay its debts, which, in turn, enhances the viability of credit in the hands of banks and financial institutions. Above all, ultimately, the interests of all stakeholders are looked after as the corporate debtor itself becomes a beneficiary of the resolution scheme-workers are paid, the creditors in the long run will be repaid in full, and shareholders/investors are able to maximize their investment." ( emphasis supplied ) 49.3. S.S. Engineers v. Hindustan Petroleum Corporation Ltd. [(2022) 234 Comp Cas 95 (SC); 2022 SCC OnLine SC 1385.] wherein it was held that (page 109 of 234 Comp Cas): " The National Company Law Tribunal, exercising powers under section 7 or section 9 of the Insolvency and Bankruptcy Code, 2016, is not a debt collection forum. The Insolvency and Bankruptcy Code tackles and/or deals with insolvency and bankruptcy. It is not the object of the Insolvency and Bankruptcy Code, that the corporate insolvency resolution process should be initiated to penal....