TaxTMI 
TaxTMI 
2026 (2) TMI 540
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....dent had filed CP(IB) No. 56/ALD/2023, under Section 7 of the Code read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, on 20.07.2023, before the Adjudicating Authority, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. 3. The Appellant submitted that upon receipt of notice, the Corporate Debtor duly filed a detailed reply along with all requisite annexures, raising a categorical preliminary objection that the Section 7 Application was ex-facie barred by limitation. It was specifically pleaded that the Date of Default was 23.10.2018, and therefore the limitation period of three years expired on 22.10.2021. It was further pointed out that the Respondent committed serious illegalities by not providing adequate Term Loan and Cash Credit limits, and by resorting to illegal "teeming and lading" adjustments between the Corporate Debtor and its sister concern, Naini Auto Tech, thereby falsely portraying both units as going concerns for recovery of principal and interest, even during the period when both accounts had already been declared NPA as per RBI guidelines. 4. The Appellant furt....
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....suant to an RBI audit cannot override the binding RBI Master Circular. The Date of Default cannot be altered at the whims of the Bank. The Appellant contended that the Date of Default in the present case, at the highest, could only be 23.10.2018, being 90 days prior to the Date of NPA, and the limitation expired on 22.10.2021, whereas the Application was filed only on 20.07.2023. 9. The Appellant contended that the Adjudicating Authority failed to properly appreciate binding judgments including B.K. Educational Services Pvt. Ltd. v. Parag Gupta & Associates, (2019) 11 SCC 633; Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries P. Ltd. &Anr., (2020) 15 SCC 1; Jignesh Shah v. Union of India, & Anr., (2019) 10 SCC 750; Laxmi Pat Surana v. Union Bank of India, (2021) 8 SCC 481 and Ramdas Dutta v. IDBI Bank Ltd., [Company Appeal (AT) (Ins) No. 1285 of 2022, all of which unequivocally hold that limitation begins from the Date of Default and not from the Date of NPA. 10. The Appellant submitted that reliance placed by the Adjudicating Authority on Asset Reconstruction Company (India) Ltd. v. Tulip Star Hotels Ltd. & Ors. (2022) IBC Law.in 94 (SC) has been misapplied. A har....
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.... Transfer of Property Act, 1882. 15. The Appellant contended that the cumulative conduct of the Financial Creditor clearly establishes abuse of process, suppression of material facts, and filing of a time-barred application, which ought to have been rejected at the threshold under Section 7(5)(b) of the Code. 16. The Appellant submitted that for all the aforesaid reasons, the Impugned Order dated 03.06.2024 is unsustainable in law and on facts and deserves to be set aside, and the Section 7 Application filed by the Respondent/Financial Creditor deserves to be dismissed as barred by limitation and otherwise not maintainable. The Appellant requested this Appellant Tribunal to allow the appeal and set aside the Impugned Order. 17. Per contra, the Respondent refuted all the averments of the Appellant treating these as baseless and misleading. 18. The Respondent submitted that the stage of admission of an application under the Code, the Adjudicating Authority is statutorily obliged to prima facie determine: (i) that the debt in question qualifies as a financial debt; (ii) that the quantum of such debt exceeds Rs. 1 crore; and (iii) that there exists a default in repayment th....
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.... in Suo Moto Writ Petition (Civil) No. 3/2020 (regarding cognizance for extension of limitation), the period from 15.03.2020 to 28.02.2022 stands excluded for computing limitation under any general or special law in respect of all judicial or quasi-judicial proceedings, thereby rendering the subject application well within the prescribed limitation period. 22. The Respondent stated that the date of default is ordinarily the date on which the default in repayment of the debt is committed by the Corporate Debtor. In the present case, however, it was during the annual inspection by the RBI that the Respondent Bank became aware that the Corporate Debtor had committed such default and that its account had turned NPA. Accordingly, the date of default is the date on which the RBI audit team directed the account to be declared as NPA. The respondent argues that the default date in the Section 7 application merely proves the repayment default occurred and confirms timely filing within the limitation period. The bank specified this date, making the application complete any appellant objection doesn't render it deficient. Even if the default predates NPA classification, the filing rema....
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....n filed by the Respondent within 90 days from 01.03.2022 i.e., on or before 01.06.2022 whereas the application was filed on 20.07.2023. 29. The Appellant also challenged the alleged debt on the strength of the acknowledgement of the debts even after the date of NPA, as the same was not in accordance with the guidance note issued by the Institute of Chartered Accountant ('ICAI') particularly in terms of Clause 8.3.1.2 on the revised schedule - VI to the Companies Act, 1956. The Appellant empathetically pleaded that in the guidance note under "8.3.1- long term borrowing" it has been categorically mentioned that in terms of guidance note, borrowings need to be further classified into different types of borrowings as per guidance note in terms of Clause 8.3.1.1. The Appellant pleaded that in terms of Clause 8.3.1.2, the borrowings were required to be classified as secured and unsecured loans and nature of security was required to be specified separately in each case. 30. It is the case of the Appellant that the balance-sheets of the Corporate Debtor where acknowledgements have been reflected, do not contain such classification and therefore, such acknowledgements cannot be treate....
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....ared as NPA w.e.f. 23.01.2019. We further note that the Impugned Order has gone into the various documentation while establishing the debt and default which included the mortgaged deeds, sanction letters issued by the Respondent Bank, record of the default with CIBIL and NeSL, etc. 38. We also note that Section 7 petition was filed by the Respondent and in part IV, the total amount of outstanding debt is stated to be Rs.100,56,04,473/- and the date of default is stated to be 31.10.2019. Bearing in mind that the disbursement of loan has not been contested by the Appellant, this is taken as undisputed fact. 39. Having regard to the fact that the Respondent claim of default took place on 31.10.2019, whereas the Appellant claims that the default date should have been considered as 23.10.2018 and therefore, the period of limitation should have expired on 23.10.2021. Thus, we find that the bone of contention between the Appellant and Respondent is about date of default and its impact on the limitation. We observe that taking into account the judgement of the Hon'ble Supreme Court of India in Suo-Moto (Supra), according to which the limitation period from 15.03.2020 to 28.02.2022 wa....
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....btor in the balance sheets as discussed above. 44. We also take into account the acknowledgement letters of debt signed by the Suspended Directors of the Corporate Debtor as well as the personal guarantors of the loan dated 31.12.2021 addressed to the Respondent Bank which read as under:- 45. Thus, all six loans have been acknowledged by the Suspended Directors of the Corporate Debtor on 31.12.2021, thereby extending the limitation further. 46. Based on above analysis, we are of the considered view that there was clear debt for which default took place and the same was duly acknowledged by the Corporate Debtor in their various balance sheets as well as the acknowledgement letters discussed and quoted above. 47. Having decided the point of limitation, now we shall examine the other aspect raised by the Appellant, regarding the non-compliance of Clause 8.3.1.2 of the guidance note issued by ICAI and based on which the Appellant pleaded before us that the acknowledgment in the balance sheet cannot be treated as valid acknowledgement. 48. We take into consideration that the guidance note which has been provided by the Appellant in the rejoinder reply dated 18.01.2025 and....
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.....2026. We are constrained to record that till date no written submissions have been submitted, hence we have decided the same, based on record available with us. In any case, written submissions perhaps would have only given same/similar details, as such no prejudice would have been caused to either of the parties. 53. Based on above detailed analysis, we do not find any error in the Impugned Order. The Appeal devoid of any merits stands rejected. No Cost. I.A., if any, are closed. ============= Document 1 Date of Disbursement Loan Account No. Loan Amount Interest Rate 19.01.2017 456000000100344 Rs. 30 crores 11.50% p.a. 19.01.2017 0455600000001585 Rs.10.83 crores 11.50% p.a. 27.11.2017 456000000100354 Rs. 20 crores 10.75% p.a. 17.06.2017 045560000001598 Rs. 8 crores 11.10% p.a. 10.04.2019 0456000000100364 Rs.6.25 crores 11.90% p.a. 03.02.2017 045600000100375 Rs.3.78 crores 9.80% p.a. Document 2 ANNEAURE-NE (PY.2019-2020) RUDRA AUTO TECH ENGINEERING PRIVATE LIMITED HOUSE NO. 62,, RAMJI VIHAR DEWAL CHAUD HALDWANI UR 263139 IN, HALDWANI-263139 CIN : U34100UR2011PTC000065 Rs. in rupees Balance Sheet as et 31st March 2020 Particulars Note No. A....
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....GAN MEHROTRA AND ASSOCIATES Fogfiora Auto Tech Engg. Pit. Line of Direct Suly For mid on turbe Dice TWEETY SINGH Director DIN: 03574841 SAURABH BHARDWAJ PARTNER Memberszip leer 408441 Pince: RUOTAFUR Date: 10/13/2220 Director DIN: 02116823 Document 3 (F.Y 2019-2020) RUDRA AUTO TECH ENGINEERING PRIVATE LIMITED HOUSE NO. 62,, RAMJI VIHAR DEWAL CHAUD HALDWANI UR 263139 IN. HALDWANI-263139 CIN : U34100UR2011PTC000065 7.41,21,374.4 7.41.21,374.60 16,22,84,374.6 3,97,82,000.0 - 9,20,76.374.60 45.55.00.000 8 45,95,00,000.0 0 45,05,00.000 00 45,95,06,000.0 O 45,95,00,000. 45,95,00,000.0 45,95,00,000 8 51,17,94,374. 60 45,95,00,000.0 8 53,36,21,374 6 O O 53,36,21.374. 60 3,97.82.000.0 O 35.15,76,374.6 O 0 0 (3,07,82,000. foc (3,97,82,000.0 53,36,21,374. 0 53,36,21,374.6 51,17,94,374. 60 0 $1,17.94,374.8 3,97,82,000.0 - Loans and advances from related parties 45,05,00.000 00 Loans directors Unsecured 45,95,00,000 51,17,94,374. 60 53,36,21,374 6 35.15,76,374.6 3,97.82.000.0 The Above Amount Includes Unsecured Borrowings Amount Disclosed Under the Hend "Other Current Net Amount Rs. In....
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....00,000 00 40.00.000.00 assers 29,77,90.832.45 34,47,91,982.45 Current assets Current investments 25.60,25.845.00 12.56.10.472 00 Trade receivables 73.42.50.615.61 93, 17.90.252.45 Cash and cash equivalents 2.19.100.57 41.02.219.71 Short-term koens and advances Olhar cument asse's 1,48.41,404.00 4,52.53.967.00 1.00,53 52.774. 18 TOTAL 1,20,31, 23,606.83 Balance Sheet as at 31st March 2021 As at 31st March 2020 Tin rupees Montry received aganat store warrants Share applestien money pending atosmane Hon current labifies Lang tem bemmuligs Short term provisions Intang tie assets Capisawpre-in Progress Intangise assets under dreicomment Short-term koens and advances Olhar cument asse's - For GAGAN MCHPOTRA AND ASSOCIATES Chantered Acteurteres SIGITY SINGH Diester BALPAR- PARTNER. PHe: RUCRAPUR Data: 18/12/2021 UCON: 13400 Document 5 (F.Y. 2020-2021) RUDRA AUTO TECH ENGINEERING PRIVATE LIMITED HOUSE NO. 62,, RAMJI VIHAR DEWAL CHAUD HALDWANI UR 263139 IN, HALDWANI-263139 CIN : U3410DUR2011PTC000065 11,19.52,853.6 7.61,21.374.6 7.41,21,374.80 51.16.62.853 "Loans and advances from "related parties....
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....d their signatures hereundss Vishal Singh Bit Sweaty Singh Borrower 1/We the guarantor/s, concur in the foregoing confirmation and acknowledge my/our liability under the letter of guarantee signed by me/us and above noted and declare that the said letter of gatninice is in full force and effect. 2. Semt Sweety Singh who Vishal Singh. ~ 1. Vishal Singh Sło Uday Pal Singh 6 4. Geeta Sah Wio Late Ganesh La: San, Quela Sa 3. Gesta Sah Wia Harish Chandra Sal, 6. Tara Dult Sito Padma Datt, Gurla Sul 6. Juswan Change gần Hồnlabarand- 8. Comna Dovi wio Lats Deep Singh 7. UdayPal Singh glo Lain Deep Singh" ·. Kandiany Sio Linha Datt Paat 4 (QUARANTORRS) Document 7 The Chief/Se Br/Br Manager The Nainital Bank Lid. Eintragur Branch Pince Rudragte Dule :1.12.2721 Dear Sir/s. 1/Wa Tweeby cordiren and acmewledge my/our indebeinew on 31.12.2021 In the aggregas mam of Ra. 200725677 42 (Rupees Two Crore Seven Lakh Twenty Three Thousand Six hundred Ninety Seva and Talas Sby Two andy ) anstaind in the latter reotrnd slang with this and further sckreredingo tut the deb in secured in the manver statt tomin and hat tee documents....
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.... - ing Imit on 31.12 Vishal Bud Borrowe - 1. Vishal Singh to lương Put Sì 5. Tere Duft Sto Padres Dett. quid Desis the Wie Lais Ganesh Lat Bak, Garda Sad (GUARANTORS) Picx Bladreper Dele 31.12:2/01 The Nabeul But LAd. Faalograr Branchs Dene Sie/s. V/Wa hory contre and acknowledge my/our indebastrem on 31.12.2021 In the aggng butter mocivad along with this and futdue acreseledge that the debt is secured in the manner salud thenin an thet the documents of escurby/and the equisitis mortgage/by dopelt of this doede cotat on 8:51.208 25.01.2017 arad 31.08.2017 es sinted thesin are in hal force and effect and that the security fare weder is simo FOR RUDRA AUTO TECH ENGINEERING PRIVATE LIMITED The common seal of MS Rada Auto Tech Engineering Private Limited wee hereunto affixed pursuant to sescktion posed by the Board Of Directors at their meeting held on 31.12.2021 in the presence of Vashal Singh And Swosty Singh Direckes of the Company. Who have afford har sigruares harwaste Vishal S Borrower I/Vie for guarantee/s, cureur in the firegring climation aral acknowledge my/our labiday under De Inter of gusanone signal by me/us al ch....