Aar Kay Industries (Prop. Indian Securities Ltd.) vs Jatalia Global Venture Ltd.

D. That in the year 2017, The Financial Creditor and Corporate Debtor had a good and cordial relations with each other and the Corporate Debtor approached and requested the Financial Creditor for financial help for business /assistance for business for an amount of Rs.1,00,00,000/- (Rupees One Crore Only) @15% rate of interest. At the request of Corporate Debtor, Financial Creditor after considering the request agreed to pay a sum of Rs.1,00,00,000/-. And accordingly transferred a sum of Rs.50,00,000/- through Cheque/RTGS on 01.09.2017 and further a sum of Rs.50,00,000/- was transferred on 19.09.2017 in the bank account by the Corporate Debtor maintained @ 15% interest per annum. A copy of Bank Account statement of the Corporate Debtor is annexed herewith as ANNEXURE-A3

PART IV

PARTICULARS OF FINANCIAL DEBT

“RA-114/2023: In view of the averments made in the application and the submissions put forth by the Ld. Counsel for the Applicant, the RA-114/2023 is allowed.

IB-263/ND/2023: It is the case of the Petitioner that the amount of the loan was disbursed on 01.09.2017 and 19.09.2017. In the list of dates filed along with the petition, it has been categorically submitted that the Petitioner had been demanding the loan amount from time to time. If such stand of the Petitioner is relied upon, the demand might have reasonably started at least on expiry of one year i.e., from 19.09.2018. If the limitation is counted with reference to said date, the petition should have been preferred by 19th September 2021. However, to explain the delay, the Ld. Counsel for the Petitioner produced Form-16A submitted by the Respondent herein. We are satisfied that the petition is not filed within the prescribed period of limitation. Besides, when at this stage the Petitioner sought to refer the certain documents such as Form-16A qua the CD as well as confirmation of account, the documents are not found enclosed with the petition. As has been clearly stipulated in Section 7 of IBC 2016, the application found not completed in all respects cannot be considered. As per the stand taken by the Petitioner himself, certain documents which he seeks to rely upon could not be enclosed with the petition. Thus, the petition is incomplete.

We may also be not be oblivious of the fact that on the first date of hearing, the Petitioner was not present and the petition had to be rejected for want of prosecution. Indubitably, as per the statutory provision, the decision regarding admission of a petition filed under Section 7 of IBC, 2016 needs to be taken within 14 days. Maybe in exceptional circumstances, the Adjudicating Authority may extend the period but the attitude and approach of the Petitioner do not appear to be for pursuing the petition, and then while appearing to pursue the same stating that the application is not complete and certain fresh documents should be taken on record across the bar cannot be justification to defer the hearing from time to time. It is also quite weird and bizarre that, after the restoration of the petition, the petitioner sought a pass over to espouse the petition, but when he appeared in the afternoon, he again sought to refer to papers that were not enclosed with the petition.

In the wake, the petition IB-263/ND/2023 is rejected.

'5. Learned Counsel for the appellant has relied on the Judgment of Hon'ble Supreme Court in Dena Bank vs. C. Shivakumar Reddy (2021) 10 SCC. 330 which has clearly held that in Section 7 the applicant is fully entitled to amend the application or filed additional documents. It is true that those documents which have been now filed were not filed before the Adjudicating Authority but we in the appeal also, there is no prohibition in accepting those documents. We take these documents on the record.

6.

In facts of the present case we are of the view that ends of justice be served in remitting the matter before the Adjudicating Authority for passing a fresh order, after considering the materials which are brought by both the parties on record.

7.

In result, the order dated 10.08.2023 is set aside, Section 7 application being CP (IB) No. 263/ND/2023 is revived before the Adjudicating Authority. Appellant is allowed two weeks' time to file an additional affidavit brining relevant materials on record for consideration of Adjudicating Authority. Respondent shall have also right two weeks' time to file Reply to the said additional affidavit and thereafter Adjudicating Authority may hear the parties and decide in accordance with law."

"RA-06/2024: In view of the order passed by the Hon'ble NCLAT in Company Appeal (AT) (Ins.) No. 1428 of 2023, on 21.12.2023, IB-263/ND/2023 stands revived. Let the application be listed for consideration and disposal. List the matter on 06.03.2024."

"2.

That the contents of Part IV are wrong and denied until specifically admitted. It is admitted that the Corporate Debtor/Respondent has taken a business loan of Rs. 1,00,00,000/- in two tranches of Rs.50,00,000/- each @15% per annum from the Financial Creditor/Appellant in September, 2017."

“(iv)

certify that there are no disciplinary proceedings pending against me with the Board or ICSI Institute of Insolvency Professionals”

“10.

Section 5 of the Limitation Act provides for an extension for the prescribed period in certain cases where sufficient cause for not preferring the appeal or where the application could not be made within the prescribed time. Section 5 reads as follows:

“5.

Extension of prescribed period in certain cases.— Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908 (5 of 1908), may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.

Explanation.—The fact that the appellant or the applicant was misled by any order, practice or judgment of the High Court in ascertaining or computing the prescribed period may be sufficient cause within the meaning of this section."

11.

Section 18 of the Limitation Act provides that where acknowledgment in writing of the liability is made by a party against whom any right is claimed, a fresh period of limitation shall be computed from the time when the acknowledgment is so signed. The said Section is reproduced hereunder:

“18. Effect of acknowledgment in writing.—

(1)

Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.

(2)

Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received.

Explanation.—For the purposes of this section,—

(a)

an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set off, or is addressed to a person other than a person entitled to the property or right,

(b)

the word "signed" means signed either personally or by an agent duly authorised in this behalf, and

(c)

an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right."

12.

The question in the present case is primarily whether Respondent No.2 would be entitled to the benefit of Section 18 of the Limitation Act and whether Section 5 of the Limitation Act thereof would also be applicable. Although Section 14 of the Limitation Act has also been referred to, but in our opinion, Section 14 will have no application inasmuch as the proceedings under the SARFAESI Act before the DRT cannot be said to be before a Court or Tribunal having no jurisdiction. Respondent No.2, being a Secured Creditor, would definitely have a right to invoke the power under the SARFAESI Act and the said proceedings cannot be said to be without jurisdiction. Therefore, no benefit under Section 14 would be admissible to Respondent No.2 in the present case.

13.

Coming back to the benefit available under Section 18 of the Limitation Act, the following sequence of events and the law thereon would be relevant. The State Bank of India declared the Corporate Debtor as an NPA on 28.06.2013. Therefore, the limitation period would be three years from the last date of the financial year previous to the declaration of NPA, which would be 31.03.2013, and would run up to 31.03.2016. If there were no further intervening circumstances or developments relating to acknowledgment, the contention raised by the appellant that the petition under Section 7 of IBC having been filed much beyond 31.03.2016, in 2020 to be specific on 22.01.2020, the petition would be clearly barred by limitation.

14.

However, there are four major acknowledgments made by the Corporate Debtor after the declaration of the NPA and within the expiry of three years from the said date, details of which have already been mentioned in the previous paragraphs. However, briefly the same are being referred to again.

a)

The Corporate Debtor, in its balance sheet for the financial year 2014-15, which came to an end on 31.03.2015, had acknowledged the debt in its balance sheet for the said year. This acknowledgment of debt in the balance sheet has been held to be a valid acknowledgment for the benefit of Section 18 of the Limitation Act. From the above date the period of three years would run up to 31 March, 2018.

b)

The first OTS proposal is dated 16 March, 2017, within a period of three years of the date of acknowledgment of debt in the balance sheet.

c)

The second OTS proposal is dated 1st January, 2018, again within a period of three years from the date of the first OTS proposal.

d)

The third OTS proposal is dated 16th May, 2019, once again within a period of three years from the date of the second OTS proposal.

15.

The petition under Section 7 was filed on 22nd January, 2020 within three years from the date of the first, second and the third OTS proposals.

16.

The question for consideration would be whether the debt acknowledged in the balance sheet of the financial year would end on 31st March, 2015 and whether the three OTS proposals would give a fresh life of limitation of three years from each of the respective dates. Section 18 of the Limitation Act is the provision on which strong reliance has been placed upon by the Respondent No.2 for seeking such extension of limitation.

17.

A plain reading of Section 18(1) of the Limitation Act would reflect that where any acknowledgment of a liability has been made in writing by the party against whom any right is claimed, a fresh period of limitation would be computed from the time when the acknowledgment was so signed, subject to such acknowledgment being made before expiry of the prescribed period for filing a suit or application in that respect.

18.

Section 18(2) of the Limitation Act may not be applicable in the present case inasmuch as all the acknowledgements in the present case have a date and, therefore, there would be no question of leading any oral evidence to establish the date of the acknowledgement.

19.

Learned Senior counsel for the appellant has strongly contended that all the acknowledgments were firstly, not filed along with the petition under Section 7 of the IBC but were subsequently filed one at the stage of appeal before the NCLAT and two of such acknowledgements have been filed before this Court, as such the same should not be entertained. This argument of the appellant may not have much force to disentitle a financial creditor from claiming its right to recover the dues and initiate proceedings under the IBC."