Hari Charan Gupta vs Mayapur Sales Pvt. Ltd.

08.09.2022 Heard Dr. Anurag Kumar Agarwal, learned Counsel appearing for the Appellant.

This Appeal has been filed against an order dated 24.05.2022 passed by National Company Law Tribunal, Kolkata Bench, Kolkata by which Application under section 7 of IBC, filed by the Appellant has been rejected.

The Appellant’s case is that an amount of Rs. 1 Crore was given as a loan to the Corporate Debtor in April, 2011. The amount became due on 25.07.2011. The Appellant filed an Application under Section 7 on 29.01.2020. The Adjudicating Authority by impugned order dated 24.05.2022 refused to admit the application observing that the Financial Creditor can avail its remedies elsewhere, if so desired and the application has been filed after expiry of three years.

Mr. Anurag Kumar Agarwal, challenged the impugned order contends that there have been acknowledgments in the balance sheet right from 2013-14 to 2018-19 and balance confirmation was given by the Corporate Debtor from 2014-15 to 2018-19. There have been tax deductions also in the years 2012-13 and 2013-14. He submits that the Adjudicating Authority committed error in rejecting the Application observing that the Financial Creditor did not initiate any action against the Corporate Debtor within three years.

Mr. Debal Kr. Banerjee, learned Sr. Counsel appearing for the Respondent submits that the documents showing balance confirmation are not admitted and they have been manufactured. It is submitted that no balance sheet was referred in Section 7 Application claiming extension of limitation under Section 18 of the Limitation Act.

We have considered the submissions made by the learned Counsel for the Parties and perused the material on record. The balance sheets which have been relied upon by the learned Counsel for the Appellant have been filed along with the Appeal. The balance sheets were not referred in Section 7 Application, but the learned Counsel for the Appellant submits that the balance sheets were handed over to Adjudicating Authority.

Learned Counsel for the Appellant has referred to the balance sheet as on 31^st March, 2013, which is filed as Annexure –A-21 at page -98 of the Appeal Paper Book. Learned Counsel has referred ‘Short Term Borrowings’ which is as follows:

Learned Counsel for the Appellant submits that in the column ‘Others’, an amount of Rs. 17,123,450.00 as short term borrowing has been stated. The learned Counsel for the Appellant contends that in the amount of Rs. 17,123,450.00 amount of Rs. 1 Crore was also included and hence stated that the entry in the balance sheet is sufficient acknowledgment within the meaning of Section 18 of the Limitation Act.

We are unable to accept to the submissions made by the learned Counsel for the Appellant. In the short terms borrowing, a mere use of the word ‘Others’ where an amount of Rs. 17,123,450/- has been mentioned, cannot be read to mean that there is an acknowledgement of corporate debt to give benefit of Section 18 of the Limitation Act to the Financial Creditor.

We are of the view that the entry of the balance sheet on which reliance has been placed by the Appellant, cannot be read to give benefit of extension of Section 18 of the Limitation Act and the Adjudicating Authority did not commit any error in refusing to commence insolvency proceeding on the ground that the Appellant failed to initiate any action against the Corporate Debtor within three years. We further notice that the Adjudicating Authority in paragraph-38 of the impugned order has observed:

Thus, we are of the view that the Adjudicating Authority itself has given observation to the effect that remedy may be sought elsewhere, if so desired. We do not find any error in the order of the Adjudicating Authority refusing to admit Section 9 Application.

With these observations, we dismiss of the Appeal.