Aditya Bhatnagar Shareholder And ... vs Bank Of Baroda

[Arising out of the Impugned Order dated 24.03.2025 passed by the Adjudicating Authority, National Company Law Tribunal, Special Bench at Indore in CP (IB) No. 18/MP/2024 and IA/98(MP)2025] In the matter of: Mr. Abhinav Bhatnagar, Shareholder and Erstwhile Management of Extol Industries Ltd. (Under CIRP) Address: B 299 Shahpura Bhopal ...Appellant Versus

1. Bank of Baroda And Ors. Bank of Baroda (CIN: U99999MH1911PLC007676) Registered Office: Bank of Baroda, Baroda House, Near Mandvi, P.B. No. 506, Vadodara- 390005 Branch Address: 1489, Wright Town, Near Manas Bhawan, Jabalpur M.P. (India)

2. Ms. Teena Saraswat Pandey Resolution Professional Registration No. IBBI/IPA-001/IP-P00652/2017-18/11126 Address: 387F, 114 Scheme Part-1, Behind Diksha Boys Hostel, Sant Nagar, Indore, Madhya Pradesh, 452010

3. Extol Industries Limited Through Resolution Professional (CIN: U01122MP1997PLC012390) Registered Office: Extol Tower, Jahangirabad, Bhopal Madhya Pradesh- 462008 ...Respondents Present:

For Appellant : Mr. Gaurav Mitra, Mr. Arjun Gaur, Mr. Vineet Gupta, Ms. Lavanya, Mr. Shaurya, Advocates.

For Respondent : Mr. Abhindra Maheshwari, Mr. Mohan Singh, Advocates for R-1. Mr. Abhishek Naik, Ms. Gulafsha Kureshi, Ms. Deepsikha Mishra, Mr. Falak Zaidi, Advocates for R2 (IRP). WITH Company Appeal (AT) (Insolvency) No. 616 of 2025

[Arising out of the Impugned Order dated 24.03.2025 passed by the Adjudicating Authority, National Company Law Tribunal, Special Bench at Indore in CP (IB) No. 17/MP/2024 and IA/99(MP)2025] In the matter of: Mr. Aditya Bhatnagar, Shareholder and Erstwhile Management of Xyron Technologies Limited (Under CIRP) Address: B 299 Shahpura Bhopal Email ID: aditya@xyroninda.com ...Appellant Versus

1. Bank of Baroda And Ors. Bank of Baroda (CIN: U99999MH1911PLC007676) Registered Office: Bank of Baroda, Baroda House, Near Mandvi, P.B. No. 506, Vadodara- 390005 Branch Address: 1489, Wright Town, Near Manas Bhawan, Jabalpur M.P. (India) Email ID: dbwrig@bankofbaroda.com

2. Ms. Teena Saraswat Pandey Resolution Professional Registration No. IBBI/IPA-001/IP-P00652/2017-18/11126 Address: 387F, 114 Scheme Part-1, Behind Diksha Boys Hostel, Sant Nagar, Indore, Madhya Pradesh, 452010 Email ID: teenasaraswat@yahoo.co.in

3. Xyron Technologies Limited Through Resolution Professional Registration No. IBBI/IPA-001/IP-P00652/2017-18/11126 Address: 387F, 114 Scheme Part-1, Behind Diksha Boys Hostel, Sant Nagar, Indore Madhya Pradesh, Email ID: teenasaraswat@yahoo.co.in ...Respondents

Page 2 of 20 Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025 Present:

For Appellant : Mr. Gaurav Mitra, Mr. Arjun Gaur, Mr. Vineet Gupta, Ms. Lavanya, Mr. Shaurya, Advocates.

For Respondent : Mr. Abhindra Maheshwari, Mr. Mohan Singh, Advocates for R-1. Mr. Abhishek Naik, Ms. Gulafsha Kureshi, Ms. Deepsikha Mishra, Mr. Falak Zaidi, Advocates for R2 (IRP).

JUDGMENT

(Hybrid Mode)

Per: Barun Mitra, Member (Technical)

The present two appeals filed under Section 61(1) of Insolvency and

Bankruptcy Code 2016 ('IBC' in short) by two different Appellants against the

common Financial Creditor arises out of two separate Orders dated 24.03.2025

(hereinafter referred to as 'Impugned Order') passed by the Adjudicating

Authority (National Company Law Tribunal, Special Bench at Indore) in CP(IB)

No. 18/MP/2024 and CP(IB) No.17/MP/2024. By the impugned orders, the

Adjudicating Authority has admitted Section 7 of IBC filed by the Financial

Creditor-Bank of Baroda bringing both the Corporate Debtors into the fold of

Corporate Insolvency Resolution Process ("CIRP" in short). Aggrieved by the

impugned orders, the present two Appeals have been preferred by the respective

suspended management of the Corporate Debtor.

2. Though the factual matrix of both the appeals are not a mirror image of

each other, the questions involved in both the cases from the perspective of facts

and law are largely identical. It is therefore, proposed to deal with the facts of

Company Appeal No. 615 of 2025 in the first place and apply the findings arrived

at on the facts of the Company Appeal No. 616 of 2025.

Page 3 of 20 Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025

3. Setting out the factual background, Shri Gaurav Mitra, the Ld. Counsel

for the Appellant submitted that the Financial Creditor-Bank of Baroda had

sanctioned to Extol Industries Ltd.-Corporate Debtor a term loan of Rs 12.72 Cr.

bearing interest @15.75% p.a. on 30.04.2011 followed by a second term loan.

On 03.05.2011 a Cash Credit Limit of Rs 15 Cr. was also sanctioned bearing

interest @13.25% p.a. The term loans were restructured and the Cash Credit

Limit was renewed by the Bank on 26.06.2013. All instalments payable were

complied with by the Appellant. The Corporate Debtor was regular in repaying

the loan which is substantiated by a No Due Certificate ("NDC" in short) issued

by the Financial Creditor on 16.01.2016. However, for inexplicable reasons, the

Financial Creditor arbitrarily declared the account of the Corporate Debtor as

NPA on 31.03.2016 and basis this date of default filed a Section 7 application in

2024 which has been erroneously admitted by the Adjudicating Authority,

aggrieved by which they have come up in appeal.

4. Assailing the impugned order, it has been contended that the impugned

order failed to take into account that the date of default shown by the

Respondent-Financial Creditor in Part-IV of the Section 7 application was

premised on the classification of the Corporate Debtor as NPA which

classification itself was wrong as it was made in violation of the RBI guidelines.

When the Financial Creditor had issued a NDC to the Corporate Debtor on

16.01.2016, the account of Corporate Debtor could not have been declared as

NPA on 31.03.2016 seventy five days therefrom. For NPA to have occurred on

31.03.2016, the Corporate Debtor was required to be in default since 31.12.2015

to meet the 90 days period as prescribed by the RBI master circular. Submission

Page 4 of 20 Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025 was further pressed that Section 7 petition was time-barred since the date of

default therein was depicted as 31.03.2016, while the Section 7 petition was filed

in 2024 after eight years. Additionally, it was pointed out that the Section 7

petition was admitted ex-parte. Since the Appellant was denied an opportunity

to file a reply, it was pointed out that they filed IA No. 98 of 2025 before the

Adjudicating Authority for grant of another opportunity to file reply but the

Adjudicating Authority rejected I.A. No. 98 of 2025. Having been denied the right

of opportunity to be heard, the impugned order was vitiated for having been

passed in gross violation of the principles of natural justice. It was also added

that the Financial Creditor had invoked the jurisdiction of the Adjudicating

Authority not for purposes of legitimate insolvency resolution.

5. Refuting the contentions of the Appellant, it has been contended by the

Shri Abhindra Maheshwari, Ld. Advocate for Respondent No.1-Financial

Creditor that the plea of incorrect NPA classification is not sustainable. The

objection raised by the Appellant, basis a communication of 16.01.2016, that

the date of NPA is incorrect cannot become a valid ground for rejecting the

Section 7 petition. It was emphatically asserted that for the purpose of

considering a Section 7 application, the only requirement that needs to be seen

by the Adjudicating Authority is the existence of debt and default. The Corporate

Debtor did not dispute debt and default at any stage. The Adjudicating Authority

has clearly noted debt and default at para 17-18 of the impugned order. Since

the default was found to persist even after the account of the Corporate Debtor

was declared NPA, the debt liability was a continuous and subsisting one.

Attention was adverted to the decision of the Hon'ble Supreme Court in the

Page 5 of 20 Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025 matter of M. Suresh Kumar Reddy Vs Canara Bank & Ors. in Civil Appeal

No. 7121 of 2022 wherein it has been held that all that is required to be seen

in deciding a Section 7 application is whether there is debt and default. In the

present case, since debt and default has been proven, and there is continuous

acknowledgment of debt in the balance sheet, the Adjudicating Authority has

rightly admitted the Section 7 application. It was further added that the

outstanding debt was consistently recorded in the balance sheets of the

Corporate Debtor from FY 2015-16 onwards till FY 2022-23. These balance

sheets of the Corporate Debtor evidences debt and default and therefore

extended the period of limitation.

6. We have duly considered the arguments advanced by the Learned Counsel

for the parties and perused the records carefully.

7. Coming to the first limb of argument canvassed by the Appellant which is

that the date of declaration of NPA as 31.03.2016 was wrong as the declaration

was done in violation of the directions contained in the RBI Master Circular

which provides that an account can be declared as NPA only if interest and/or

instalments of principal amount remain overdue for a period of more than 90

days in respect of a loan. In the present case, the Financial Creditor had issued

NDC to the Corporate Debtor on 16.01.2016. But even before the expiry of period

of 90 days therefrom, the account of the Corporate Debtor was illegally declared

as NPA by the Financial Creditor. It was also submitted that both the DRT as

well as the Hon'ble High Court of Madhya Pradesh had adjudicated that the NPA

classification was wrongly done. Amplifying further it was added that the DRT

had set aside the NPA classification of the accounts of the Corporate Debtor as

Page 6 of 20 Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025 illegal, while the NPA notice issued by the Bank was also stayed by the Hon'ble

High Court. Questioning the conduct of the Financial Creditor, it was asserted

that they wilfully failed to disclose the findings given by other competent forums

that the NPA classification was illegal and void and such suppression of material

facts show that the Financial Creditor did not approach the Adjudicating

Authority with clean hands. Even the Adjudicating Authority erroneously turned

a blind eye to the orders of the DRT and Hon'ble High Court of Madhya Pradesh

and wrongly held that default had persisted for 90 days prior to the NPA at para

18 of the impugned order. It was strenuously contended that the reliance placed

by the Adjudicating Authority on the NPA as date of default is contrary to the

facts on record since the Financial Creditor had issued a NDC to the Corporate

Debtor 75 days before declaring the Corporate Debtor to be NPA. It is also

contended that when the date of default is clearly incorrect, the Section 7

application could not have been admitted by the Adjudicating Authority basis a

wrong date of default depicted in the Section 7 application. It was asserted that

as laid down by the Hon'ble Supreme Court in the matter of Ramesh Kymal Vs

Siemens Gamesa Renewable Power Pvt. Ltd. (2021) 3 SCC 224, the Bank

cannot claim that the date of default can be changed.

8. Per contra, it is the contention of the Respondent-Financial Creditor that

even after the restructuring of both the Term Loans and renewal of Cash Credit

Limit on 26.06.2013, the Corporate Debtor failed to maintain financial discipline

as per the terms and conditions of the loan agreement. This had led to the

classification of the accounts of the Corporate Debtor as NPA on 31.03.2016. It

was also stated that a notice was issued on 28.04.2016 by the Financial Creditor

Page 7 of 20 Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025 indicating not only the over-dues in respect of the various accounts of the

Corporate Debtor but also the minimum repayment required towards

discharging the debt obligations. The Financial Creditor has also contended that

it has placed on record statement of accounts as per Banker Books Evidence Act

to prove that there was debt qua the Financial Creditor and there was default

prior to 90 days before the NPA classification. This debt had continued to subsist

even thereafter as may be seen from the balance sheets of the Corporate Debtor

from FY 2015-16 to FY 2022-23.

9. To return our findings on this bone of contention, it may be useful to take

notice of two documents which have been relied upon by the rival parties. The

first document which has been relied upon by the Appellant is the purported

NDC dated 16.01.2016 which was issued by the Financial Creditor to the

Corporate Debtor which is as extracted below:

Bank of Baroda TO WHOMSOEVER IT MAY CONCERN

This is to certify that M/s Extol Industries Ltd. has been enjoying various credit facilities from our branch.

As on date, accounts are regular and there are no overdue in the accounts. This certificate is issued at the request of M/s Extol Industries Ltd.

Chief Manager PLACE : BHOPAL (M.P.) DATE : 16.01.2016"

(Emphasis supplied)

10. The second document which on the other hand is relied upon by the

Respondent No.1- Financial Creditor relates to a communication issued on

28.04.2016 by the Financial Creditor to the Corporate Debtor regarding

'Classification/overdue of various accounts of M/s Extol Industries Ltd., M/s Page 8 of 20 Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025 Xyron Technologies Ltd. and Personal Accounts'. This document is reproduced

below:

BOB/TTN/ADV/16-17/22 DATED: 28.04.2016

Shri G.K. Bhatnagar, Shri Aditya Bhatnagar, Shri Abhinav Bhatnagar, Smt. Sheela Bhatnagar & Smt. Sudarshana Bhatnagar,

Dear Sir, Re: Classification/overdue of various accounts of M/s Extol Industries Ltd ,M/s Xyron Technologies Ltd. And personal accounts We may inform you that conduct of various accounts, pertaining to M/s Extol Industries Ltd, M/s Xyron Technologies Ltd. as well as individual accounts of promoters/directors is not at all satisfactory and in view of this, Central Statutory Auditors have downgraded advances accounts related to M/s Extol Industries Ltd. into NPA category as on 31.03.2016.

In order to upgrade these accounts and to retain other accounts into standard category, minimum repayment as per following details is required:

A/c No. Name of Overdue Approx Total the as on amount of amount to account date interest & be instalment deposited up to June 2016 12230500 M/s Extol Rs. Rs. 5690000/- Rs. 6265701/- 000094 Ind. 575701/- Ltd. 12230600 M/s Extol Rs. Rs. 8390000/- Rs. 8585617/- 001554 Ind. 195617/-

12230600 M/s Extol Rs. 11162/- Rs. 730000/- Rs. 741162/- 001910 Ind.

Total Rs. 15592480/- 12230600 Shri G.K. Rs. Rs. 1081980/- Rs. 1623512/- 001393 Bhatnagar 541532/- Others 12230600 Shri G.K. NIL Rs. 168717/- Rs. 168717/- 002068 Bhatnagar Page 9 of 20

Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025 others

TOTAL Rs. 1792229/-

12230600 M/s Xyron NIL Rs. 1355401/- Rs. 1355401/- 002126 Technologie s Ltd.

We, therefore request you to arrange to deposit the amount as mentioned above, at your earliest so that degraded accounts may be upgraded.

Your Faithfully, Chief Manager (Emphasis supplied)

11. When we peruse the letter of 16.01.2016 which letter has been the primary

basis for the Appellant to contend that the declaration of NPA was wrong, we find

that this certificate was issued at the request of the Corporate Debtor. The

purpose for which this letter had been sought from the Financial Creditor by the

Appellant is also not clear as there is no mention of any reason on the body of

the said letter to throw light on why this NDC was requested for by the Appellant.

Further, we find the NDC to be cryptic as it contains no details about the account

numbers and also bereft of the specific details of the loan facility disbursed and

payments received. Hence, not much credence can be attached to this letter to

determine the financial health of the Corporate Debtor or evaluate the status of

loan facilities taken by the Appellant or the status of repayments made so far.

12. On the other hand, when we look at the communication from the Financial

Creditor to the Corporate Debtor dated 28.04.2016 we find that the same

contains details of the various accounts held by the Corporate Debtor including

the instalments overdue for repayment as well as the total amount outstanding. Page 10 of 20 Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025 This letter clearly states that the accounts of the Corporate Debtor has been

downgraded into NPA category as on 31.03.2016 alongwith request to arrange

to deposit requisite minimum sums indicated therein to regularise the various

accounts. This down-grading of the account was done by the Central Statutory

Auditors of the Financial Creditor. We also notice that in the same

communication the bank had given an opportunity to the Appellant to deposit

the overdue amount in their account to resolve the issue. However, nothing has

been placed on record to show that the Appellant had taken any steps to clear

the overdue amount. This is a clear pointer that the default has been continuing

from a period prior to 31.03.2016. Rather than endeavouring to repay the loan

qua the bank for which repayment, we find that the Appellant has instead

instituted litigations at multiple fora questioning the declaration of NPA.

13. It has also been submitted by the Respondent No.1-Financial Creditor

that the Hon'ble High Court of Madhya Pradesh in its order dated 23.08.2017

had directed the Financial Creditor to consider and decide on the alleged

objections raised by the Corporate Debtor on the alleged capricious classification

of the accounts of the Corporate Debtor as NPA. We find that the Financial

Creditor-Bank of Baroda in its communication dated 23.11.2017 to the

Corporate Debtor had sent a detailed response to the directions raised by the

Appellant in compliance of the directions of the Hon'ble High Court of Madhya

Pradesh. In their reply, it was clearly pointed out by the Financial Creditor that

the Corporate Debtor had not paid the quarterly instalments on the due dates

due to which the term loan accounts had become irregular and that this status

had been duly communicated to the Appellant on 03.06.2015, 24.08.2015 and

Page 11 of 20 Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025 02.03.2016. Inspite of these repeated communications, the Corporate Debtor

had not taken remedial action. This communication also mentions that the

Appellant had defaulted 24 times in Term Loan-I facility and 11 times in Term

Loan-II facility besides pointing out that the Appellant had failed to ensure that

the credit-turnover in their account remained more than the interest debited

during each quarter leading to unsatisfactory operation of the loan account

showing poor repayment capacity of the Corporate Debtor. This communication

is placed at page 161-164 of APB. On 22.01.2018, the Respondent issued the

final recall notice to the Appellant. When we see the statement of Accounts

placed on record by the Financial Creditor as per Banker Book Evidence Act

buttressed by entries in the Balance sheets of the Corporate Debtor and the

tabular chart forwarded by the Financial Creditor to the Appellant on

28.04.2016, we are persuaded to believe that default had arisen well before the

declaration of the accounts of the Corporate Debtor as NPA. When we put all

these facts and documents together, the clear picture that evolves is that the

Corporate Debtor stood as a defaulter qua the debt borrowed from the Financial

Creditor-Respondent No.1 since 31.03.2016.

14. The second bone of contention raised by the Appellant is that if the default

had arisen on 31.03.2016, then the Section 7 application having been filed 8

years from the date of default, the present application is clearly barred under

Article 137 of the Limitation Act. In terms of the provisions of the Limitation Act,

the period of limitation is to run for 3 years. Thus, for any Section 7 application

which is based on the date of default of the Corporate Debtor as of 31.03.2016,

the period of limitation would run only until 30.03.2019. However, the present

Page 12 of 20 Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025 Section 7 petition has been filed after a protracted delay of eight years in 2024

and thus become time-barred. It is the counter contention of the Financial

Creditor that while indubitably Section 18 of the Limitation Act, 1963 is fully

applicable to IBC proceedings, however entries in the balance-sheets of a

Corporate Debtor would amount to be an acknowledgement under Section 18 of

the Limitation Act which would extend the period of limitation. It was contended

that the Adjudicating Authority has correctly noted in paras 19-21 of the

impugned order that the 3 years period of limitation stood extended basis clear

acknowledgment of debt liability as reflected in the balance sheets of the

Corporate Debtor from FY 2015-16 until 2022-23.

15. At this juncture, we may notice the provisions of Section 18 of the

Limitation Act which provides that a fresh period of limitation starts from the

date of acknowledgement. For ease of reference, the language of Section 18 is

quoted as under:

"18. 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."

On a plain reading of the above statutory provision, we have no quarrel with the

proposition canvassed by the Appellant that if the default has occurred over 3

years prior to the date of filing of Section 7 application, then the Section 7

application would be barred under Article 137 of the Limitation Act. Be that as

it may, we also notice that the language of Section 18 clearly suggests that

Page 13 of 20 Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025 limitation can well be extended subject to such acknowledgment of liability

arising before the expiration of the period of limitation.

16. When we peruse the impugned order, we find that the Adjudicating

Authority has noted at para 19 therein that the Financial Creditor has presented

credible evidence that the outstanding debt of the Corporate Debtor is recorded

in their balance sheets from FY 2015-16 until 2022-23. The Adjudicating

Authority has also noted that these entries were not contested by the Corporate

Debtor during the oral arguments and hence held these entries to be

acknowledgments of debt and basis these acknowledgement held the Section 7

petition to be within the period of limitation.

17. When we look at the material placed on record, we find that the balance

sheet of FY 2016-17 is placed at page 766-767 of APB which contains the closing

balance of borrowings of the period FY 2015-16. The balance sheet of FY 2017-

18 is placed at page 766-777 of APB; the balance sheet of FY 2018-19 is placed

at page 644 of APB; the balance sheet of FY 2019-20 is at page 568-569 of APB

and the balance sheet of FY 2020-21 is at page 488 of APB. The balance sheet of

FY 2022-23 is placed at page 343-347 of APB which also reflects the closing

balance of the borrowings as on 31.03.2022. When we look into these balance

sheets of the Corporate Debtor from FY 2015-16 upwards, there is clear

depiction of the borrowings of near identical amounts in the balance sheet.

18. It is however the case of the Appellant that there is no mention of the name

of Financial Creditor in the balance sheets and there is no specific

acknowledgment of the debt qua the Financial Creditor. It was contended that

the borrowings mentioned in the above balance sheets also pertain to

Page 14 of 20 Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025 debts/borrowings qua other financial lenders of the Corporate Debtor. Hence,

for purposes of limitation, the Financial Creditor cannot rely on these balance

sheets to claim acknowledgement of debt liability qua the debt claimed under

Part-IV of the Section 7 petition.

19. The stand taken by the Appellant that the borrowings reflected in the

balance sheets do not indicate the name of the Financial Creditor is

misconceived. When we look at the balance sheet of 2022-23, we notice that

there is a clear mention that the Corporate Debtor had Rs 24,80,91,780/- as

outstanding amount under the head of "Long Term Borrowing" qua the Bank of

Baroda which happens to be the present Financial Creditor. It would also be

constructive to reproduce here the 'Disclosure' made in the Auditor's Report for

FY 2022-23 as placed at page 343 of APB. We find that it has been noted in the

Annexure to the Auditor's Report at Sr. No. (ix)(a) in the Balance sheet of 2022-

23 that the Corporate Debtor has defaulted in repayment of loans along with

interest taken from the Financial Creditor-Bank of Baroda as reproduced below:

"(ix)(a) based upon the audit procedures performed and information and expansions given to us, the Company has defaulted in repayment of loans alongwith interest taken from various banks. As stated by the company in its Contingent Liability also, the matter with Debt Recovery Tribunal and final amount will be paid only after the order in this regard. No further details as desired under paragraph 3(ix)(a) of the Order have been provided to us. The amounts outstanding as per the Balance Sheet are as under:

Bank Amount (Rs.)

Bank of Baroda A/c 01554 89623400.00 Bank of Baroda Term Loan-1 152457220.00 Bank of Baroda Term Loan-2 6011160.00

Page 15 of 20

Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025

20. Thus, even though the balance sheets of FY 2015-16 onwards prior to FY

2022-23 do not specifically mention the name of the Financial Creditor, it is an

undisputed fact that the name of Financial Creditor is specifically mentioned in

the Balance sheet of 2022-23. This specific mention of the name of the Financial

Creditor in the Balance sheet of the Corporate Debtor is sufficient to establish

the jural relationship between them as of debtor and creditor. Moreover, the

outstanding balance as shown in the balance sheet of FY 2022-23 is also

reflected in the balance sheets of the previous years which therefore clearly

shows that it is the historical debt which is being carried forward. Further, the

fact that the Appellant has not made any averment or placed any material on

record to show that they had obtained any fresh loan from any other Financial

Creditor during this period, it would not be wrong to infer that the "Long Term

Borrowings" reflected in the Balance sheet was in the context of present

Respondent No.1-Financial Creditor and not for any other Financial Creditor.

Neither did the present Financial Creditor give any fresh loan during this period

other than the restructured loan amount from 26.06.2013, therefore, it may not

be wrong either to hold the view that the "Long Term Borrowing" reflected in the

Balance sheet of the Corporate Debtor until 2022-23 relates to a continuing and

subsisting liability qua the Financial Creditor from 2015-16 onwards.

21. In this regard, we are also guided by the well settled legal precept laid

down by the Hon'ble Supreme Court in Dena Bank v. C. Shivkumar Reddy,

(2021) 10 SCC 330 wherein it has been held as hereunder:

"111. As per Section 18 of the Limitation Act, an acknowledgement of present subsisting liability, made in writing in respect of any right claimed by the opposite party and signed by the party against whom the right is claimed, has the effect of commencing a fresh period of limitation from the date on Page 16 of 20 Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025 which the acknowledgement is signed. Such acknowledgement need not be accompanied by a promise to pay expressly or even by implication. However, the acknowledgment must be before the relevant period of limitation has expired."

22. It is also well settled that if a Corporate Debtor acknowledges its debt in

writing before the expiration of the 3 years period, the limitation period would

get extended by another 3 years. We also notice that the Adjudicating Authority

has relied on the judgment of Hon'ble Supreme Court in Asset Restructuring

Company (India) Ltd. Vs Bishal Jaiswal and Anr. in Civil Appeal No. 323

of 2021 wherein it was held that the entries in balance sheets constitute an

acknowledgement of debt for the purposes of Section 18 of the Limitation Act.

23. In our considered opinion, there is sound basis to hold that the Corporate

Debtor in their balance sheet had acknowledged the debt consistently year on

year from FY 2015-16 onwards. In such circumstances, the Adjudicating

Authority has correctly concluded that the Section 7 application fell well within

limitation. We are therefore satisfied that the Adjudicating Authority has

returned the correct finding that the debt having been acknowledged year over

year from 2015-16 onwards until 2022-23, it was not barred by limitation. The

debt having become due and payable and a default thereto having been

committed, the Adjudicating Authority has correctly applied the ratio of the

judgment of the Hon'ble Supreme Court in Innoventive Industries Ltd. Vs ICICI

Bank in Civil Appeal No. 8337-38 of 2017 that in a Section 7 application, the

Adjudicating Authority is to be only satisfied that there is a debt which is above

the threshold limit which has become due and payable and if a default thereto

Page 17 of 20 Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025 has occurred, a Section 7 application ought to be admitted even if the debt is

disputed.

24. We now come to the last issue raised by the Appellant that the

Adjudicating Authority had passed the impugned order without giving the

Appellant a right to reply. It is the contention of the Appellant that they could

not appear before the Adjudicating Authority due to some genuine reasons

including critical medical condition of the mother of the ex-promoter of the

Corporate Debtor besides defects in service of notice and non-availability of

legible petition documents etc. It was contended that IA No. 98 of 2025 filed by

the Appellant seeking rehearing was turned down by the Adjudicating Authority

causing severe miscarriage of justice.

25. We find that the Adjudicating Authority has accorded due consideration

to the plea raised by the Appellant in IA 98 of 2025. The prayers of the Appellant

contained in IA No. 98 of 2025 for reopening the right to file reply were not

acceded to after giving a detailed reasoning by the Adjudicating Authority. After

correctly noting the need of adhering to the strict timelines contemplated in the

IBC framework the Adjudicating Authority while passing a speaking order has

stated that the main petition was listed for hearing on several occasions giving

both parties ample opportunity to be heard. The Appellant had however absented

themselves from hearing multiple times and did not chose to file their reply on

time. When the Appellant was himself prima-facie casual and negligent, the

Appellant cannot be seen to take advantage of their own wrong.

26. Now we come to the factual matrix of Company Appeal No. 616 of 2025.

In this case, the Respondent No.1-Financial Creditor had sanctioned a Term

Page 18 of 20 Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025 Loan of Rs 4.97 Cr. on 29.09.2015 (further modified on 04.01.2016) to the

Corporate Debtor-Xyron Technologies Ltd. The Corporate Debtor failed to

maintain financial discipline following which the account of the Corporate Debtor

was classified as NPA on 31.03.2017 which is also reflected in Part-IV of the

Section 7 application filed by the Financial Creditor. The total dues claimed by

the Financial Creditor in Part-IV is Rs 9.57 Cr. consisting of Rs 4.97 Cr. as

principal amount and Rs 4.51 Cr. as interest. Satisfied with the evidence of debt

and default, the Adjudicating Authority vide impugned order dated 24.03.2025

admitted the Corporate Debtor-Xyron Technologies Ltd. into CIRP. The grounds

on which the impugned order has been assailed are the same grounds on which

the impugned order in Company Appeal No. 615 of 2025 has been challenged.

These grounds are that there was no default preceding the date of default of

31.03.2017 as claimed in Part-IV; that the Section 7 petition was time-barred

and that IA No. 99 of 2025 seeking remedial action for having been denied the

right to hear had been rejected by the Adjudicating Authority. On the issue of

debt and default, we find that the Financial Creditor had placed on record

Statement of Account alongwith certificate as per provisions of Bankers Book

Evidence Act, 1891 as well as balance sheet from FY 2015-16 to 2021-22 as

evidence of debt and default. Like in Company Appeal No.615 of 2025, in the

present Appeal too, the Corporate Debtor has failed to show that the debt liability

was liquidated. The Adjudicating Authority after considering the material on

record had therefore rightly concluded that there was outstanding debt qua the

Financial Creditor and that there was continuing default. In the present Appeal

too as in Company Appeal No. 615 of 2025, the Financial Creditor has relied on

Page 19 of 20 Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025 the balance sheets for the purpose of acknowledgment of debt liability for the

purpose of limitation. We have also noticed that the Adjudicating Authority has

noted that the balance sheets in the present case also extends the period of

limitation. Like in the case of IA No. 98 of 2025 which had been rejected in

Company Appeal No. 615 of 2025, the same grounds for rejection holds good in

Company Appeal No. 616 of 2025 also. We are therefore satisfied with the

findings of the Adjudicating Authority in admitting the Corporate Debtor-Xyron

Technologies Ltd. into the rigours of CIRP.

27. For the reasons explained above, we find both the appeals to be devoid of

merit and dismiss them. Both the impugned orders are affirmed. All IAs stand

closed. No order as to costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical)

Place: New Delhi Date: 30.05.2025

Abdul

Page 20 of 20 Company Appeal (AT) (Insolvency) Nos. 615 & 616 of 2025