Debabrata Das vs State Bank Of India

NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Ins) No.1349 of 2022 In the matter of: Debabrata Das ...Appellant Vs. State Bank of India & Anr. ...Respondents

Present: Appellant: Mr. Dhananjaya Mishra, Mr. Aran Rai, Mr. Nikhil Bhatia and Mr. Mohanty, Advocates Respondent: Mr. Sanjay Kapur, Mr. Surya Prakash, Mr. Devesh Dubey, Ms. Divya Singh Pundir, Ms. Isha Virmani and Mr. Arjun Bhatia, Advocates for R-1 Mr. Abhay A. Jena, Advocate for R-2

ORDER

(Hybrid Mode)

(Per: Justice Rakesh Kumar Jain) (ORAL) 18.9.2024 - This Appeal is directed against the Order dated 12th

September, 2022 by which an Application filed under Section 7 of the

Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the

Insolvency and Bankruptcy Rules, 2016 (for short, the Rules) by the

State Bank of India against Dynametic Overseas Pvt. Ltd. for

the resolution of an amount of Rs.1,48,36,62,808.65 has been

admitted, moratorium was declared and Shri Yogesh Gupta was

appointed as the IRP. The Appellant is the suspended

director of Dynametic Overseas Pvt. Ltd. Counsel for the 2

Appellant has submitted that Tribunal has decided the issue of

limitation erroneously, relying upon an entry dated 6.6.2016,

regarding payment of Rs.2,57,250/- alleged to have been made

through NEFT vide UTR No.44001615814282 from the accounts

lying with the HDFC Bank towards the Corporate Debtor's debt to

the dues of the Financial Creditor in its loan account, therefore, the

limitation, starting from 6.6.2016 continued for another period of

three years and ended up on 5th June, 2019. In between, the

Appellant acknowledged the debt in its balance sheet for the year 31st

March, 2018 and 31st March, 2019 therefore, the period of limitation

is extended from 31st March, 2018 to 30th March, 2021 and since the

Petition under Section 7 was filed on 24th March, 2021, therefore, it

was found to be within the period of limitation. Counsel for the

Appellant has submitted that the said entry dated 6.6.2016 is not

made by the Appellant and in this regard, an Affidavit has also been

filed before this Court that the Appellant does not have any account

in the HDFC Bank in Bombay. On the basis of this argument, he has

submitted that the impugned Order has to be set aside.

2. Counsel for the Respondent Bank has submitted that the

default occurred on the date when their account was declared NPA Company Appeal (AT) (Ins) No.1349 of 2022 3

on 5th August, 2013 and thereafter the Appellant has acknowledged

the debt continuously in its balance sheets of the period 2014-2015,

2015-2016 and 2017-2018 which are sought to be placed on record

through I.A. No.455 of 2023 filed on 11th January, 2023 with a prayer

that these documents, which belong to the Appellant, appended with

the application as Annexures - A-1 to A-4 may be taken on record.

Notice in this Application was issued to which reply has been filed by

the Appellant. Counsel for the Respondent has drawn our attention

to pages - 31, 42, 46, 76 and 77 of this Application bearing I.A.

No.455 of 2023 from which it is proved that the debt has been

acknowledged by the Appellant in their Financial Statement (balance

sheets).

3. Counsel for the Respondent has submitted that the limitation

under Article 137 is three years of the Limitation Act, 1963 (for short

- the Act) but it is extendable in terms of Section 18 and 19 of the

Act. Section 18 and 19 are reproduced as under:-

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 Company Appeal (AT) (Ins) No.1349 of 2022 4

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,

Company Appeal (AT) (Ins) No.1349 of 2022 5

(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.

19. Effect of payment on account of debt or of interest on legacy

Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made:

Provided that, save in the case of payment of interest made before the 1st day of January, 1928, an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment.

Explanation.--For the purposes of this section,--

(a) where mortgaged land is in the possession of the mortgagee, the receipt of the rent or

Company Appeal (AT) (Ins) No.1349 of 2022 6

produce of such land shall be deemed to be a payment;

(b) "debt" does not include money payable under a decree or order of a court."

4. He has then referred to a recent decision of the Hon'ble Supreme

Court rendered in the case of "Axis Bank Limited vs Naren Sheth and

Another" 2023 SCC OnLine SC 1152 decided on 12th September 2023

to contend that the balance sheets in which the debt is admitted, can

be placed on record at the appellate stage and even before the Hon'ble

Supreme Court. In this regard, he has referred to paras - 19, 21, 22,

23 and 24 of this Judgement which are reproduced as under:-

"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.

Company Appeal (AT) (Ins) No.1349 of 2022 7

21. Reference may be made to a recent judgement of this Court in the case of Dena Bank (supra) where facts were similar. The documents relating to acknowledgement claiming benefit of Section 18 were introduced at appellate stage, and such documents being balance sheets and settlement offers. It was held that the same could be accepted even at the appellate stage and a settlement offer akin to an OTS proposal would be an acknowledgment of debt for the purpose of Section 18 of Limitation Act. The only caveat was that such acknowledgments should be before the expiry of limitation prescribed under law. Para 22 of the said judgement refers to the facts in brief which are similar to the facts of the present case where the balance sheet and one-time settlement proposal were introduced. The same is reproduced herein:

"22. In other words, the main question involved in this appeal is, whether a petition under Section 7 IBC would be barred by limitation, on the sole ground that it had been filed beyond a period of 3 years from the date of declaration of the loan account of the corporate debtor as NPA, even though the corporate debtor might subsequently have acknowledged its liability to the appellant Bank, within a period of Company Appeal (AT) (Ins) No.1349 of 2022 8

three years prior to the date of filing of the petition under Section 7 IBC, by making a proposal for a one-time settlement, or by acknowledging the debt in its statutory balance sheets and books of accounts."

22. Ultimately, in paragraph 142 of the report, it was held that additional documents could be introduced at the stage of appeal also. The said para is reproduced hereunder:

"142. There is no bar in law to the amendment of pleadings in an application under Section 7 IBC, or to the filing of additional documents, apart from those initially filed along with application under Section 7 IBC in Form 1. In the absence of any express provision which either prohibits or sets a time-limit for filing of additional documents, it cannot be said that the adjudicating authority committed any illegality or error in permitting the appellant Bank to file additional documents. Needless however, to mention that depending on the facts and circumstances of the case, when there is inordinate delay, the adjudicating authority might, at its discretion, decline the request of an applicant to file additional pleadings and/or

Company Appeal (AT) (Ins) No.1349 of 2022 9

documents, and proceed to pass a final order. In our considered view, the decision of the adjudicating authority to entertain and/or to allow the request of the appellant Bank for the filing of additional documents with supporting pleadings, and to consider such documents and pleadings did not call for interference in appeal."

23. The above discussion takes care of the arguments raised by the appellant regarding admissibility of documents in appeal to be without any merit. The judgement in the case of Dena Bank (supra) has been later on relied upon in the case of Kotak Mahindra Bank Ltd.(supra).

24. A balance sheet acknowledging debt is also a document relevant for calculating the limitation. This has already been held in case of Asset reconstruction Company India Ltd. (supra). In all the above cases, what has been elaborately discussed is the 'purposive interpretation of the statute' to advance the cause of justice."

5. On the other hand, in rebuttal, Counsel for the Appellant has

submitted that this Judgement cannot be relied upon by the

Appellant because the Appellant has not pleaded his case in the

Company Appeal (AT) (Ins) No.1349 of 2022 10

application filed under Section 7 that there has been

acknowledgement on the part of the Appellant by way of balance

sheets of the years 2014-2015, 2015-2016 and 2017-2018. He has

submitted that until and unless there is a foundation made by the

Respondent in the Application filed under Section 7, these

documents cannot be brought on record. In support of his

submission, he has relied upon decisions of Hon'ble Supreme Court

in the case of "Babulal Vardharji Gurjar vs Veer Gurjar Aluminium

Industries Pvt. Ltd. & Anr." 2020 15 SCC (page 1) and has also

submitted that the decision in the case of "Dena Bank (Now Bank Of

Baroda) vs C. Shivakumar Reddy" 2021 10 SCC is distinguishable on

facts.

6. We have heard counsel for parties and perused the record. The

admitted facts in this case are that application under Section 7 has

been filed with a date of default as 5th August, 2013 and the

application under Section 7 has been filed on 4th March, 2021. The

only issue is as to whether the Application filed on 4th March, 2021,

keeping in view the date of default as 5th August, 2013, is within the

Company Appeal (AT) (Ins) No.1349 of 2022 11

period of limitation? Article 137 of the Act provides a period of three

years of limitation. Article 137 of the Act is reproduced as under:-

"

137. Any other application Three years When the for which no period of right to apply limitation is provided accrues.

elsewhere in this Division "

7. Section 18 and 19 of the Act, already referred to above, provides

that the debt can be acknowledged in writing or by making payment.

In so far as the balance sheets are concerned, it has been held by the

Hon'ble Supreme Court by various Judgements that the liabilities

shown by the Corporate Debtor in its books (balance sheets) towards

the Financial Creditor is a sufficient proof of the debt due. In the

present case, the date of default of the amount of debt is not in

dispute in so far as the balance sheets are concerned. The

Respondent relied upon an entry in its accounts alleged to have been

made by the Appellant of an amount of Rs.2,57,250/- on 6.6.2016

and from that date, a further period of three years has been counted

to bring into account the balance sheets of 31st March, 2018 and

2019. This entry is disputed but the very fact that the I.A. No.455 of

Company Appeal (AT) (Ins) No.1349 of 2022 12

2023 which has been filed during the pendency of this Appeal for the

purpose of bringing on record the balance sheets of the years 2014-

2015, 2015-2016 and 2017-2018 duly signed by the Appellant,

would show that the Application filed on 4th March, 2021 is within

the period of limitation. Since the date of NPA is 5th August, 2013 and

the balance sheet for the year 2014 - 2015 in which the debt is

acknowledged by the Appellant then the limitation would start from

the date when the balance sheet for the year 2014 - 2015 is signed.

The period of three years shall be counted from that period and in

the meantime, from the balance sheet of the year 2015-2016, the

limitation would again start from the singing of the balance sheet for

a period of three years. Similarly, same would happen in regard to

financial year 2017-2018. Thereafter, the balance sheets of 31st

March, 2018 and 2019 would also come to support the Respondent

and in this process the Application filed under Section 7 on 4 th

March, 2021 is within the period of limitation. The contention of the

Appellant that these documents cannot be taken on record during

the pendency of this Appeal has been repelled in the decision of the

Hon'ble Supreme Court in the case of Axis Bank Ltd. (supra), relevant

paragraphs have already been mentioned in the earlier part of the Company Appeal (AT) (Ins) No.1349 of 2022 13

Order which are not being mentioned again for the sake of brevity. In

view of the above circumstances, the Application bearing I.A. No.455

of 2023 is hereby allowed and the documents which are the statutory

documents, not manufactured by the Respondent but are the

documents of the Appellant, are taken on record. Once we have taken

on record the aforesaid documents namely, balance sheets of the

years 2014-2015, 2015-2016 and 2017-2018 and there are already

balance sheets of the year 2018-2019 on record, the petition having

been filed on 4th March, 2021 is within the period of limitation. In

view of the aforesaid circumstances, we do not agree with the

contention of the Appellant and thus the Appeal is hereby dismissed.

No cost.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Ajai Das Mehrotra] Member (Technical) rs/md

Company Appeal (AT) (Ins) No.1349 of 2022