Dinesh G. Jaiswal vs 1) Punjab National Bank

impugned order the Adjudicating Authority has

admitted an application filed under Section 7 of the Code

and thereby Corporate Insolvency Resolution Process

(CIRP) has been initiated. The application before the

Adjudicating Authority was filed by the Financial

Company Appeal (AT)(Ins) No.24/2021 3

Creditor, Punjab National Bank, Assets Recovery

Management, Mumbai.

2. Short fact of the case is that on 10.06.2019 an

application was filed by the Punjab National Bank,

which has been arrayed as Respondent No.1 in the

present application (Financial creditor) due to the

reason that Corporate Debtor i.e. Respondent No.2 failed

to make payment of the debt to the tune of

Rs.1,45,42,74,724.16 (Rupees One hundred forty five

crores forty two lakhs seventy four thousand and seven

hundred twenty four and Paise sixteen only) which was

inclusive of principal amount plus interest as well as

penal interest @ 2%. The credit facilities provided to

Corporate Debtor was given in detail in a chart before

the Adjudicating authority which is reproduced

hereinbelow:

Sr. Nature of Principal Normal Other Penal Total No. Credit facility outstand Interest debits interest claim ing as on from less @ 2% amount 31.05.20 01.10.20 other simple 19 14 to credit 31.05.20 19 p.a. 1 2 3 4 5 (2+3+4+5) 1 Cast Credit 35,01,06 68,26,31 32,09,10 9,25,60, 1,44,62,0 A/c ,230.47 ,758.38 ,740.11 238.43 8,967.39 No.05464008 701738041

Company Appeal (AT)(Ins) No.24/2021 4

2 Term Loan 20,96,65 18,76,40 - 3,19,38 42,92,44 (Car Loan) 6.00 4.40 7.98 8.38 A/c No. 056400NG00 053639 3 Term Loan 22,47,80 16,41,30 (3,95,17 2,79,37 37,73,30 (Car Loan) 2.00 5.28 0.00) 1.11 8.39 A/c No.056400N G00053648 Grand Total 35,44,50 68,61,49 32,05,15 9,31,58, 1,45,42,7 ,688.00 ,468.06 ,030.11 997.52 4,724.16

3. As per application filed under Section 7 of the Code

date of declaring account of the Corporate Debtor as

Non-Performing Assets (hereinafter referred to as 'NPA')

was shown as 30.09.2013. At the time of availing

various credit facilities on 17.02.2012 a deed of

guarantee was executed by Mr Dinesh G Jaiswal

(appellant) his wife Ms Sunita D Jaiswal, as personal

guarantors, D.J. Exim (India) Pvt Ltd as Corporate

Guarantor in favour of Punjab National Bank and

another deed of guarantee dated 17.2.2012 was

executed by the same party in favour of the Punjab

National Bank and deed of hypothecation dated

17.02.2012 between the Corporate Debtor and the

Financial Creditor and a joint deed of hypothecation

between the Corporate Debtor and Financial Creditor

and IDBI Bank Limited was executed.

Company Appeal (AT)(Ins) No.24/2021 5

4. Initially the Corporate Debtor regularly made

payment towards the credit facilities. However, from the

month of June, 2013 the Corporate Debtor started

defaulting in making payment of the debt and as such

according to the guidelines of RBI, on 30.09.2013

Corporate Debtor's account was declared as NPA.

Subsequently on 25.10.2013 the Financial Creditor

issued notice under Section 13(2) of the Securitisation

and Reconstruction of Financial Assets and

Enforcement of Security Interest (SARFAESI) Act. The

Corporate Debtor thereafter on 16.04.2014 submitted

Balance and Security confirmation letter to the

Financial Creditor. On 03.05.2019 Commercial Credit

Information Report was taken from CIBIL. Statement of

accounts alongwith certificate under Section 2A of

Banker's Books Evidence Act, 1891 was also obtained.

5. In the meanwhile in the SARFAESI proceeding

secured immovable properties were sold between

27.12.2018 and 30.04.2019. After filing of the

application under Section 7 of the Code, the Corporate

Debtor appeared before the Adjudicating Authority and

Company Appeal (AT)(Ins) No.24/2021 6

filed affidavit in reply. In the reply regarding debt no

dispute was raised but only dispute was raised on the

ground of limitation. In sum and substance it was

pleaded on behalf of the Corporate Debtor before the

Adjudicating Authority that the application filed by the

Financial Creditor was barred by limitation under

Section 137 of the Limitation Act. It was pleaded that

admittedly in the present case date of default was to be

considered from the date of declaring the account of the

Corporate Debtor as NPA which was declared on

30.09.2013. Thereafter affidavit in rejoinder was also

filed by the Financial Creditor wherein details were given

as to on which date the debt was acknowledged by the

Corporate Debtor and also date on which OTS was

offered by the Corporate Debtor which was subsequently

not accepted by the Financial Creditor. The Learned

Adjudicating Authority after considering the facts

disclosed in the application filed under Section 7, reply

affidavit filed by the Corporate Debtor and also affidavit

in rejoinder, finally decided that it was not barred by

Company Appeal (AT)(Ins) No.24/2021 7

limitation and by order dated 26.05.2020 admitted the

application and CIRP proceeding was initiated.

6. Aggrieved with the impugned order the Corporate

Debtor has preferred the present appeal which was

registered as Company Appeal (AT)(Ins) No.24/2021 on

20.01.2021. While directing issuance of Notice to

Respondent No.1 and considering the facts disclosed in

IA No.62/2021 wherein it was stated that Committee of

Creditors was already constituted, a Bench of this

Tribunal directed that the CIRP may continue but the

Adjudicating Authority shall not take any decision in

regard to approval of the Resolution Plan till next date of

hearing. After appearance of all the parties and

completion of pleading, the appeal was finally heard on

22.07.2022 and Judgement was reserved.

7. Mr. Varun Singh, learned counsel appearing on

behalf of the appellant assailing the impugned order has

taken a stand that the Adjudicating Authority has

miserably failed to appreciate that in the application

filed by the Financial Creditor was barred by limitation

since the date of default was shown as 30.09.2013 on

Company Appeal (AT)(Ins) No.24/2021 8

which date the account of the Corporate Debtor was

declared as NPA. According to the Learned counsel for

the appellant it was an admitted case that application

under Section 7 of the code was filed on 10.06.2019 and

as such it was much beyond the time of limitation as

prescribed under Section 137 of the Limitation Act. He

submits that as per Limitation Act within three years

from the date of default an application was to be filed

before the Adjudicating Authority, but in the present

case application was filed on 10.06.2019 for a debt

which was declared as NPA on 30.09.2013 as date of

default. Learned counsel for the appellant has

specifically drawn our attention to affidavit in reply filed

by the Corporate Debtor at running page 558 in Volume

III para 4 which is reproduced hereinbelow:

"4. In the present matter the default is said to have been made on 30th September, 2013 and the Respondent was declared NPA with effect from 30th September, 2013. Notice under SARFAESI Act was issued on 30th October, 2013 for recovery of the dues and pursuant to that few properties of the Respondent were sold for recovery. Therefore, in our humble submission, as soon as the default occurred, and the Respondent was declared as NPA, the limitation started ticking from such date i.e. 30th September, 2013. Issuance of Notice u/s 13(2)

Company Appeal (AT)(Ins) No.24/2021 9

of SARFAESI Act on 30th October, 2013 and the sale of properties for recovery is another event making the injury complete. In any case, by virtue of Article 137 of the Limitation Act, the claims in the present petition have become time barred from September and/or October, 2016. The present petition seems to have been filed sometime in June, 2019. Therefore, it is apparently clear that the claims in the present petition are time barred and the present petition is prima facie barred by the Limitation Act."

8. In the present proceeding besides making oral

submissions on behalf of the Appellant two notes of

written submission have been filed, one was filed on

25.03.2021 and another was filed on 29.10.2021.

However, factually there is no much difference in two

notes of written submission. However, in last written

submission which was filed on 29.10.2021, besides

submission, the appellant has brought on record two

judgement passed by the Hon'ble Supreme Court of

India one reported in 2021 SCC OnLine SC 543 Dena

Bank (Bank of Baroda) Vs C Shivakumar Reddy &

anr and Asset Reconstruction Company (I) Ltd Vs

Bishal Jaiswal and Another 2021 SCC OnLine SC

321. In the written submission dated 25.03.2021 and

Company Appeal (AT)(Ins) No.24/2021 10

dated 29.10.2021 of the appellant the following facts

have been stated:-

"Written submission dated 25.03.2021

1.The Application u/S. 7 of the Insolvency and Bankruptcy Code, 2016 ('Code') filed by Respondent No. 1 is barred by limitation as:-

a.It is undisputed that the Application was filed on 10.06.2019 and the date of NPA and date of default is shown as 30.09.2013. In the said Application there was no mention of any OTS proposal or acknowledgement of debt. The Application was filed after more than 3 years from default and/or declaration of NPA and is filed beyond the period prescribed in Article 137 of the Limitation Act.

b.The Corporate Debtor filed its reply to the Application and took the ground of limitation.

c.Respondent No. 1 developed its case in the Rejoinder where it mentioned the dates about the acknowledgement of debt by the Corporate Debtor. It also mentioned therein that the cause of action is a continuing one. The case of the Respondent No. 1 is that by the Offer of settlement dated 23.02.2017 and the acknowledgment of debt in the balance sheet for FY 2015-2016 of Corporate Debtor, the cause of action stood extended and that the cause of action is continuing one.

2.The Adjudicating Authority in the impugned judgment despite observing the judgment of Supreme Court, in para 17 erroneously observed that the said judgment has no applicability as there is an acknowledgement of debt and S. 23 of the Limitation Act would apply. On the aspect of acknowledgement of liability, the Adjudicating Authority observed the judgments in para 18-20, 23-

Company Appeal (AT)(Ins) No.24/2021 11

24 to erroneously hold that the acknowledgment of debt in balance sheet and in OTS proposal would amount to acknowledgment of liability within the meaning of S. 18 of Limitation Act and further held that the Application filed by the Respondent No. 1 is within limitation (para 22, 26-28 of the impugned order) and thereafter admitted the said Application.

3.The judgments observed by the Adjudicating Authority in paras 18-20, 23-24 of the impugned judgment are not related to or pertaining to the Code. Furthermore, the Adjudicating Authority in para 25 of the impugned judgment relied on a judgement of this Hon'ble Appellate Tribunal which is set aside by the Hon'ble Supreme Court in Babulal Vardharji Gurjar Vs Veer Gurjar Aluminium Industries Pvt Ltd & Anr. [(2020) 15 SCC 1].

4.It is submitted that the facts in Babulal Vardharji (Supra) are analogous to the present case. The facts of the said case are mentioned in paras 7.1, 7.2, 7.3, 11.5,11.6, 12 and 17. In the said case, there was acknowledgement of debt in balance sheet of Corporate Debtor therein and the Corporate Debtor therein has given a OTS offer to the Financial Creditor therein. Therefore, the law laid down by the Hon'ble Supreme Court in in Babulal Vardharji (Supra) squarely applies to the present case. In the light of above, the below mentioned exposition of law is relevant for the present case.

5.The Hon'ble Supreme Court in Swiss Ribbons Private Limited and Another Vs Union of India And Others [(2019) 4 Supreme Court Cases 17] in para 64 held that 'Legislative policy now is to move away from the concept of "inability to pay debts" to "determination of default".' (Also observed in Babulal Vardharji (Supra) at para 20.3.2)

6.In B.K. Educational Services Private Limited Vs. Parag Gupta And Associates [(2019) 11 Supreme Court Cases 633] held that the Code does not give a

Company Appeal (AT)(Ins) No.24/2021 12

new lease of life to debts which are time barred. Furthermore, it was held that the Limitation Act is applicable to the applications filed under the Code and Article 137 of the Limitation Act is applicable to such applications. It was held that 'the right to sue' accrues when default occurs'. If the default occurs over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act unless S. 5 of the Limitation Act is applied to condone the delay in filing such application. (Observed in Babulal Vardharji (Supra) para 24, pg. 40 and 24.1, pg 41).

7.In K. Sashidhar Vs Indian Overseas Bank and Others [(2019) 12 Supreme Court Cases 150, para 78] it is held that right to sue accrues on the date when default occurs and if the default occurred even three years prior to the date of filing of the application, the same cannot be treated as "debt that is due and payable" or "debt" due."(observed in Babulal Vardharji (Supra) at para 26, pg. 42).

8.In Jignesh Shah And Another Vs. Union of India and Another [(2019) 10 Supreme Court Cases 750, para 12, 21 & 28] held that that a suit for recovery based upon a cause of action that is within limitation cannot in any manner impact the separate and independent remedy of a winding-up proceeding. In law, when time begins to run, it can only be extended in the manner provided in the Limitation Act. For example, an acknowledgment of liability u/S. 18 of the Limitation Act would certainly extend the limitation period, but a suit for recovery, which is a separate and independent proceeding distinct from the remedy of winding up would, in no manner, impact the limitation within which the winding-up proceeding is to be filed, by somehow keeping the debt alive for the purpose of the winding-up proceeding. [Also observed in Babulal Vardharji (Supra) at para 27.1 (for facts), 27.2, 27.3 & 27.4 (for law laid down by the Hon'ble Supreme Court)]

Company Appeal (AT)(Ins) No.24/2021 13

9.In Gaurav Hargovindbhai Dave Vs. Asset Reconstruction Company (India) Limited and Another [(2019) 10 Supreme Court Cases 572] held that the (in para 3) that the date of default is the date of declaration of the Corporate Debtor as NPA. It was also held (in paras 3 to 6) that the Article 62 which applies on the money suit pertaining to mortgage or any charge on the immoveable property and would only apply to suits and not applications under the Code. The applications filed under the Code would fall only within the residuary Article

137. Furthermore, (in para 7) it was held it is not for the Courts to interpret, commercially or otherwise, articles of the Limitation Act when it is clear that a particular article gets attracted. It is well settled that there is no equity about limitation. (Also observed in Babulal Vardharji (Supra) at para 30). Also see Sagar Sharma And Another Vs. Phoenix Arc Private Limited and Another [(2019) 10 Supreme Court Cases 353, para 2 & 3] (Also observed in Babulal Vardharji (Supra) at para 31)

10.The Hon'ble Supreme Court after observing aforesaid judgments in Babulal Vardharji (Supra) at para 32 held that:-

"(a) ........

(c) that intention of the Code is not to give a new lease of life to debts which are time-barred;

(d) that the period of limitation for an application seeking initiation of CIRP under Section 7 of the Code is governed by Article 137 of the Limitation Act and is, therefore, three years from the date when right to apply accrues;

(e) that the trigger for initiation of CIRP by a financial creditor is default on the part of the corporate debtor, that is to say, that the right to apply under the Code accrues on the date when default occurs;

(f) that default referred to in the Code is that of actual non-payment by the corporate debtor when a debt has become due and payable; and

Company Appeal (AT)(Ins) No.24/2021 14

(g) that if default had occurred over three years prior to the date of filing of the application, the application would be time-barred save and except in those cases where, on facts, the delay in filing may be condoned; and (h) an application under Section 7 of the Code is not for enforcement of mortgage liability and Article 62 of the Limitation Act does not apply to this application." Emphasis supplied

11.The exception as held by the Hon'ble Supreme Court in Babulal Vardharji (Supra) in aforesaid sub- para h of para 32 does not apply in the present case as no application for condonation of delay in filing application u/S. 7 of the Code was filed by Financial Creditor. Furthermore, there is no other exception postulated by the Hon'ble Supreme Court to make application u/S. 7 of the Code fall within limitation under the Limitation Act when it is filed after 3 years from the date of default.

12.In Babulal Vardharji (Supra) (in paras 34-34.2) it is also held that Section 18 of the Limitation Act does not apply to the Applications under the Code. It is submitted that the Hon'ble Supreme Court in para 34.1 has held that:-

"....this Court rejected the contention suggesting continuing cause of action for the purpose of application under Section 7 of the Code....) Emphasis supplied

13.In Babulal Vardharji (Supra) (in paras 35-35.1), the Hon'ble Supreme Court adverted to the pleadings and the facts of the case in question and answered that even if S.18 of the Limitation Act would have been applicable even then the Application u/S.7 was barred by limitation on the ground of absence of proper pleadings. It is submitted that firstly, the application does not mention any fact of acknowledgment of liability by Corporate Debtor and secondly, the acknowledgment of liability does not make the

Company Appeal (AT)(Ins) No.24/2021 15

application u/S. 7 filed by Respondent No. 1 to be within limitation. It is apparent from the bare reading of paras 35-35.1 of Babulal Vardharji (Supra) that the said findings are in alternative and without prejudice to the finding of the Hon'ble Supreme Court in para 34-.4.2 that S. 18 of the Limitation Act is not applicable to the Applications under the Code.

14.In view of foregoing law laid down by the Hon'ble Supreme Court it is apparent that the application u/S. 7 filed by Respondent No. 1 is barred by limitation. The OTS proposal or acknowledgement of debt in the balance sheet of the Corporate Debtor or continuing cause of action or S. 18 or S. 23 would not be applicable on the Application u/S. 7 of the Code and the limitation when commenced from the date of default would cannot be stopped or altered, subjected to the exception carved out in sub-para h of para 32 in Babulal Vardharji (Supra).

III. The Respondent No. 1 and Respondent No. 2 are collusively against the Corporate Debtor

17.As the Respondent No. 1 (Financial Creditor) and Respondent No. 2 (Resolution Professional) have engaged same advocates the independence of Resolution Professional is highly doubted and is against the ethics of the Code.

"Written submission dated 29.10.2021

1.It is undisputed that Application u/S. 7 of the Insolvency and Bankruptcy Code, 2016 ('Code') was filed by Respondent No. 1 on 10.06.2019 and the date of NPA and date of default is shown as 30.09.2013 of the impugned order -. In the said Application, either in Part-IV or Part V thereof or anywhere else, there was no mention of any OTS proposal or acknowledgement of debt. Furthermore,

Company Appeal (AT)(Ins) No.24/2021 16

there is no mention of any document which goes to show any acknowledgement of debt by the Corporate Debtor. The Application was filed after more than 3 years from default and/or declaration of NPA and is filed beyond the period prescribed in Article 137 of the Limitation Act.

2. It is also matter of fact that apart from 30.09.2013 there is no other date of default is mentioned in the Application. Therefore, the said Application as it was presented before the Adjudicating Authority ought to be rejected on the threshold being barred by limitation.

1.The Corporate Debtor filed its reply to the Application and took the ground of limitation. Thereafter, Respondent No. 1 developed its case in the Rejoinder where it mentioned the dates about the acknowledgement of debt by the Corporate Debtor. It also mentioned therein that the cause of action is a continuing one). The case of the Respondent No. 1 is that by the Offer of settlement dated 23.02.2017 and the acknowledgment of debt in the balance sheet for FY 2015-2016 of Corporate Debtor the cause of action to file the S. 7 Application under the Code is a continuing one. It is submitted that the even the purported balance sheets do not extend the limitation to file the said Application as it was executed more than 3 years prior to filing the said application.

3.It is pertinent to mention that despite clearly highlighting the aspect that the Application u/S.7 filed by the Respondent No. 1 is barred by limitation and Respondent No. 1 coming up with new facts, the Respondent No. 1 utterly failed to amend its pleadings in its Application u/S. 7 to bring forth the pleading of acknowledgement of debt in the said Application. It is settled law that the Rejoinder is not a part of pleadings.

Company Appeal (AT)(Ins) No.24/2021 17

4.It is submitted that the facts in Babulal Vardharji Gurjar Vs Veer Gurjar Aluminium Industries Pvt Ltd & Anr. [(2020) 15 SCC 1 are analogous to the present case. The facts of the said case are mentioned in paras 7.1, 7.2, table in para 7.3, and

17. In the said case, there was acknowledgement of debt in balance sheet of Corporate Debtor therein and the Corporate Debtor therein has given a OTS offer to the Financial Creditor therein. Therefore, the law laid down by the Hon'ble Supreme Court in in Babulal Vardharji (Supra) squarely applies to the present case. In the light of above, the below mentioned exposition of law is relevant for the present case.

5.In Babulal Vardharji (Supra), the Hon'ble Supreme Court adverted to the pleadings and the facts of the case in question and answered that even if S.18 of the Limitation Act would have been applicable even then the Application u/S.7 was barred by limitation on the ground of absence of proper pleadings. It is held there in that:-

"i.In the Application no other date of default other than 08.07.2011 was mentioned. There was no mention of any acknowledgment of debt anywhere in the Application.

ii.Financial Creditor cannot be permitted to develop new submissions at later stage.

iii.It also held in para 35.1 that " In other words, even if Section 18 of the Limitation Act and principles thereof were applicable, the same would not apply to the application under consideration in the present case, looking to the very averment regarding default therein and for want of any other averment in regard to acknowledgement."

(Emphasis supplied)

6.Therefore, the law laid down in Babulal Vardharji (Supra) applies to the present case and no benefit of

Company Appeal (AT)(Ins) No.24/2021 18 S. 18 could be given to the Financial Creditor/Respondent No.1.

7.The aforesaid view held in Babulal Vardharji (Supra) is also further affirmed by the Hon'ble Supreme Court in the recent judgment of Dena 2 Bank (Now Bank of Baroda) VS C Shivakumar Reddy & Anr. [2021 SCC OnLine SC 543 in paras 53, 54, 106-108, 111, 134 & 144]. In the Dena Bank (Supra), the Supreme Court allowed the Application u/S. 7 of a Financial Creditor as an amendment to the said Application was incorporated before the passing of the final order by Adjudicating Authority. Dena Bank (Supra) also held that the Application u/S. 7 could be amended before the passing of the final order by Adjudicating Authority.

8.It is submitted that the pleadings in the Application u/S. 7 qua the acknowledgment of debt are indispensable to take benefit of S. 18 of the Limitation Act. However, in the present case there is no such pleading in the Application and no amendment to that effect was brought forth in the said Application. It is further submitted that the Hon'ble Supreme Court in Asset Reconstruction Company (India) Limited Vs Bishal Jaiswal and Another [2021 SCC OnLine SC 321] after holding that S. 18 of Limitation Act is applicable to the proceedings under the Code have remanded the matters, which lack the basic pleadings in the Application, back to the Tribunals below to amend the Application.

9.It is submitted that in the present matter no amendment to the Application u/S. 7 could be brought forth at the present stage and the said Application is lacking the basic pleadings regarding the acknowledgment of debt. Therefore, no benefit of Section 18 or 23 of the Limitation Act could be given to the Financial Creditor/ Respondent No. 1 and the present Appeal is liable to be allowed."

Company Appeal (AT)(Ins) No.24/2021 19

9. Besides the aforesaid written submissions the

appellant has also filed rejoinder to the reply filed by the

Financial Creditor. Learned counsel for the appellant

while referring to para 72 of the judgement of the

Hon'ble Supreme Court of India reported in (2020) 15

SCC 1 Babulal Vardharji Gurjar Vs Veer Gurjar

Aluminium Industries Pvt Ltd & Another submits that

the present case is squarely covered since after the

declaration of account as NPA the Financial Creditor in

the present case also had issued Notice under

SARFAESI Act. Since learned counsel for the appellant

heavily placed reliance of para 7.2 it is necessary to

reproduce the same as follows:-

"7.2.The corporate debtor having defaulted in

payment of the amount due against such loans,

advances and facilities, its account with

Corporation Bank was classified as Non-Performing

Asset on 08.07.2011 and that with Indian Overseas

Bank was classified as NPA on 05.08.2011. Then,

on 15.11.2011, demand notice under Section 13(2)

of the Securitisation and Reconstruction of Financial

Company Appeal (AT)(Ins) No.24/2021 20

Assets and Enforcement of Securities Interest Act,

2002 was issued by Indian Overseas Bank to the

corporate debtor and its guarantors. These steps

were followed up with recovery proceedings against

the corporate debtor by the consortium of lenders

and respondent No. 2 in OA No. 172/2013 before

the Debts Recovery Tribunal, Aurangabad

under Section 19 of the Recovery of Debts Due to the

Banks and Financial Institution Act, 1993.".

10. He has also referred to para 17 of the same

judgement i.e. Babulal Vardharji Gurjar (Supra) which

is as follows:-

"17. In distillation of what has been noticed hereinabove, it is apparent that while not disputing the basics on the applicability of law of limitation to the application in question, the main plank of submissions of the learned counsel for respondents has been that the applicability of Section 18 of the Limitation Act, providing for extension of the period of limitation upon making of acknowledgment by the party against whom a right is claimed, is not taken away and, for such acknowledgments (of liability) having been consistently and continuously made in the balance sheets and annual reports by the corporate debtor as also in its offer for OTS, the fresh period of limitation would be available from the date of every such acknowledgment. Hence, with heavy reliance on the principles relating to "acknowledgment" under Section 18 of the

Company Appeal (AT)(Ins) No.24/2021 21 Limitation Act, the learned counsel for the respondents would assert that the application in question is not barred by limitation. On the other hand, the gravamen of submissions on behalf of the appellant has been that looking to the scheme of the Code and the decisions of this Court, the application in question is governed by Article 137 of the Limitation Act; that three years' time period prescribed therein commences from the date of default; and that acknowledgment of debt in the balance sheet or annual report does not give any fresh period of limitation because default occurs only once and does not furnish a continuing right to apply."

11. While referring to Additional Written Submission

filed on 29.10.2021 on behalf of the Appellant, learned

counsel for the appellant has placed heavy reliance on

the cases reported in 2021 SCC OnLine SC 543 Dena

Bank (Bank of Baroda) Vs C Shivakumar Reddy &

anr. It has been argued that in the application filed by

the Financial Creditor for initiation of CIRP under

Section 7 it was not disclosed that the debt was

acknowledged by the Corporate Debtor or there was offer

of OTS. It was a serious defect and on this defect itself

the application was fit to be rejected as it was barred by

limitation. To elaborate this submission learned

counsel for the appellant has referred to para 53 and 54

Company Appeal (AT)(Ins) No.24/2021 22

of 2021 SCC OnLine SC 543 Dena Bank (Bank of

Baroda) Vs C Shivakumar Reddy & anr. He has also

referred para 106, 107, 134, 144 which are as

follows:-

"106. There can be no dispute with the proposition of law laid down in Babulal Vardharji Gurjar (supra) that limitation is essentially a mixed question of law and facts and when a party seeks application of any particular provision for extension or enlargement of the period, the relevant facts are required to be pleaded and requisite evidence is required to be adduced.

107. The judgment of this Court in Babulal Vardharji Gurjar (supra) was rendered in the facts of the aforesaid case, where the date of default had been mentioned as 8.7.2011 being the date of N.P.A. and it remained undisputed that there had neither been any other date of default stated in the application nor had any suggestion about any acknowledgement been made.

xxx

134. It is true that, when the petition under Section 7 of IBC was filed, the date of default was mentioned as 30th September 2013 and 31st December 2013 was stated to be the date of declaration of the Account of the Corporate Debtor as NPA. However, it is not correct to say that there was no averment in the petition of any acknowledgment of debt. Such averments were duly incorporated by way of amendment, and the Adjudicating Authority rightly looked into the amended pleadings.

xxxx

Company Appeal (AT)(Ins) No.24/2021 23

144. There is no bar in law to the amendment of pleadings in an application under Section 7 of the IBC, or to the filing of additional documents, apart from those initially filed along with application under Section 7 of the 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 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."

12. Learned counsel for the appellant has also referred

to para 49 and 54 of the Judgement of Hon'ble Supreme

Court reported in Asset Reconstruction Company (I)

Ltd vs Bishal Jaiswal and Another 2021 SCC OnLine

SC 321. However, we consider that such observation

has got no relevance in the facts and circumstances of

the present case. In sum and substance learned counsel

for the appellant has argued that the application filed by

Financial Creditor under Section 7 was fit to be rejected

Company Appeal (AT)(Ins) No.24/2021 24

on the ground of limitation itself and as such he

requests for setting aside the impugned order.

13. In the present case a detailed reply has been filed

by the Respondent No.1. Besides filing affidavit in reply

the Respondent No.1 has also filed written submission

on 29.10.2021. In this case one another written

submission has also been filed on behalf of Respondent

No.1 on 08.07.2022. In both the written submission

filed on behalf of Respondent No.1 there is similarity in

the submission. Mr. Yasartha Gupta, learned counsel

appearing on behalf of Respondent No.1/Financial

Creditor has argued that neither before the Adjudicating

Authority nor before this Appellate Tribunal the

Corporate Debtor has raised any dispute on the debt

amount. He submits that the appellant/corporate

debtor has only raised an issue of limitation. According

to him there was no substance on the objection raised

by the corporate debtor raising dispute of limitation. He

submits that admittedly the corporate debtor defaulted

to pay the debt and as such its account was declared

NPA on 30.09.2013. Thereafter under the SARFAESI

Company Appeal (AT)(Ins) No.24/2021 25

Act notice was issued and proceeding was also initiated.

In the SARFAESI proceeding some of the immovable

assets of corporate debtor were sold but it was much

lesser amount to the recoverable amount. He submits

that before the Adjudicating Authority the Financial

Creditor had brought on record number of documents to

show that the case was not barred by limitation. He

submits that after the account of corporate debtor was

declared NPA, Notice under Section 13(2) of the

SARFAESI Act was issued by the Financial Creditor and

thereafter on 16.04.2014 the corporate debtor

submitted balance and security confirmation letter for

credit facilities. The Financial Creditor has also brought

to the notice of Adjudicating Authority with the liability

acknowledgement towards the financial creditor by the

corporate debtor for the financial year 2014-15 and

financial year 2015-16 which were submitted by the

corporate debtor before the Ministry of Corporate Affairs.

14 Thereafter the corporate debtor through its letter

dated 23.02.2017 submitted a proposal for OTS of dues

of Financial Creditor, IDBI Bank Ltd. Another such

Company Appeal (AT)(Ins) No.24/2021 26

letter with the revised OTS was submitted on

15.09.2018. However, since it was not acceptable to the

Financial Creditor the same was informed to the

corporate debtor. Subsequent thereto on 22.10.2018 a

joint lenders meeting was held to discuss the revised

proposal. However, the revised proposal was rejected.

15. In SARFAESI proceeding secured immovable

properties were sold between 27.12.2018 and

30.04.2019. Three secured assets, one immovable

property at Charni Road and two cars were still available

with the Financial Creditor against their claims but the

claim was much greater than the value of those

remaining secured assets. Learned Counsel for the

Financial Creditor has also placed heavy reliance on a

judgement of Hon'ble Supreme Court in Bishal Jaiswal

(Supra). He submits that in view of Section 18 of the

Limitation Act the initial period of limitation was already

covered by way of acknowledgement by the corporate

debtor in its balance sheet for the year 2014-15 and

2015-16. Subsequently, thereafter the debt was also

admitted by the corporate debtor when he approached

Company Appeal (AT)(Ins) No.24/2021 27

for One Time Settlement. According to the learned

counsel for the Financial Creditor since debt has not

been disputed on the flimsy ground of limitation there is

no reason to interfere with the impugned order.

16. During hearing of the present appeal, Mr. Mukesh

Verma, RP appeared in person. He submitted that in

compliance with the earlier order he had already

submitted the status report but the said status report

was submitted on 25.03.2021. According to status

report Committee of Creditors was already constituted

and at least till 12.02.2021, 11 COC Meeting was

convened for discussing the plans received and for

negotiation with the Resolution Applicants. He also

supports the impugned order.

17. Besides hearing learned counsel for the parties we

have minutely examined the material available on record

and particularly the impugned order. The order

impugned itself reflects that the plea of limitation raised

by the appellant/corporate debtor is not sustainable

and is required to be rejected at threshold. It would be

appropriate to reproduce the impugned order passed by

Company Appeal (AT)(Ins) No.24/2021 28

the National Company Law Tribunal, Mumbai Bench as

follows:-

"1. This is a Company Petition filed under section 7

of the Insolvency & Bankruptcy Code, 2016 (IBC) by

Punjab National Bank (Financial Creditor), a body

corporate constituted under the Banking Companies

(Acquisition and Transfer of Undertakings) Act,

1970, duly represented by Mr. Binod Kumar

Sharma, Chief Manager, on the basis of a Power of

Attorney dated 02.06.1986 (Exhibit 'A' to the

petition at pp.16-21), seeking to initiate Corporate

Insolvency Resolution Process (CIRP) against J-

Marks Exim (India) Private Limited [CIN:

U51311MH2007PTC168736] (Corporate Debtor).

2. The Corporate Debtor is a Private Company

limited by shares and incorporated on 14.03.2007

under the Companies Act, 1956, with the Registrar

of Companies (RoC), Maharashtra, Mumbai. Its

Corporate Identity Number (CIN) is

U51311MH2007PTC168736. Its registered office is

at Nos. 58 & 59, 1st Floor, Nakshatra Cine Shoppe,

Company Appeal (AT)(Ins) No.24/2021 29

Ranade Road, Dadar (W), Mumbai- 400028 within

the State of Maharashtra. Therefore, this Bench has

jurisdiction to deal with this petition.

3. The present petition was filed on 10.06.2019

before this Adjudicating Authority on the ground

that the Corporate Debtor failed to make payment of

a sum of ₹1,45,42,74,724.16 (Rupees one hundred

and forty-five crore forty-two lakh seventy-four

thousand seven hundred and twenty-four and paise

sixteen only) as the total claim amount, comprising

inter alia of a sum of ₹35,44,50,688.47 (Rupees

thirty-five crore forty-four lakh fifty thousand six

hundred and eighty-eight and paise forty seven

only) as principal, ₹68,61,49,468.06 (Rupees sixty

eight crore sixty-one lakh forty-nine thousand four

hundred and sixtyeight and paise six only) as

interest and ₹9,31,58,997.52 (Rupees nine crore

thirty-one lakh fifty-eight thousand nine hundred

and ninetyseven and paise fifty-two only) as penal

interest at the rate of 2% p.a., as stated at pp.7-8 of

Company Appeal (AT)(Ins) No.24/2021 30

the Petition. The date of default is 30.09.2013, as

stated at p.7 of the petition.

4. The Financial Creditor has granted various credit

facilities to the Corporate Debtor aggregating to an

amount of ₹37,67,28,000/- (Rupees thirty-seven

crore sixty-seven lakh and twenty-eight thousand

only) (at page 7 of the Petition). Details of claim as

per Exhibit 'V' at pp.479.481 are as follows:

Sr. Nature of Principal Normal Other Penal Total No. Credit facility outstand Interest debits interest claim ing as on from less @ 2% amount 31.05.20 01.10.20 other simple 19 14 to credit 31.05.20 19 p.a. 1 2 3 4 5 (2+3+4+5) 1 Cast Credit 35,01,06 68,26,31 32,09,10 9,25,60, 1,44,62,0 A/c ,230.47 ,758.38 ,740.11 238.43 8,967.39 No.05464008 701738041 2 Term Loan 20,96,65 18,76,40 - 3,19,38 42,92,44 (Car Loan) 6.00 4.40 7.98 8.38 A/c No. 056400NG00 053639 3 Term Loan 22,47,80 16,41,30 (3,95,17 2,79,37 37,73,30 (Car Loan) 2.00 5.28 0.00) 1.11 8.39 A/c No.056400N G00053648 Grand Total 35,44,50 68,61,49 32,05,15 9,31,58, 1,45,42,7 ,688.00 ,468.06 ,030.11 997.52 4,724.16

5. The Financial Creditor submitted the particulars

of Financial Debt at pp.8-9 of the Petition as follows:

Company Appeal (AT)(Ins) No.24/2021 31

i) The Financial Creditor had sanctioned Cash

Credit Facilities as Working Capital Limit of ₹35

crore by providing first pari passu charge by way of

hypothecation of the Corporate Debtor's stocks of

imported/indigenous raw materials, consumables,

spares, stock in process, finished goods, packing

materials, book debts, etc. and term loan of ₹2.20

crore by providing first charge on land and building

and plant and machinery created out of the said

term loan vide sanction letter dated 27.12.2011

which is placed as Exhibit-B at pp.22-33. The

aforesaid Working Capital Limit was granted under

consortium arrangement dated 17.02.2012 with

IDBI Bank Limited, a copy of which is placed as

Exhibit E at pp 67-107. The Term Loan Agreement

dated 17.02.2012 sanctioned by the Financial

Creditor individually is placed as Exhibit D at pp.36-

66 of the petition. The undertakings dated

12.01.2012 and 17.02.2012 for the above credit

facilities availed by the Corporate Debtor are placed

as Exhibit F (Colly) at pp.108-114. Further an Inter

Company Appeal (AT)(Ins) No.24/2021 32

Se Agreement between the Financial Creditor and

IDBI Bank Limited was executed on 17.02.2012 and

the same is placed as Exhibit G at pp.115-134.

ii) A Deed of Guarantee dated 17.02.2012 between

Mr. Dinesh G. Jaiswal, director of Corporate Debtor,

Ms. Sunita D. Jaiswal, wife of director of the

Corporate Debtor, as Personal Guarantors, D.J.

Exim (India) Private Limited as Corporate Guarantor

in favour of Punjab National Bank (Lead Bank of the

Consortium) is placed as Exhibit I at pp.137-153 of

the petition. Further a Deed of Guarantee dated

17.02.2012 between Mr. Dinesh G. Jaiswal, director

of Corporate Debtor, Ms. Sunita D. Jaiswal, wife of

director of the Corporate Debtor, as Personal

Guarantors, D.J. Exim (India) Private Limited as

Corporate Guarantor in favour of Punjab National

Bank as security for the Term Loan is placed at

pp.154-167 of the Petition.

iii) A Deed of Hypothecation dated 17.02.2012

between the Corporate Debtor and the Financial

Creditor and a Joint Deed of Hypothecation between

Company Appeal (AT)(Ins) No.24/2021 33

the Corporate Debtor and Financial Creditor and

IDBI Bank Limited are placed as Exhibit J (Colly) at

pp.168-228.

iv) On 31.07.2012 the Financial Creditor sanctioned

two more Term Loan (Car Loan) facilities of

₹24,69,000/- and ₹22,59,000/-. To secure the

aforesaid Term Loan (Car Loan) facilities the

Corporate Debtor executed Letter of Hypothecation

for both Term Loans on 31.07.2012. Further the

Directors of the Corporate Debtor namely Mr. Dinesh

Jaiswal and Mrs. Sunita Jaiswal also executed

Agreement of Guarantee 31.07.2012 for the Term

Loans (Car Loan). All of these are placed as Exhibit

R (Colly) and Exhibit S (Colly) at pp.419-439 of the

petition.

v) Further the Corporate Debtor, being in need of

additional credit limits, approached Bank of India

who sanctioned fresh credit facilities amounting to

₹25 crore and Term Loan of ₹5 crore. In pursuance

of sanctioning the aforesaid additional credit limits

by Bank of India, a First Supplement Joint Deed of

Company Appeal (AT)(Ins) No.24/2021 34

Hypothecation, a First Supplement Working Capital

Consortium Agreement, a First Supplement Inter Se

Agreement, a First Supplement Deed of Guarantee,

a Memorandum of Deposit of the Title Deeds, a letter

of Authority to Lead Bank and an undertaking dated

23.11.2012 were executed adding Bank of India as

a party, copies of the same are placed as Exhibit K-

Q at pp.229-418 of the petition.

vi) Initially the Corporate Debtor was regularly

making payment towards the credit facilities.

However, around June 2013, it started defaulting in

making the payment and according to the guidelines

of the Reserve Bank of India, it was considered as

a Non-Performing Asset (NPA) on 30.09.2013. The

letter declaring NPA is attached at p.482B of the

petition.

vii) On 25.10.2013, the Financial Creditor issued

notice under section 13(2) of the Securitisation and

Reconstruction of Financial Assets and Enforcement

of Security Interest (SARFAESI) Act, 2002. (Exhibit X

pp.484-489 of the petition)

Company Appeal (AT)(Ins) No.24/2021 35

viii) On 16.04.2014 the Corporate Debtor submitted

Balance and Security Confirmation Letters to the

Financial Creditor. (Exhibit T (Colly) pp.440-443)

ix) Commercial Credit Information Report taken from

CIBIL as on 03.05.2019 is also attached to the

petition stating the credit facilities taken by the

Corporate debtor as Exhibit U at pp.444- 455.

x) Further statement of accounts along with

Certificate under section 2A of Bankers' Books

Evidence Act, 1891 is placed as Exhibit V (Colly) at

pp.456-482F.

xi) Further, in pursuance of the action initiated by

the Financial Creditor under the SARFAESI Act,

secured immovable properties were sold between

27.12.2018 and 30.04.2019. Sale Certificates

regarding the same are placed as Exhibit Y (Colly)

at pp.490-494.

6. In its reply dated 17.09.2019, the Corporate

Debtor has set up the following defence:

Company Appeal (AT)(Ins) No.24/2021 36

a) The present Petition is barred by the law of

limitation. The cause of action arose on 30.09.2013,

the day on which the Corporate Debtor was

declared as Non-Performing Asset (NPA). The

present petition was filed on 10.06.2019, hence the

petition is time barred.

b) Further the Financial Creditor initiated a recovery

action under section 13(2) of the Securitisation and

Reconstruction of Financial Assets and Enforcement

of Security Interest (SARFAESI) Act, 2002 by notice

dated 25.10.2013. Pursuant to the initiation of

action the Financial Creditor sold a few properties of

the Corporate Debtor which were mortgaged as per

'para 1 and 2' at pp. 1-3 of the reply.

c) The Corporate Debtor has relied on section 238-A

of Insolvency and Bankruptcy Code, 2016 along

with the judgment of the Hon'ble Supreme Court in

B. K. Education Services Private Limited V. Parag

Gupta and Associates MANU/SC/1160/2018

(Exhibit A pp.6-59 of the reply) which clearly lays

Company Appeal (AT)(Ins) No.24/2021 37

down the application of Limitation Act to petition

filed under IBC,2016 as follows:

"27. It is thus clear that since the Limitation Act is

applicable to applications filed under Sections 7 and

9 of the Code from the inception of the Code, Article

137 of the Limitation Act gets attracted. "The right to

sue", therefore, accrues when a default occurs. If the

default has occurred over three years prior to the

date of filing of the application, the application

would be barred under Article 137 of the Limitation

Act, save and except in those cases where, in the

facts of the case, Section 5 of the Limitation Act may

be applied to condone the delay in filing such

application."

d) Further the Corporate Debtor also submits that

the default cannot be regarded as continuing wrong

so as to invite the application of section 23 of the

Limitation Act.

7. The Financial Creditor filed a rejoinder to the

affidavit in reply on 25.09.2019 stating the

following:

Company Appeal (AT)(Ins) No.24/2021 38

a) Credit facilities and term loans were sanctioned

to the Corporate Debtor by the Financial Creditor

between 27.11.2011 and 23.11.2012 through

consortium arrangements with IDBI Bank Limited

and Bank of India and through arrangements

between the two parties on various dates. The

Corporate Debtor defaulted in paying monthly

instalments from June 2013 and hence was

declared as a Non-Performing Asset (NPA) on

30.09.2013 as per guidelines of Reserve Bank of

India.

b) After issue of notice under section 13(2) of the

SARFAESI Act, 2002 by the Financial Creditor, the

Corporate Debtor on 16.04.2014 submitted balance

and security confirmations letters for the credit

facilities taken.

c) Further the Corporate Debtor in its financials for

the year FY 2014- 15 and FY 2015-16 submitted

with the Ministry of Corporate Affairs acknowledged

the liability towards the Financial Creditor. (Exhibit

B pp.14-105 of the rejoinder)

Company Appeal (AT)(Ins) No.24/2021 39

d) Further the Corporate Debtor in its letter dated

23.02.2017 submitted a proposal for one time

settlement of dues of the Financial Creditor, IDBI

Bank Limited and Bank of India. Another letter

regarding the same with a revised one time

settlement value was submitted on 15.09.2018

(Exhibit C pp. 106-108 and Exhibit E pp. 110-113 of

the rejoinder)

e) The Financial Creditor as a consortium leader

informed the Corporate Debtor that the one time

settlement was not acceptable by any party to the

consortium. (Exhibit D p. 109 of the rejoinder).

Further a Joint Lenders Meeting was held on

22.10.2018 to discuss about the revised proposal.

Minutes of meeting rejecting the revised offer is

placed as Exhibit F at pp. 114-116 of the rejoinder.

f) Further in pursuance of the action initiated by the

Financial Creditor under the SARFAESI Act, secured

immovable properties were sold between

27.12.2018 and 30.04.2019. Three secured assets,

one immovable property at Charni Road and two

Company Appeal (AT)(Ins) No.24/2021 40

cars are still available with the Financial Creditor

against their claims but the claim amount is much

greater than the value of these remaining secured

assets. Findings:

8. We have heard the arguments of both sides and

perused the records. 9. The objection of the Ld.

Counsel for the Corporate Debtor is on the ground of

Limitation and defences raised can be classified as

follows on the subject of limitation:

(a) Continuing wrong;

(b)Balance confirmation and acknowledgement of

liability in the Balance Sheet;

(c) Settlement offers made.

10. The date of default is taken to be 30.09.2013,

the day on which the Corporate Debtor was

declared as a Non-Performing Asset (NPA) by the

Financial Creditor as per the guidelines of Reserve

Bank of India.

11. The Corporate Debtor on the point of limitation

has relied on the judgment of the Hon'ble Supreme

Company Appeal (AT)(Ins) No.24/2021 41

Court in case of Gaurav Hargovindbhai Dave vs

Asset Reconstruction Company (India) Limited &

Anr (2019) 10 SCC 572 which reads as follows:

"6) Having heard the learned counsel for both sides,

what is apparent is that Article 62 is out of the way

on the ground that it would only apply to suits. The

present case being "an application" which is filed

under Section 7, would fall only within the residuary

Article 137. As rightly pointed out by learned

counsel appearing on behalf of the appellant, time,

therefore, begins to run on 21.07.2011, as a result

of which the application filed under Section 7 would

clearly be time-barred. So far as Mr. Banerjee's

reliance on para 7 of B.K. Educational Services

Private Limited (supra), suffice it to say that the

Report of the Insolvency Law Committee itself stated

that the intent of the Code could not have been to

give a new lease of life to debts which are already

time-barred.... It is well settled that there is no

equity about limitation - judgments have stated that

Company Appeal (AT)(Ins) No.24/2021 42

often time periods provided by the Limitation Act can

be arbitrary in nature."

12. This principle of law was reinforced by the

Hon'ble Supreme Court in the case of Jignesh Shah

& Anr vs Union of India & Anr (2019) 10 SCC 750

which reads as follows:

"10.... With the introduction of Section 238A into the

Code, the provisions of the Limitation Act apply to

applications made under the Code. Winding up

petitions filed before the Code came into force are

now converted into petitions filed under the Code.

What has, therefore, to be decided is whether the

Winding up Petition, on the date that it was filed, is

barred by lapse of time. If such petition is found to

be time-barred, then Section 238A of the Code will

not give a new lease of life to such a time-barred

petition...."

13. The Corporate Debtor further relied on the

judgment of the Hon'ble Supreme Court in the case

of Sagar Sharma & Anr vs Phoenix Arc Pvt. Ltd. &

Company Appeal (AT)(Ins) No.24/2021 43

Anr (2019) 10 SCC 353 which reiterated the same

principle.

14. There is no quarrel with reference to the

applicability of the Limitation Act to IBC

proceedings. In considering this aspect, the

defences raised by the Corporate Debtor are

answered as follows:-

On the matter of 'default' not being a

continuing wrong.

15. The Corporate Debtor submits a default cannot

be regarded as continuing wrong so as to invite the

application of section 23 of the Limitation Act.

16. The Corporate Debtor has relied on the

judgement of the Hon'ble Supreme Court in the case

of Vashdeo R Bhojwani V. Abhudaya

Cooperative Bank Ltd & anr 79(IBC)10/2019

(Exhibit 'B' pp. 61-63 of the reply) by which it was

clarified that a default cannot be regarded as a

continuing wrong in para 4 as follows:

Company Appeal (AT)(Ins) No.24/2021 44

"4. ..... If the wrongful act causes an injury which is

complete, there is no continuing wrong even though

the damage resulting from the act may continue. If,

however, a wrongful act is of such a character that

the injury caused by it itself continues then the act

constitutes a continuing wrong. In this connection it

is necessary to draw a distinction between the

injury caused by the wrongful act and what may be

described as the effect of the said injury. It is only

in regard to acts which can be properly

characterised as continuing wrongs that s.23 can be

invoked....

Following this judgment, it is clear that when the

Recovery Certificate dated 24.12.2001 was issued,

this Certificate injured effectively and completely the

appellant's rights as a result of which limitation

would have begun ticking."

17. However, this exposition of law in regard to

section 23 of the Limitation Act, 1963, has no

applicability in so far as the case of the Corporate

Debtor is concerned, inter alia for the reason that

Company Appeal (AT)(Ins) No.24/2021 45

there is acknowledgement of liability, as discussed

in the subsequent paragraphs.

On the matter of Balance confirmation and

acknowledgement of liability in the Balance

Sheet

18. The Financial Creditor further submitted that the

Hon'ble High Court of Andhra Pradesh in the matter

of Vijaya Kumar Machinery & Electrical Stores Vs.

Alaparthi Lakshmikanthamma

MANU/AP/0150/1968 has clearly laid down in

para 50 as follows:

"50. The Punjab High Court also took a similar view

in Lahore Enamelling and Stamping Co. Ltd. v. A.K.

Bhalla. In paragraph 37 it was laid down as

follows:

"Debts due to creditors not mentioned by name

but included in the item relating to 'loans

(unsecured)' or as due to 'sundry creditors'

mentioned in the balance-sheet amount to an

acknowledgment within the provisions of

Company Appeal (AT)(Ins) No.24/2021 46 Section 19 of the Indian Limitation Act, so as

to extend the period of limitation with effect

from the date of the signing of the

acknowledgment."

(emphasis added)

19. The Hon'ble High Court of Delhi in the matter of

Bhajan Singh Samra Vs. Wimpy International

Limited MANU/DE/6688/2011 reinforced the same

view.

20. Further the Financial Creditor submits that the

Hon'ble High Court of Kerala in the matter of Al-

Ameen Limited Vs. K. P. Sethumadhavan

MANU/KE/1189/2017 decided upon the date on

which the acknowledgement in the Balance Sheet

should be considered and the same reads as

follows:

"7. The complex question is as to whether Ext.A1

balance sheet and the profit and loss account is an

acknowledgment of liability for the period ending

31.3.1995 to which it relates or on 26.3.1997 when

Company Appeal (AT)(Ins) No.24/2021 47

it was signed. This assumes significance since the

suit for money was filed on 3.1.2000 which is well

beyond three years from 31.3.1995 though within

three years from 26.3.1997. The period of limitation

for filing a suit of the nature is three years from the

acknowledgment and there is a cleavage in judicial

opinion as to from which date the period will run...

8. ...***

9. Will not the signing of the balance sheet and the

profit and loss account at best be an

acknowledgment made by a director of a debt due

to himself is the further question posed by the

defendant. Reliance is placed on P. S. Thirumalai

Iyengar v. Official Liquidator [AIR 1962 Madras

253(DB)] and A. C. K. Krishnaswami v. M/s.

Stressed Concrete Constructions Pvt. Ltd. [AIR 1964

Madras 191]. But the precise question has been

answered in Re Gee & Co's case (supra) as follows:

'It seems to me plain that an acknowledgment

signed by the directors in relation to their own debt

would be fully effective if sanctioned by every

Company Appeal (AT)(Ins) No.24/2021 48

member of the company............The general meeting

of the company at which the accounts were adopted

and the state of the Eccles account confirmed was

in fact a meeting attended by, or by the

representative of, every member of the

company............In these circumstances, it seems to

me plain that all the corporators must be taken to

have agreed to the directors' written

acknowledgment of the debt.'

Nobody has a case that Ext.A1 balance sheet and

the profit and loss account was not placed in the

annual general body meeting of the defendant and

got approved by the board of directors as mandated

by the Company Law. The irresistible conclusion

therefore is that Ext.A1 balance sheet and the profit

and loss account operates as an acknowledgment

on 26.3.1997 of the liability on 31.3.1995."

21. The Corporate Debtor per contra, relied on a

judgment of Hon'ble Calcutta High Court in case of

Darjeeling Commercial Co. Ltd. vs Pandam Tea Co.

Ltd MANU/WB/0117/1981 which reads as follows:

Company Appeal (AT)(Ins) No.24/2021 49

"16. Reference may also be made to a latest

decision of the English court In Gee & Co. (Woolwich

Ltd.), re [1974] 1 All ER 1149; 2 WLR 515(Ch.D),

where the acknowledgment of the liability, of a

company in its balance-sheet came up for

consideration and after reviewing the relevant

decisions including some of the decisions cited by

Mr. S. B. Mukherjee on behalf of the company and

summarising the relevant facts of the case which, in

my view, are very similar to the present one,

Brightman J. observed at page 1160 (p. 527 of 2

WLR) as follows:

"I shall accordingly decide this case on the footing

that a balance sheet, if duly signed by the directors,

is capable of being an effective acknowledgment of

the state of indebtedness as at the date of the

balancesheet; and that, in an appropriate case, the

cause of action will be deemed to have accrued at

the date of the balance-sheet, being the date to

which the signature of the directors relates. It's my

judgment the balance-sheet of the company as at

Company Appeal (AT)(Ins) No.24/2021 50

31st December 1965, signed by the directors on

25th November, 1966, would have been an effective

acknowledgment as at 31st December, 1965, of the

liability of the company so as to take the matter out

of the statute, if the acknowledgment had not been

made by the directors in favour of one of

themselves."

22. In view of the above enunciation of law by the

Hon'ble High Courts of Andhra Pradesh, Delhi and

Kerala, it is clear that an acknowledgement of

liability in the balance sheet of the company

constitutes an acknowledgment of liability within

the meaning of section 18 of the Limitation Act,

1963, with attendant consequences. In the present

case, there is acknowledgement in the balance

sheet of the corporate debtor as at 31.03.2015 and

31.03.2016, and therefore, a fresh period of

limitation began to run from that date. Further, the

judgment of the Hon'ble Calcutta High Court

recognises the fact that "in an appropriate case, the

cause of action will be deemed to have accrued at

Company Appeal (AT)(Ins) No.24/2021 51

the date of the balance-sheet, being the date to

which the signature of the directors relates." In view

of the above judgments, it appears to us that the

date of signatures of the directors be construed as

the date of effective acknowledgement of the state

of indebtedness of the company.

On the matter of Settlement Offers made:

23. The Financial Creditor has argued by relying on

the judgment of the Hon'ble Supreme Court in the

case of ITC Limited Vs Blue Coast Hotels Ltd. & Ors

2018 SCC OnLine SC 237 which reads as follows:

"Letter of Undertaking 'Without Prejudice'

35. Much was sought to be made of the words

"without prejudice" in the letter containing the

undertaking that if the debt was not paid, the

creditor could take over the secured assets. The

submission on behalf of the debtor that the letter of

undertaking was given in course of negotiations and

cannot be held to be an evidence of the

acknowledgement of liability of the debtor, apart

Company Appeal (AT)(Ins) No.24/2021 52

from being untenable in law, reiterates the attempt

to evade liability and must be rejected. The

submission that the letter was written without

prejudice to the legal rights and remedies available

under any law and therefore the acknowledgement

or the undertaking has no legal effect must likewise

be rejected. This letter is reminiscent of a letter that

fell for consideration in Spencer's case as pointed

out by Mr. Harish Salve, "as a rule the debtor who

writes such letters has no intention to bind himself

further than is bound already, no intention of paying

so long as he can avoid payment, and nothing

before his mind but a desire, somehow or other, to

gain time and avert pressure." It was argued in a

subsequent case that an acknowledgment made

"without prejudice" in the case of negotiations

cannot be used as evidence of anything expressly or

impliedly admitted. The House of Lords observed as

follows:

"But when a statement is used as

acknowledgement for the purpose of s. 29 (5), it is

Company Appeal (AT)(Ins) No.24/2021 53

not being used as evidence of anything. The

statement is not an evidence of an

acknowledgement. It is the acknowledgement."

Therefore, the without prejudice rule could have no

application."

24. In response to this, the Corporate Debtor has

submitted the judgment of Shibcharan Das vs Firm

Gulabchand Chhotey Lal AIR 1936 All 157 which

states as follows:

"4. The defendant also called a Vakil, Pandit Behari

Lal Sharma, who gave evidence corroborating that

given by the defendant himself. In our judgment this

witness's evidence was not admissible.

Negotiations were being conducted with a view to

settlement, and that being so, we are bound to hold

that these negotiations were being conducted

without prejudice." In such circumstances it is not

open for one of the parties to give evidence of an

admission made by another. If negotiations are to

result in a settlement each side must give away a

certain amount. If one of the parties offers to take

Company Appeal (AT)(Ins) No.24/2021 54

something less than what he later claims he is

legally entitled, such must not be used against him;

otherwise persons could not make offers during

negotiations with a view to a settlement."

25. The Financial Creditor has further submitted an

order of the National Company Law Appellate

Tribunal (NCLAT) in the case of Babulal Vardhaji

Gurjar vs Veer Gurjar Aluminium & Anr CP (IB)-

488/I&BP/MB/2018 which reads as follows:

"12. The 'Financial Creditor' has also brought on

record a letter dated 31st July 2018 issued by the

appellant to the respondent - 'Financial Creditor' for

one-time settlement. The aforesaid fact shows that

there is a continuous cause of action under Section

19 filed by the respondent - 'Financial Creditor'

which is pending before the DRT....

29. Part V (First Division) of Limitation Act relates to

'Suits relating to immovable property' to recover

possession of the property mortgaged and

afterwards transferred by the mortgagee for a

valuable consideration. The period of limitation is 12 Company Appeal (AT)(Ins) No.24/2021 55

years since the transfer becomes known to the

plaintiff [Article 61(b)].

30. In view of the aforesaid position of law, the

property having mortgaged, we also hold that the

claim is not barred by limitation as the period of

limitation is 12 years with regard to mortgaged

property and in terms of Section 5 (7) read with

Section 5(8) as the property is mortgaged,

Respondent No. 2 also comes within the meaning of

'Financial Creditor'."

26. In view of the law laid down by the Hon'ble

Supreme Court in ITC Limited (supra), we hold that

the offer of one Time Settlement (OTS) made by the

Corporate Debtor to the Financial Creditor

constitutes an acknowledgement of liability within

the meaning of section 18 of the Limitation Act,

1963. The Judgment of the Hon'ble Allahabad High

Court in Shibcharan Das (supra) must be held to be

inapplicable in view of the judgment of the Hon'ble

Supreme Court in ITC Limited. Further the order of

the Hon'ble NCLAT discussed in previous paras

Company Appeal (AT)(Ins) No.24/2021 56

directly relates to this matter and can be a

continuous cause of action as well. 27. In the light

of the above discussion and the fact that the

Corporate Debtor in its financial statements for the

F.Y. 2014-15 and F.Y. 2015- 16 filed with the

Ministry of Corporate Affairs acknowledges the

liability towards the Financial Creditor; and also in

its letter dated 23.02.2017 submitted a proposal for

one time settlement of dues of the Financial Creditor,

IDBI Bank Limited and Bank of India, which was

also revised on 15.09.2018.

28. Therefore, we hold that the petition filed by the

Financial Creditor is within limitation.

29. This Petition reveals that there is a debt as

defined in section 3(11) of IBC; there is a default

within the meaning of section 3(12) of IBC.

Therefore, the Petition made by the Financial

Creditor is complete in all respects as required by

law. It clearly shows that the Corporate Debtor is in

default of a debt due and payable, and the default

is more than minimum amount of one lakh rupees

Company Appeal (AT)(Ins) No.24/2021 57

stipulated under section 4(1) of the IBC. Therefore,

the default stands established and there is no

reason to deny the admission of the Petition. In view

of this, this Adjudicating Authority admits this

Petition and orders initiation of CIRP against the

Corporate Debtor.

30. The Financial Creditor has proposed Mr. Mukesh

Verma as Interim Resolution Professional (IRP) in the

matter.

31. It is, accordingly, hereby ordered as follows: -

(a) The petition bearing CP(IB) 2176/MB/C-IV/2019

filed by Punjab National Bank, the Financial

Creditor, under section 7 of the IBC read with rule

4(1) of the Insolvency & Bankruptcy (Application to

Adjudicating Authority) Rules, 2016 for initiating

Corporate Insolvency Resolution Process (CIRP)

against J- Marks Exim (India) Private Limited [CIN:

U51311MH2007PTC168736], the Corporate Debtor,

is admitted. (b) There shall be a moratorium under

section 14 of the IBC, regarding the following:

Company Appeal (AT)(Ins) No.24/2021 58

(i) The institution of suits or continuation of pending

suits or proceedings against the Corporate Debtor

including execution of any judgment, decree or order

in any court of law, tribunal, arbitration panel or

other authority;

(ii) Transferring, encumbering, alienating or

disposing of by the Corporate Debtor any of its

assets or any legal right or beneficial interest

therein;

(iii) Any action to foreclose, recover or enforce any

security interest created by the Corporate Debtor in

respect of its property including any action under

the Securitisation and Reconstruction of Financial

Assets and Enforcement of Security Interest

(SARFAESI) Act, 2002;

(iv) The recovery of any property by an owner or

lessor where such property is occupied by or in

possession of the Corporate Debtor.

(c) Notwithstanding the above, during the period of

moratorium:

Company Appeal (AT)(Ins) No.24/2021 59

(i) The supply of essential goods or services to the

corporate debtor, if continuing, shall not be

terminated or suspended or interrupted during the

moratorium period;

(ii) That the provisions of sub-section (1) of section

14 of the IBC shall not apply to such transactions as

may be notified by the Central Government in

consultation with any sectoral regulator;

(d) The moratorium shall have effect from the date of

this order till the completion of the CIRP or until this

Tribunal approves the resolution plan under sub-

section (1) of section 31 of the IBC or passes an order

for liquidation of Corporate Debtor under section 33

of the IBC, as the case may be.

(e) Public announcement of the CIRP shall be made

immediately as specified under section 13 of the IBC

read with regulation 6 of the Insolvency &

Bankruptcy Board of India (Insolvency Resolution

Process for Corporate Persons) Regulations, 2016.

Company Appeal (AT)(Ins) No.24/2021 60

(f) Mr. Mukesh Verma, Registration No.IBBI/IPA-

001/ IPP01665/ 2019-20/12522, residing at A

504, Manish Garden Cooperative Housing Society,

Manish Nagar, J.P. Road, Andheri West, Mumbai-

400058, is appointed as Interim Resolution

Professional to carry out the functions as mentioned

under IBC. The fee payable to IRP or, as the case

may be, the RP shall be compliant with such

Regulations, Circulars and Directions as may be

issued by the Insolvency & Bankruptcy Board of

India (IBBI). The IRP/ RP shall carry out his

functions as contemplated by sections 15, 17, 18,

19, 20 and 21 of the IBC.

(g) During the CIRP Period, the management of the

Corporate Debtor shall vest with the IRP or, as the

case may be, the RP in terms of section 17 of the

IBC. The officers and managers of the Corporate

Debtor shall provide all documents in their

possession and furnish every information in their

knowledge to the IRP within a period of one week

Company Appeal (AT)(Ins) No.24/2021 61

from the date of receipt of this Order, in default of

which coercive steps will follow.

(h) The Financial Creditor shall deposit a sum of

₹3,00,000/- (Rupees three lakh only) with the IRP to

meet the expenses arising out of issuing public

notice and inviting claims. These expenses are

subject to approval by the Committee of Creditors

(CoC).

(i) The IRP/RP shall submit periodical reports to this

Adjudicating Authority indicating the progress of the

CIRP.

(j) The Registry is directed to communicate this

Order to the IRP, Financial Creditor, IRP and the

Corporate Debtor by Speed Post, email and

WhatsApp immediately, and in any case, not later

than two days from the date of this Order.

(k) A copy of this Order be sent to the Registrar of

Companies, Maharashtra, Mumbai, for updating the

Master Data of the Corporate Debtor. The said

Registrar of Companies shall send a compliance

Company Appeal (AT)(Ins) No.24/2021 62

report in this regard to the Registry of this Court

within seven days from the date of receipt of a copy

of this order.

18. On going through the aforesaid order there is no

dispute that the account of corporate debtor was

declared NPA on 30.09.2013 . It is also not in dispute

that balance sheet for the year 2014-15, 2015-16

showing acknowledgement was brought to the notice of

the Adjudicating Authority. It is also not in dispute that

on 16.4.2014 the corporate debtor had submitted

balance cum security letter acknowledging the debt.

The said balance sheet of 2014-2015 and 2015-16 were

uploaded by the corporate debtor on the portal of MCA

website. Thereafter on 23.02.2017 the corporate debtor

vide its letter dated 23.02.2017 submitted proposal for

settlement of dues. The said letter was submitted with

an offer of an amount of Rs.20 crore in settlement of

dues of all the three banks i.e. PNB, IDBI, Edelweisse

ARC (assignee of Bank of India). Thereafter on 15 th

September, 2018 the corporate debtor submitted revised

offer for settlement of dues and offered Rs.27 crores. As

Company Appeal (AT)(Ins) No.24/2021 63

such on 22nd October, 2018 a joint lender meeting was

held wherein the representative of corporate debtor was

present. However, after discussions in the meeting

revised OTS was also rejected. After rejection of OTS on

27.12.2018 in the Sarfaesi proceeding two secured

immovable properties were sold. Since outstanding was

much much higher than the amount recovered after sale

on 10.06.2019 application under Section 7 of the Code

was filed before the Adjudicating Authority. All the

aforesaid facts were brought to the notice of the

Adjudicating Authority and thereafter the Adjudicating

Authority by impugned order admitted the application

and initiated CIRP which is still pending.

19. On examination of aforesaid fact there is no reason

to accept the plea of Learned Counsel for the appellant

that the initiation of CIRP was barred by limitation. The

question regarding acknowledgement has already been

set at rest by three Judges Bench of Hon'ble Supreme

Court which was passed on 15.4.2021 reported in 2021

6 SCC 366 in Bishal Jaiswal (Supra). Whatever points

have been raised by the learned counsel for the

Company Appeal (AT)(Ins) No.24/2021 64

appellant in the present case, is squarely covered by the

Hon'ble Supreme Court in Bishal Jaiswal (supra) case.

As per judgement of the Hon'ble Supreme Court in a

proceeding under the IBC, provisions of Limitation Act

is applicable though Section 238A was inserted in the

IBC w.e.f. 6.6.2018. It has been clarified by the Hon'ble

Supreme Court that it was clarificatory in nature and it

was having retrospective effect. The Hon'ble Supreme

Court in Bishal Jaiswal case (Supra) has relied upon

its own judgement passed in Laxmi Pat Surana Vs

Union Bank of India and the same has been reproduced

in para 12 of the Judgement in Bishal Jaiswal case. We

may not do better than to reproduce the same:-

"12. Nearer home, in Laxmi Pat Surana v. Union Bank of India, Civil Appeal No. 2734 of 2020, a judgment delivered on 26.03.2021, this Court, after referring to various judgments of this Court, including the judgment in Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries (P) Ltd., (2020) 15 SCC 1 ["Babulal"], then held:

"41. The purport of such observation has been dealt with in the case of Babulal Vardharji Gurjar. Suffice it to observe that this Court had not ruled out the application of Section 18 of the Limitation Act to the proceedings under the Code, if the fact situation of the case so warrants. Considering that the purport of Section 238A of the Code, as enacted, is

Company Appeal (AT)(Ins) No.24/2021 65

clarificatory in nature and being a procedural law had been given retrospective effect; which included application of the provisions of the Limitation Act on case-to-case basis. Indeed, the purport of amendment in the Code was not to reopen or revive the time barred debts under the Limitation Act. At the same time, accrual of fresh period of limitation in terms of Section 18 of the Limitation Act is on its own under that Act. It will not be a case of giving new lease to time barred debts under the existing law (Limitation Act) as such.

42. Notably, the provisions of Limitation Act have been made applicable to the proceedings under the Code, as far as may be applicable. For, Section 238A predicates that the provisions of Limitation Act shall, as far as may be, apply to the proceedings or appeals before the Adjudicating Authority, the NCLAT, the DRT or the Debt Recovery Appellate Tribunal, as the case may be. After enactment of Section 238A of the Code on 06.06.2018, validity whereof has been upheld by this Court, it is not open to contend that the limitation for filing application under Section 7 of the Code would be limited to Article 137 of the Limitation Act and extension of prescribed period in certain cases could be only under Section 5 of the Limitation Act. There is no reason to exclude the effect of Section 18 of the Limitation Act to the proceedings initiated under the Code. Section 18 of the Limitation Act reads thus:

"18. Effect of acknowledgement in writing.- (1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgement 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

Company Appeal (AT)(Ins) No.24/2021 66

period of limitation shall be computed from the time when the acknowledgement was so signed. (2) Where the writing containing the acknowledgement 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 acknowledgement 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."

20. So far as plea of Learned Counsel for the appellant

that limitation should be counted from the date of

declaration of the account of Corporate Debtor as NPA,

it has also been dealt with in the same para by the

Hon'ble Supreme Court and it has been clarified that

ordinarily a declaration of the loan account/debt as NPA

can be reckoned as date of default but it may not be

Company Appeal (AT)(Ins) No.24/2021 67

considered as the final date for calculation of the

limitation. If we consider the application of Section 18

of the Limitation Act certainly if acknowledgement has

been made within the period of three years from the date

of declaring the account as NPA, the period of limitation

shall be extended from the date of acknowledgement. In

the present case the Financial Creditor has established

that within the limitation period initially debt was

acknowledged in 2014. Thereafter in view of

acknowledgement made in balance sheet which has

been obtained from the website of the MOCA which was

for the year 2014-15 and 2015-16 the limitation was

extended. Again when the appellant/corporate debtor

approached the bank for OTS the date of limitation was

further extended from the date of OTS and finally offer

of OTS was given. On examination of the chain of events

which we have elaborated hereinabove there is no

difficulty in coming to the conclusion that the petition

under Section 7 was filed within the period of limitation

or within extended period of limitation. The Hon'ble

Supreme Court in Bishal Jaiswal case has approved

Company Appeal (AT)(Ins) No.24/2021 68

and reproduced law laid down in Laxmi Pat Surana case

(Supra) which has been incorporated in para 12 of the

Judgement:-

"43. Ordinarily, upon declaration of the loan

account/debt as NPA that date can be reckoned as

the date of default to enable the financial creditor to

initiate action under Section 7 of the Code.

However, Section 7 comes into play when the

corporate debtor commits "default". Section 7,

consciously uses the expression "default" - not the

date of notifying the loan account of the corporate

person as NPA. Further, the expression "default"

has been defined in Section 3(12) to mean non-

payment of "debt" when whole or any part or

instalment of the amount of debt has become due

and payable and is not paid by the debtor or the

corporate debtor, as the case may be. In cases

where the corporate person had offered guarantee

in respect of loan transaction, the right of the

financial creditor to initiate action against such

entity being a corporate debtor (corporate

Company Appeal (AT)(Ins) No.24/2021 69

guarantor), would get triggered the moment the

principal borrower commits default due to non-

payment of debt. Thus, when the principal borrower

and/or the (corporate) guarantor admit and

acknowledge their liability after declaration of NPA

but before the expiration of three years therefrom

including the fresh period of limitation due to

(successive) acknowledgements, it is not possible to

extricate them from the renewed limitation accruing

due to the effect of Section 18 of the Limitation

Act. Section 18 of the Limitation Act gets attracted

the moment acknowledgement in writing signed by

the party against whom such right to initiate

resolution process under Section 7 of the Code

enures. Section 18 of the Limitation Act would come

into play every time when the principal borrower

and/or the corporate guarantor (corporate debtor),

as the case may be, acknowledge their liability to

pay the debt. Such acknowledgement, however,

must be before the expiration of the prescribed

period of limitation including the fresh period of

Company Appeal (AT)(Ins) No.24/2021 70

limitation due to acknowledgement of the debt, from

time to time, for institution of the proceedings under

Section 7 of the Code. Further, the

acknowledgement must be of a liability in respect

of which the financial creditor can initiate action

under Section 7 of the Code."

21. An entry made in the balance sheet of the corporate

debtor as to whether amounts to acknowledgement of

liability under Section 18 of the Limitation Act has been

dealt with in detail in para 16 and 17 of Bishal Jaiswal

case (Supra) which is quoted hereinbelow:-

"16. The next question that this Court must address is as to whether an entry made in a balance sheet of a corporate debtor would amount to an acknowledgement of liability under Section 18 of the Limitation Act.

17. Several judgments of this Court have indicated that an entry made in the books of accounts, including the balance sheet, can amount to an acknowledgement of liability within the meaning of Section 18 of the Limitation Act. Thus, in Mahabir Cold Storage v. CIT, 1991 Supp (1) SCC 402, this Court held:

"12. The entries in the books of accounts of the appellant would amount to an acknowledgement of the liability to M/s Prayagchand Hanumanmal within the meaning of Section 18 of the Limitation

Company Appeal (AT)(Ins) No.24/2021 71

Act, 1963 and extend the period of limitation for the discharge of the liability as debt. ..."

22. In view of the law laid down by the Hon'ble

Supreme Court and facts which we have discussed

hereinabove we are satisfied that the application under

Section 7 of the Code was filed by the Financial Creditor

within the period of limitation. The appellant has never

raised any dispute on the question of debt i.e.

recoverable amount nor a dispute has been raised

regarding endorsement in the balance sheet or offer of

OTS. In such view of the matter there is no reason to

interfere with the impugned order. The appeal in

absence of any merit deserves to be rejected.

Accordingly the appeal stands dismissed without cost.

23. In view of dismissal of the appeal, interim order

passed earlier stands automatically vacated.

(Justice Rakesh Kumar) Member (Judicial)

(Dr.Ashok Kumar Mishra) Member (Technical) bm

Company Appeal (AT)(Ins) No.24/2021