Gouri Shankar Chatterjee vs State Bank Of India & Anr

IN THE MATTER OF: Gouri Shankar Chatterjee ...Appellant Son of Late Shaktipada Chatterjee Resident of 2, G Road, Belgachia, Howrah-711108. West Bengal

Versus ...Respondent No. 1

State Bank of India, Stressed Assets Management Branch (SAMB-II) Jeevandeep Building, 1st Floor, 1 Middletion Street, Kolkata-700071.

...Respondent No. 2 Hanumanta Engineering Pvt. Ltd.

Through the Liquidator, Sankrail Industrial Park, PO & Village Dhulagarh, PS. Sankrail, Howrah-711302.

...Respondent No. 3 Sanjit Kumar Nayak, The Liquidator, Hanumanta Engineering Pvt. Ltd., 30E, Haramohan Ghosh Lane, Flat 2B, Suryadeep, Beliaghata, Kolkata 700085.

Present:

For Appellants : Mr. Devashish Bharuka, Mr. Kaushik Poddar, Mr. Saurabh Jain, Advocates.

For Respondents : Ms. Anannya Ghosh, Ms. Doel Bose, Mr. Mohit Seth, Advocates for R-1.

Mr. Aniruddha Choudhury, Mr. Rohit Tomar, Advocates for R-2 & 3.

Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 1 of 22 Judgment (Date: 24.2.2023)

[Per.: Dr. Alok Srivastava, Member (Technical)]

1. The present appeal has been filed by the Appellant under

section 61 of the Insolvency and Bankruptcy Code, 2016 (in short

'IBC') being aggrieved by the order dated 19.8.2019 (in short

Impugned Order I) whereby an application under section 7 of the

IBC was admitted by the Adjudicating Authority and order dated

20.2.2020 (Impugned Order-II) whereby the Adjudicating Authority

(National Company Law Tribunal, Kolkata) has ordered for

liquidation of the corporate debtor. Both the Impugned Orders have

been passed by the Adjudicating Authority in CP (IB)

No.1111/KB/2018.

2. It is the Appellant's case that on an application under section

7 of IBC filed by State Bank of India (Respondent No.1), it was

admitted by the Adjudicating Authority vide Impugned Order - I and

this order was challenged by way of Revision Petition under Article

227 of the Constitution of India being CO No. 1257 of 2020 before

the Hon'ble High Court of Calcutta, wherein the Hon'ble High Court

vide order dated 15.10.2020 allowed the Revision Petition thereby

setting aside the initiation of Corporate Insolvency Resolution

Process (in short 'CIRP') against the corporate debtor. The Appellant Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 2 of 22 has further stated that Respondent No. 1 State Bank of India

thereafter challenged the said order of the Hon'ble High Court of

Calcutta through a Special Leave Petition Civil Appeal No. 323 of

2021, wherein the Hon'ble Supreme Court set aside the order of

Hon'ble High Court of Calcutta and granted liberty to the Appellant

to prefer an appeal before NCLT within four weeks of the order of

the Hon'ble Supreme court. The present appeal has been filed by

the Appellant in pursuance of the liberty granted by Hon'ble

Supreme Court, wherein the Impugned Order-I and Impugned

Order-II have been challenged.

3. The Appellant has further stated that the date of default as

stated in section 7 application by State Bank of India is 6.8.2012,

which is the date when the account of the corporate debtor was

classified as a non performing asset (in short NPA). Subsequent to

classification of the account as NPA, State Bank of India filed OA

No. 392 of 2014 before the Debt Recovery Tribunal, Kolkata for

recovery of its debt amounting to Rs.100,52,94,787.26 and this

proceeding before the Debt Recovery Tribunal is still pending

adjudication. The Appellant has further stated that the corporate

debtor filed Civil Suit being CS No. 191 of 2014 before the Hon'ble

High Court of Calcutta praying for a declaration that the account of

the corporate debtor was declared as NPA in an illegal manner and

Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 3 of 22 the corporate debtor also sought damages to the tune of Rs. 100

crores and a decree of Rs.10 crores towards the excess interest

charged by the Respondent No. 1.

4. The Appellant has further stated that the corporate debtor

has mentioned the debt of the State Bank of India in its balance

sheet for the financial years 2014-2015, 2015-2016 and 2016-2017

in accordance with the statutory requirements, but the mention of

such debt is not unequivocal and the auditor's report attached with

the balance sheet specifically state that the said debt is disputed in

view of the pendency of the Civil Suit before the Hon'ble High Court

of Calcutta. The Appellant has also stated that the date of the NPA

being 6.8.2012 and the fact that the dispute was raised by the

Appellant/corporate debtor in 2014 regarding the illegal declaration

of the corporate debtor's account as NPA, the section 7 application

is clearly barred by limitation and therefore, the initiation of CIRP

as ordered in Impugned Order-I should be quashed and

consequently the order for liquidation of corporate debtor vide

Impugned Order-II is also ab-initio null and void and should also be

quashed.

5. We heard the arguments of the Learned Counsels for both the

parties and perused the record.

Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 4 of 22

6. The Learned Counsel for the Appellant has argued that the

account of the corporate debtor was illegally declared as NPA for an

alleged default on 6.8.2012, and thereafter the financial creditor

State Bank of India issued a legal notice to the corporate debtor on

10.1.2013 seeking payment of outstanding dues. He has further

argued that the financial creditor State Bank of India filed OA No.

392 of 2014 before the Debt Recovery Tribunal, Kolkata, which is

presently pending, but the corporate debtor disputing the debt and

declaration of its account as NPA to be illegal filed Civil Suit being

CS No. 191 of 2014 before the High Court of Calcutta and the

Respondent Bank has entered appearance in the said civil suit. He

has further claimed that in response to the order of Hon'ble

Supreme Court in SLP (Civil No. 1168 of 2021 dated 23.12.2020)

the Appellant has filed the instant appeal challenging the section 7

admission order (impugned Order-I) and liquidation order

(Impugned Order-II) passed by the Adjudicating Authority.

7. The Learned Counsel for Appellant has explained that even if

it is admitted that account of the corporate debtor was declared as

NPA on 6.8.2012, in the light of Civil Suit being CS No. 191 of 2014

filed by the corporate debtor before the Hon'ble High Court of

Calcutta in 2014, the debt was disputed and the declaration of

Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 5 of 22 account of the corporate debtor's account as NPA was also alleged

to be illegal. He has further claimed that the primary challenge that

he has made in the appeal is that the application under section 7 of

IBC was time barred since it was filed after a period of over six years

from the date of alleged default i.e. 6.8.2012. He has referred to the

law laid down by the Hon'ble Supreme Court in its judgment dated

15.4.2021in Civil Suit No. 323 of 2021 (Asset Reconstruction

Company (India) Ltd. vs. Bishal Jaiswal & Anr. [(2021) 6 SCC

366], to agree that it is important to note, while adjudicating an

application under section 7, whether any caveat has been recorded

in the Auditor's note annexed to the balance sheet with regard to

acknowledgment of debt made by the corporate debtor. He has

further referred to section 18 of the Limitation Act to claim that in

the light of the said judgment Asset Reconstruction Company

(India) Ltd. (supra), the acknowledgment of debt in the balance

sheet would amount to extension of period of limitation only if such

an acknowledgment has been made in the balance sheet in an

unequivocal manner without any caveat.

8. The Learned Counsel for Appellant has further submitted that

in Civil Suit being CS 191 of 2014, the specific prayer made by the

Appellant before the Hon'ble High Court of Calcutta is regarding

declaration of the NPA of the corporate debtor by State Bank of India

Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 6 of 22 as illegal and the substratum of the debt has been challenged. He

has thus contended that in the light of caveats entered into by the

Auditor of the corporate debtor in the balance sheets for the years

2014-15, 2015-16 and 2016-17, it is clear that the said debt

claimed by State Bank of India is disputed, and therefore, the

financial creditor State Bank of India cannot claim extension of

limitation under section 18 of the Limitation Act.

9. The Learned Counsel for Appellant has further submitted that

the main prayer of the Appellant is still being considered in Civil

Suit by the Hon'ble High Court of Calcutta and therefore, in such

event the corporate debtor has not committed any default, if the

debt account has been declared as NPA illegally. He has also

claimed that the commission of default and classification of the loan

account as NPA are two distinct aspects and classification of loan

account as NPA would have no bearing regarding the admission of

section 7 application, which is based on the default of the corporate

debtor.

10. The Learned Counsel for Appellant has further argued that

Civil Suit was filed by the corporate debtor in the year 2014 and the

Respondent State Bank of India which appeared in the civil suit as

is evident from the order date 21.7.2014, had complete knowledge

Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 7 of 22 of the civil suit. Further, he has added that in the balance sheets

for the financial years 2014-15 and 2015-16, the existence of a civil

suit which disputed the declaration of NPA have not been added due

to oversight, but in the balance sheet for the financial year 2016-

17, the Auditor's report categorically mentions the said debt is

disputed in civil suit pending the Hon'ble High Court of Calcutta.

He has further contended that the existence of the legality of NPA

and therefore, the existence of default is contingent on the outcome

of the said civil suit and therefore, the default in respect of the debt

can only be established once the civil suit is decided in favour of the

Respondent.

11. The Learned Counsel for Respondent No. 1 State Bank of

India has argued that the debt is not disputed by the corporate

debtor and the declaration of NPA with respect to the debt was made

on 6.8.2012, which fact is stated in the section 7 application. He

has further argued that the SBI filed an application before the Debt

Recovery Tribunal and after this application was filed by the

financial creditor before the DRT, Kolkata, the corporate debtor filed

a civil suit before the Hon'ble High Court of Calcutta challenging the

legality of the declaration of NPA. He has further argued that even

though the NPA was declared on 6.8.2012, the corporate debtor

never made any representation, objection or demur regarding the

Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 8 of 22 declaration of the corporate debtor's loan account as NPA and it was

only after the SBI filed an application for recovery of the amount

due did the corporate debtor challenge the legality of NPA. He has

further claimed that the stay granted by the Hon'ble High Court of

Calcutta was finally set aside by the Hon'ble Supreme Court vide its

judgment dated 15.4.2021 whereby in Civil Appeal No. 323 of 2021

and SLP (Civil No. 1168/2021 whereby the Hon'ble Supreme Court

held that the balance-sheets considered by the Hon'ble High Court

of Calcutta to extend limitation under section 18 of the Limitation

Act should be considered with caveats entered in the auditor's note

for the purpose of extension of limitation. The Hon'ble Supreme

Court thereafter allowed the appeal setting aside the impugned

judgment of Hon'ble High Court of Calcutta and permitted the

Respondent (corporate debtor) to file an appeal before the NCLAT

against the orders of the NCLT dated 19.8.2019 and 20.2.2020

within a period of four weeks from the date of the judgment i.e.

15.4.2021.

12. The Learned Counsel for Respondent No. 1 has claimed that

in the light of Hon'ble Supreme Court's judgment dated 15.4.2021

in SLP Civil No. 1168/2021 (supra), the balance-sheets and the

Auditor's note made therein have to be looked at to decide whether

the statements in the Auditor's note can provide acknowledgment

Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 9 of 22 of debt to give the benefit of extension of limitation under section 18

of the Limitation Act.

13. The Learned Counsel for Respondent No. 1 State Bank of

India has further referred to the balance-sheet filed by the corporate

debtor for the financial year 2014-15, wherein the corporate debtor

has unambiguously and unequivocally admitted that the company

has defaulted in payment of dues to the bank and later in the

balance-sheet for the financial year 2015-16 the corporate debtor

has shown its long term borrowing Rs.33,49,11,048 as on

31.3.2015 and also shown the long term borrowing as

Rs.33,49,92,064 as on 31.3.2016.

14. The Learned Counsel for Respondent No.-1 State Bank of

India has referred to Part IV of the section 7 application, wherein a

total amount of Rs.173,85,76,484.56 has been shown as due from

the corporate debtor and also stated that the said debt account of

the corporate debtor was classified as NPA on 6.8.2012.

15. The Learned Counsel for Respondent-1 State Bank of India

has further argued that the Adjudicating Authority has correctly

admitted the application under section 7 of the IBC in as much as

the debt stated in the application was within the prescribed period

Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 10 of 22 of limitation and furthermore, the corporate debtor acknowledged

the amount of debt it owed to the bank in the balance sheets for the

financial years 2014-15, 2015-16 and 2016-17 and thus, the period

of limitation for filing the application under section 7 of the IBC

would get extended from the date of NPA i.e. 6.8.2012 under section

18 of the Limitation Act, 1963. He has also claimed that any dispute

raised qua a financial debt would not be of any consequence in a

proceeding under section 7 of IBC, and further the corporate debtor

raised no demur or any objection regarding the declaration of NPA

for almost two years from 2012 to 2014, which only goes to show

that the civil suit filed before the Hon'ble High Court of Calcutta is

to merely avoid repayment of its debt to State Bank of India.

16. The issue in question in this appeal is whether the three

balance-sheets for the financial years 2014-15, 2015-16 and 2016-

17 provide extension of limitation for the debt claimed by State Bank

of India in accordance with Section 18 of the Limitation Act, 1963.

17. We first look at the statement made in the Auditor's Report

for the balance-sheet for the financial year 2014-15, which is as

follows:-

"Textual information (23)

Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 11 of 22 Disclosure in auditors report relating to default in repayment of financial dues.

ILLEGIBLE audit procedure and as per the information and explanation given to us, we are of the opinion that the company has defaulted in repayment of dues to the Bank. The cash creditor and term loan facilities is exceeding the sanction limit of Rs.34,18,00,000.00/- and the balance outstanding as on the Balance Sheet is Rs.33,49,92,064.00/."

18. The amount shown as long-term borrowings in the balance

sheet for the year ending 31.3.2015 is Rs.33,49,11,048/-. Further

in the balance-sheet for the financial year 2015-16, the Appellant

has not submitted any evidence of statement in the Auditor's note

regarding the debt being disputed, and the balance sheet shows

term loan from bank as Rs.33,45,92,064/- as on 31.3.2016. In the

balance-sheet for the year 2016-17, the following has been stated in

Auditor's note (attached at pg. 122 of the appeal paperbook, vol.I):-

"Textual Information (15)

"Disclosure in auditors report relating to default in repayment of financial dues.

8) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institutions, banks and debenture holders except the Secured Term Loan from State Bank of India of Rs.334992064/- which has been declared by the bank

Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 12 of 22 as Non-Performing Assets. The same has been disputed by the company in the High Court."

19. It is noted that the SBI declared NPA of the corporate debtor's

loan account on 6.8.2012, a fact which has been not disputed by

the corporate debtor in the civil suit before Hon'ble High Court of

Calcutta. Further, it is also noted that after declaration of the loan

account as NPA on 6.8.2012, the corporate debtor did not dispute

the legality of the declaration of NPA before the competent authority

of the State Bank of India and the bank filed OA No. 392 of 2014

under section 19 of the Recovery of Debts Due to Banks and

Financial Institutions Act, 1993 on 25.3.2014 within the period of

limitation before Debt Recovery Tribunal, Kolkata. This suit is still

pending before the Debt Recovery Tribunal. The corporate debtor

filed civil suit being CS No. 191 of 2014 before the Hon'ble High

Court of Calcutta contesting the legality of declaration of NPA and

also inter alia seeking damages to the tune of Rs.100 crores from

the State Bank of India. This civil suit is pending before the Hon'ble

High Court of Calcutta. In the facts of the case, it is quite clear that

neither the corporate debtor raised the issue of illegality of

declaration of NPA of its loan account before the bank authorities

and also participated in the proceedings before Debt Recovery

Tribunal, Kolkata.

Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 13 of 22

20. The Hon'ble Supreme Court in the matter of Asset

Reconstruction Company (India) Limited (supra) considered the

question whether an entry made in a balance-sheet of a corporate

debtor would amount to an acknowledgment of liability under

section 18 of the Limitation Act. The Hon'ble Supreme Court in

this case considered this issue and observed as follows:-

"14. Several judgments of this Court have indicated that an entry made in the books of accounts, including the balance sheet, can amount to an acknowledgment 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 acknowledgment of the liability to M/s Prayagchand Hanumanmal within the meaning of Section 18 of the Limitation Act, 1963 and extend the period of limitation for the discharge of the liability as debt....."

21. Thereafter, in the same judgment the Hon'ble Supreme Court

held as follows:-

"22. ` A perusal of the aforesaid Sections would show that there is no doubt that the filing of a balance sheet in accordance with the provisions of the Companies Act is mandatory, any transgression of the same being punishable by law. However, what is of importance is that notes that are annexed to or forming part of such financial statements expressly recognised by Section 134 (7). Equally, the auditor's report may also enter caveats with regard to acknowledgments made in in the books of accounts including the balance sheet. A perusal of the aforesaid would show that the statement of law contained in Bengal Silk Mills (supra), that Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 14 of 22 there is a compulsion of law to prepare a balance sheet but no compulsion to make any particular admission, is correct in law as it would depend on the facts of each case as to whether an entry made in a balance sheet qua any particular creditor is unequivocal or has been ener4ed into with caveats, which then has to be examined on a case by case basis to establish whether an acknowledgment of liability has, in fact, been made, thereby extending limitation under Section 18 of the Limitation Act."

22. From the above mentioned observations of the Hon'ble

Supreme Court in the Asset Reconstruction Company (India)

Limited (supra) judgment, we follow that the balance-sheets and

the entries regarding the debt recorded therein constitute

admission of liability, but such admission has to be seen along with

the caveat which may be entered in the balance-sheet regarding

any particular creditor, which has to be examined on case by case

to decide whether an acknowledgment of liability has in fact been

made which would qualify for extension of limitation under the

Limitation Act.

23. Section 18 of the Limitation Act, 1963 is as follows:-

"18. Effect of acknowledgment in writing.-- (1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.

Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 15 of 22 (2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received.

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

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

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

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

24. Thus, it is clear that before the expiration of prescribed period

for an application (in the present case section 7 application) in

respect of any right, an acknowledgment of liability of such right

made in writing signed by the party against whom such right is

claimed, shall permit a fresh period of limitation to be computed

from the time when the acknowledgment was so signed.

25. We note that the NPA of the corporate debtor loan account

was declared on 6.8.2012. Thereafter, while it is noted that the Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 16 of 22 corporate debtor filed a civil suit before the Hon'ble High Court of

Calcutta that suit is yet to be decided and therefore in the present,

no illegality attaches to the declaration of NPA, as the stay order

granted by Hon'ble High Court of Calcutta vide order dated

15.10.2020 was vacated by the Hon'ble Supreme Court by its

judgment in SLP Civil No. 1168/2021. The Hon'ble Supreme Court

vacated the said order passed by the Hon'ble High Court of Calcutta

vide judgment dated 15.4.2021 as follows:-

"5.

xx xx xx xx

Civil Appeal arising out of SLP (Civil) No 1168 of 2021

1. Leave Granted.

2. This appeal is against the judgment dated 15.10.2020 of the Calcutta High court which set aside two orders of the NCLT - (i) order dated 19.8.2019 whereby the NCLT admitted the appellant's application under Section 7 of the IBC, and (ii) order dated 20.02.2020, whereby the NCLT ordered liquidation of the corporate debtor.

xx xx xx xx

5. Given the judgment delivered in Civil Appeal No. 323 of 20212, the imp8ugned judgment in this appeal also deserves to be set aside. The appeal is, therefore, allowed. If the respondent wishes to file an appeal before the NCLAT against the orders of the NCLT dated 19.8.2019 and 20.02.2020, it may do so within a period of four weeks from the date of this judgment. The appeal will thereafter be decided on its merits, keeping in view the statement of the law laid down in Civil Appeal No. 323 of 20212."

Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 17 of 22

26. Thus, it is clear that there is no stay order operative on the

order of NCLT dated 19.8.2019, whereby the application under

section 7 was admitted.

27. In the light of the above judgment of Hon'ble Supreme Court

in the matter of Asset Reconstruction Company (India) Ltd.

(supra) and its judgment with respect to SLP (Civil) No. 1168 of

2021, we now examine the balance-sheets and the entries made

therein to decide whether they provide an extension of limitation to

the debt of State Bank of India with regard to section 18 of the

Limitation Act, 1963.

28. The State Bank of India declared the loan account of the

corporate debtor as NPA on 6.8.2012 and quite clearly the

declaration of NPA has not been declared as illegal or incorrect.

Therefore, the limitation for section 7 application starts from

6.8.2012. As per Article 137 of the Limitation Act, 1963 the period

of limitation prescribed for an application under section 7 of IBC is

three years. Therefore, the limitation of section 7 application would

be valid upto 5.8.2015. Before the expiry of the limitation period,

the balance sheet for FY 2014-15 filed by the corporate debtor

(attached at pp.86-100 of the appeal paperbook Vol.I) mentions the

amount of long-term borrowings as Rs.33,49,92,064/- and the

Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 18 of 22 balance sheet very clearly mentions in Textual Information 23 "that

the company has defaulted in repayment of dues to the Bank. The

cash credit and term loan facilities is exceeding the sanction limit

of Rs.34,18,00,000/- and the balance outstanding as on the

balance sheet is Rs.33,49,92,064/-." Thus, the corporate debtor

has unequivocally acknowledged that it has defaulted in repayment

of dues of bank and also stated the balance outstanding with regard

to the said loan. This balance sheet is for the year ending 31.3.2015

and therefore, the limitation of the loan under section 7 application

is extended for three years from 3.1.3.2015 i.e. upto 31.3.2018. It

is noted that while this limitation period was running, another

acknowledgment was made by corporate debtor in its balance sheet

for the FY 2015-16, wherein again the long-term borrowings for the

year ended 31.3.2016 has been shown as Rs.33,49,92,064/-.

Further, since no caveat by way of any textual information is shown

by the corporate debtor in its appeal with the balance-sheet

(attached at pp.101-114 of the appeal paperbook, vol.II) , the

limitation would again get extended from the last date of the

balance sheet i.e. 31.3.2016 for another three years, which would

make it upto 31.3.2019.

29. It is observed from the section 9 application that it was filed

on 8.8.2018, which is within the limitation period, which extends

Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 19 of 22 upto 31.3.2019. On the basis of above analysis, it is clear that the

application under section 7 is within the prescribed limitation

period.

30. We also consider the argument of the Learned Counsel for

Appellant that the dispute regarding the declaration of NPA as

illegal, which was raised by it before the Hon'ble High Court of

Calcutta could not be entered in the balance-sheets for the

Financial Years 2014-15 and 2015-16 on account of oversight. We

are not convinced by this argument of the Appellant since the

declaration of NPA which was done on 6.8.2012 by the State Bank

of India was not challenged for almost two years by the corporate

debtor and therefore, it was considered a valid action. Further the

challenge to the illegality of the declaration of NPA through a civil

suit is still pending before the Hon'ble High Court of Calcutta and

therefore, even if there is an alleged dispute, merely the existence

of such a dispute cannot be taken to negate the legality of the

declaration of NPA. Therefore, the balance-sheets on which the

section 7 application is based are considered as valid

acknowledgments of the debt of the corporate debtor without any

caveat of dispute.

Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 20 of 22

31. In the light of the above discussion, we are convinced that

the loan account of corporate debtor declared by State Bank of

India as NPA on 6.8.2012 the date of default and the balance-sheets

for the financial years 2014-15 and 2015-16 provide an

unequivocal and clear extension of limitation of the debt by virtue

of section 18 of the Limitation Act, 1963. Such a limitation is

validly extended through acknowledgment of liability of the said

debt upto 31.3.2019 and the section 7 application, which was filed

on 8.8.2018, is clearly within limitation.

32. We thus hold that the admission order passed by the

Adjudicating Authority admitting the section 7 application to be

correct, and therefore, Impugned Order-I does not need to be

interfered with. Further, in view the fact that the Impugned Order-

I has been held to be correct, the order of liquidation i.e. Impugned

order-II also is held to be correct and therefore, we see no reason

to interfere with it. The appeal, therefore, is devoid of merit, and

accordingly it fails.

33. The appeal is disposed of with no order as to costs.

[Justice Rakesh Kumar] Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 21 of 22 Member (Judicial)

[Dr. Alok Srivastava] Member (Technical)

New Delhi 24th February, 2023

/aks/

Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 22 of 22