Mr. Kapil Jain vs Punjab National Bank (Erstwhile ...

Kaapil Jain ...Appellant

Versus

Punjab National Bank (Erstwhile Oriental Bank of Commerce) & Anr. ...Respondents

Present: For Appellant: Mr. Rakesh Kumar, Ms. Preeti Kashyap, Mr. Ankit Sharma and Mr. Rishabh Arora, Advocates. For Respondents:

ORDER

23.01.2023: Heard learned counsel for the Appellant. This Appeal has been filed against the order dated 23.12.2022 by which order the Adjudicating Authority has admitted Section 7 application filed by the Financial Creditor. The brief facts of the case are:

(i) The account of Corporate Debtor was declared NPA on 31.12.2015.

(ii) Application under Section 7 has been filed on 31.01.2019.

(iii) Before the Adjudicating Authority the Corporate Debtor has raised objection that application is barred by time. The Adjudicating Authority overruled the objection and held that the application is within time and admitted Section 7 application. Challenging the said order this Appeal has been filed.

2. Learned counsel for the Appellant challenging the order dated

23.12.2022 submits that the balance sheet which has been relied by the

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Adjudicating Authority was with a condition and notes which does not make

it clear acknowledgment within the meaning of Section 18 of the Limitation

Act. Learned counsel for the Appellant has referred to the balance sheet for

the year 2015-16 as on 21.03.2016 and has referred to Note (viii), which note

is as follows:

"viii. The company's total debt was restructured under the scheme by its consortium member on 01.06.2014. During the year, the company defaulted in repayment of principal, interest payments on all bank finance. Further it did not adhere to term & conditions of restructured agreements. Hence its consortium banker had declared it as NPA on 31.12.2015 and issued notice u/s 13(2), of "SARPAESI ACT" on 04.01.2016. Further the bankers also issued possession notice u/s 13 (4) of SARFAESI ACT in 07.03.2016. Further during the year, the company did not pay single EMI of loan Deutsche Bank and M/s. Reliance Commercial Finance. Both the parties have initiated legal proceedings against the company.

Further, the company squared off loan of ICICI Bank after settling outstanding of Rs. 17.90 lacs with one time settlement of Rs. 9.47 lacs."

3. Further, learned counsel for the Appellant referred to Note 25 under

hearing 'Notes to the Account', which is to the following effect:

Company Appeal (AT) (Insolvency) No. 61 of 2023 3

"25. The Company has incurred a net loss of Rs.748,69 lacs (Previous Year Rs.272.21 lacs) during the year ended 31 March, 2016. Further there has been an erosion of net worth because of accumulated losses. The Company was sanctioned Package 1st June 2014 to restructure and reschedule the Company's debt. The Master Restructuring Agreement was executed only on 1st June, 2014 it self. But during the year due to non repayment of interest & principal & non compliance of terms & conditions, both Banks have transferred a/c to NPA category on 31.12.2015. The Bank initially issued notice u's 13 (2) of SARFAESI Act on 04.01.2016 and again on 07.03.2016 the banks took symbolic possession by issuing notice u/s 13 (4) under SARFAESI Act."

4. The Adjudicating Authority has considered the objection raised by the

Appellant regarding limitation and has relied on the financial statement as on

31.03.2016. The question which has been raise for consideration is as to

whether the acknowledgment of debt in the balance sheet as on 31.03.2016 is

qualified or unqualified.

5. The notes which have been referred to by the Appellant are clear

acknowledgment of debt as n 31.03.2016 and the note as extracted above does

not in any manner take away the acknowledgment in the balance sheet which

are enough for extension of limitation under Section 18 of the Limitation Act.

Learned Adjudicating Authority has also noted the One Time Settlement letter

Company Appeal (AT) (Insolvency) No. 61 of 2023 4

issued by the Appellant. From the acknowledgment in the balance sheet,

which balance sheet has been brought on record, we are satisfied that there

is clear acknowledgement which in no manner is diluted by the notes referred

to by learned counsel for the Appellant. We are of the view that the application

under Section 7 was filed well within time and no error has been committed

by the Adjudicating Authority in admitting Section 7 application. Appeal is

dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical) Archana/nn

Company Appeal (AT) (Insolvency) No. 61 of 2023