Nishit Patel vs Manjulaben Karelia

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Insolvency) No.543 of 2022 (Arising out of Order dated 20.04.2022 passed by the Adjudicating Authority (National Company Law Tribunal), Court No.V, Mumbai Bench in Company Petition No.1118(IB)-MB-V/2020)

IN THE MATTER OF: Mr. Nishit Patel Having office at : 101, Wing-B, Gharkul Co-Op. Society, Azad Road, Misquitta Street, Vile Parle (E) Mumbai Mumbai City MH 400057 ... Appellant

Versus

1. Manjulaben Mahdulal Karelia A-5 Shakti Sadan Opp Navjivan Society Falakland Road, Lamington Road Mumbai 400007 Through its Authorized Representative Mrs. Rina Birla 505, Arcadla Building, 195 NCPA Marg, Nariman Point, Mumbai 400 021 Email: rinabirla03 @gmail.com

2. Pooja Land and Premises Pvt. Ltd. Through the Interim Resolution Professional Mr. Jitendra Palande Having its address at 38, 5-3/D, New Ajanta Avenue, Paud Road Kothrud Pune 411038 ... Respondents

Present:

For Appellant : Mr. Krishnendu Datta, Sr. Advocate with Mr. Mahesh Agarwal, Mr. Ankur Saigal, Mr. Shivam Shukla, Mr. Shadab S. Jan, Advocates

For Respondent : Mr. Zeeshan Hashmi, Mr. Ankit Parashar, Mr. Saurav Sapra, Advocates for R-1. Mr. Shikhil Suri, Sr. Advocate with Ms. Vidhi Kapoor, Advocates for R-2.

Company Appeal (AT) (Insolvency) No.543 of 2022 1 JUDGMENT

ASHOK BHUSHAN, J.

This Appeal by a Suspended Director of the Corporate Debtor has been

filed challenging order dated 20.04.2022 passed by National Company Law

Tribunal, Court No.V, Mumbai Bench, admitting Section 7 Application filed

by the Financial Creditor (Respondent herein).

2. The brief facts necessary to be noticed for deciding the Appeal are:

(i) The Corporate Debtor - Pooja Land and Premises Pvt. Ltd. is a

registered Company, incorporated on 07.02.2007. The Financial

Creditor - Manjulaben Mahdulal Karelia has extended loan to the

Corporate Debtor of Rs.2 crores on 23.06.2010. Apart from

Financial Creditor, her other family members also granted loan to

the Corporate Debtor. A Loan Agreement dated 31.12.2010 came

to be entered into between the Respondent - Financial Creditor

and other family members with the Corporate Debtor, which Loan

Agreement contemplated payment of interest @ 12% per annum

compounded annually. The loan was repayable along with

interest on or before 23.06.2020.

(ii) The Corporate Debtor refunded certain amount to other members

of the family namely - Krishna Karelia and Dilip Karelia in the

Company Appeal (AT) (Insolvency) No.543 of 2022 2 year 2015. However amount of Rs.2 crores, which was disbursed

by Respondent on 23.06.2010 was not refunded. The Financial

Creditor issued Notice dated 18.12.2019 to the Corporate Debtor,

claiming an amount of Rs.2 crores, principal amount and

Rs.3,92,49,406 as interest. The Notice required the Corporate

Debtor to make payment within 15 days, failing which Financial

Creditor shall initiate proceedings in appropriate Tribunal and

civil proceedings, including but not limited to Insolvency and

Bankruptcy Code, 2016 (hereinafter referred to the "IBC").

(iii) No payment having been made, an Application under Section 7

was filed by the Financial Creditor (Respondent herein) on

22.04.2020 claiming an amount of Rs.5,94,03,811/-, which

included principal and interest. The date of default was

mentioned as December 18, 2019.

(iv) In the Application, notice was issued to the Corporate Debtor.

The Corporate Debtor appeared and filed reply to Section 7

Application. The Corporate Debtor denied the execution of Loan

Agreement dated 31.12.2010 and alleged that documents is

forged and fabricated document. In the reply, the Corporate

Debtor further stated that by Share Purchase Agreement entered

into on 29.11.2014 shares have been purchased, which were held

by earlier Directors of the Corporate Debtor by one M/s Romell

Company Appeal (AT) (Insolvency) No.543 of 2022 3 Real Estates Pvt. Ltd. and the earlier Directors resigned in the

year 2015 and new Directors were appointed including the

Appellant herein (who joined as Director on 30.06.2018).

(v) The Financial Creditor filed a rejoinder affidavit to the reply of the

Corporate Debtor, where it pleaded that Loan as extended by

Financial Creditor is reflected in the balance sheet of the

Corporate Debtor. Copy of Certificate issued by the Information

Utility was enclosed along with the rejoinder affidavit. It was

pleaded that in the Share Purchase Agreement the liability as on

31.03.2014 was also undertaken to be discharged. It was pleaded

that loan is reflected in the balance sheet, i.e., for the year

31.03.2011 and subsequent balance sheets. The balance sheets

for the year as on 31.03.2014 and subsequent balance sheets

were also brough on record along with the rejoinder affidavit.

(vi) The Adjudicating Authority after hearing the parties and

considering the submissions, held that debt and default is clearly

proved. The Adjudicating Authority held that the there is

acknowledgment of the liability by the Corporate Debtor in the

balance sheet ending on 31.03.2014. It was held that Loan

Agreement was executed and stamp duty paid on the Loan

Agreement of Rs.100/- was as per the provisions of Maharashtra

Stamp Act, 1958. The debt and default was clearly established

Company Appeal (AT) (Insolvency) No.543 of 2022 4 and the debt was also within limitation. The Adjudicating

Authority by the impugned order admitted Section 7 Application.

Challenging the order, this Appeal was filed by the suspended

Director of the Corporate Debtor.

3. When the Appeal was heard on 01.11.2022, the learned Counsel for the

Appellant prayed for time to file an additional affidavit seeking details of

amount paid of Rs.10,01,16,474/- as reflected in the balance sheet of 2017-

18. In response to the order dated 01.11.2022, an additional affidavit was

filed by the Appellant dated 17.01.2023, to which affidavit in reply dated

25.02.2023 has also been filed by the Respondent.

4. We have heard Shri Krishnendu Datta, learned Senior Counsel for the

Appellant and Shri Seeshan Hashmi, learned Counsel appearing for Financial

Creditor.

5. The learned Counsel for the Appellant challenging the impugned order

submits that no debt was due or payable as the Application was filed on

28.04.2020. The Application filed under Section 7 was premature. The

Adjudicating Authority arrived at erroneous finding that there is acknowledge

of liability of the Corporate Debtor in the balance sheet of 2017-18. The Loan

Agreement is insufficiently stamped. The Loan Agreement is a fabricated

document. The Loan Agreement contemplated that the Corporate Debtor

would secure the loan by creation of mortgage. The Demand Notice mentions

Company Appeal (AT) (Insolvency) No.543 of 2022 5 the loan as 'unsecured loan', whereas Information Utility Certificate mentions

the loan as 'secured loan'. It is submitted that amount of Rs.10,01,16,474/-

which is reflected as long term borrowing in the balance sheet of 2017-18 is

amount of loan, which was extended by M/s Romell Real Estates Pvt. Ltd.

Hence, the said amount cannot be treated to be acknowledgement of any debt

due to the Financial Creditor. The Appellant has brought on record the

materials to indicate that amount of Rs.10 crores was paid by Romell Real

Estates Pvt. Ltd. on the request of Corporate Debtor to one Mr. Vijay Kamdar

between 29.07.2015 to 04.06.2016 and which loan amount having been paid

at the request of the Corporate Debtor, there is no debt due to the Financial

Creditor.

6. The learned Counsel for the Respondent (Financial Creditor) refuting

the submissions of learned Counsel for the Appellant submits that the

disbursement of loan of Rs.2 crores is not even denied by the Corporate

Debtor, which is proved by the Bank statement filed along with Section 7

Application, which Bank statement from HDFC Bank, proves that

disbursement of Rs.2 crores on 23.06.2010 was made to the Corporate Debtor

by the Financial Creditor. It is submitted that the balance sheet for the year

2010-11, duly reflected the loan, where the name of Financial Creditor

Manjulaben Karelia is also mentioned against the amount of Rs.2 crores. It

is submitted that the balance sheets of the Corporate Debtor from 2010-11 to

2017-18 reflected the amount under the heading 'Long term borrowing', which

Company Appeal (AT) (Insolvency) No.543 of 2022 6 was the loan extended by the Financial Creditor and her other family members

and which loan was reflected in the balance sheets from year to year. The

Share Purchase Agreement was executed by the then Directors of the

Corporate Debtor in the year 2014. After Share Purchase Agreement by

Romell Real Estates Pvt. Ltd. with the Corporate Debtor, the earlier Directors

resigned and new Directors have come into place. Share Purchase Agreement

also acknowledges the liability as existed by 31.03.2014. The submission of

the Appellant that amount of Rs.10,01,16,474/- reflected in the balance sheet

of 2016-17 and thereafter is the amount, which is a loan, which was extended

by Romell Real Estates Pvt. Ltd. to the Corporate Debtor and does reflect the

loan, which was extended by the Financial Creditor and her other family

members is incorrect. In pursuance of the order dated 01.11.2022 passed by

this Court to file relevant documents to prove that loan has been extended to

the Corporate Debtor by the Romell Real Estates Pvt. Ltd., the Appellant has

filed additional affidavit, where no document to prove that loan was extended

by Romell Real Estates Pvt. Ltd. has been brought on the record. Only

document which has been brought on the record are the letters signed by

authorised representative of the Corporate Debtor from 29.07.2015 to

04.01.2016, under which request was made to the Romell Real Estates Pvt.

Ltd. to make the payment of different amount to one Mr. Vijay Kamdar. The

documents filed by the Appellant in support of the alleged loan by Romell Real

Estates Pvt. Ltd. is wholly insufficient and Appellant has filed the letters,

Company Appeal (AT) (Insolvency) No.543 of 2022 7 which does not prove any loan transaction between the Corporate Debtor and

Romell Real Estates Pvt. Ltd. It is submitted that Respondent No.1 Financial

Creditor has brought on the record the balance sheet of Romell Real Estates

Pvt. Ltd. of the years 2015-16 and 2016-17, which do not refer to any long

term or short term loan advanced to the Corporate Debtor, nor Vijay Kamdar

has been mentioned as any creditor of the Romell Real Estates Pvt. Ltd.. The

plea of the Appellant that amount of Rs.10,01,16,474/- is the loan given by

Romell Real Estates Pvt. Ltd. is wholly false and incorrect. The said amount

is nothing but long term borrowing, which included borrowing by the

Financial Creditor with interest.

7. We have considered the submission of learned Counsel for the parties

and haver perused the record.

8. The first question need to be considered is as to whether Financial

Creditor has able to prove disbursement of loan to the Corporate Debtor. The

Bank statement has been filed by the Financial Creditor, where disbursement

of Rs.2 crores to the Corporate Debtor on 23.06.2010 is reflected. The

Corporate Debtor in his reply at no point time had denied the disbursement.

The immediate balance sheet after disbursement is balance sheet for the year

2010-2011, reflects the amount as unsecured loan. Unsecured loans are

mentioned in two categories, i.e. (1) From Directors; and (2) From Others. It

is useful to extract balance sheet as on 31.03.2011, which is filed by the

Company Appeal (AT) (Insolvency) No.543 of 2022 8 Appellant himself in the Appeal. At page 77 of the paperbook, the balance

sheet reads as under:

"Pooja Land and Premises Pvt. Ltd.

SCHEDULES FORMING PART OF THE BALANCE SHEET

Particular As at As at 31-Mar-11 31-Mar-10

Share Capital Schedule 1

Authorised 10,00,000 Equity Shares of Rs.10/- each 1,00,00,000 1,00,00,000 Total 1,00,00,000 1,00,00,000 Issued, Subscribed and Paid up

20,500 Equity Shares of Rs.10- each 205,000 205,000

Total 205,000 205,000 Reserves and Surplus Schedule 2 Profit and Loss A/c Opening Balance (204,731) (125,945) Add: Profit/ (Loss) during the year (152,754) (78,786) Closing balance (357,485) (204,731)

Total (357,485) (204,731)

Unsecured Loans Schedule 3

From Directors Chandramahi dubey 1,150,000 1,150,000 Raplesh Shah 1,290,000 2,15,80,000 PrakshchandDubey 135,000 135,000 Rushpa Dubey 135,000 135,000 Vishal Dubey 135,000 135,000 Rajkumari Dubey 125,000 125,000 Suketu Shah 8,900,000 Rahul K. Shah 120,000 11,990,000 25,180,000

From Others Nityanand Dubey 135,000 135,000

Company Appeal (AT) (Insolvency) No.543 of 2022 9 Krishna Karelia 6,498,871 Manjula Karelia 21,662,904 Nayana Karelia 4,332,581 Pooja Construction 1,435,000 1,435,000 Sachidanand Dubey 85,000 85,000 Vijay Bhai 1,500,000 1,500,000 Vivek Dubey 135,000 135,000 ISMF Builders (27,888) Pratha Developers Pvt. Ltd. 3,000,000 3,000,000 38,756,468 6,290,000 Total 50,746,468 31,470,000"

9. It is relevant to notice that against the name of the Financial Creditor

Manjula Karelia amount mentioned on 31.03.2011 is as Rs.21,662,904 and

further in the previous year, no amount was mentioned against Manjula

Karelia, which clearly proves that amount reflected in the balance sheet

included the interest, since disbursement was only of Rs.2 crores. At this

juncture, we may also notice the balance sheets as on 31.03.2014. The

balance sheet as on 31.03.2014 refer to long term borrowing of the current

year as well as the previous year, which is as follows:

"Pooja Land and Premises Pvt. Ltd.

B, 1st Floor, Eastern Court, Vile Parle (*** ***

BALANCE SHEET AS AT 31ST MARCH 2014

Previous Particular Note Current Year Year Amount Amount No. Amount (Rs.) (Rs.) (Rs.)

EQUITY & LIABILITIES Shareholders funds Share Capital 2 205,000 205,000 Reserve and Surplus 3 (28,897,554) (24,556,848) (28,692,554) (24,351,8480

Company Appeal (AT) (Insolvency) No.543 of 2022 10 Non Current Liaibilities Long Term Borrowings 4 97,834,545 97,834,545 95,081,053"

10. Note 4 of the same balance sheet divides long term borrowings in two

categories, i.e., - (a) Loans and Advances from Related Parties; and (b) Other

Loans and Advances, which Note 4 is as follows:

"NOTE NO. 4 - LONG TERM BORROWINGS Unsecured (a) Loans and Advances from related 40,093,011 parteis 42,730,221 (B) Other Loans and Advances 55,101,324 54,988,042 Total 97,831,545 95,081,053"

11. Share Purchase Agreement is dated 29.12.2014. The balance sheet as

on 31.03.2015 is also on the record, in which with respect to long term

borrowing amount of Rs.10,01,16,474 has been mentioned. Balance sheet as

on 31.03.2015 continue long term borrowing, which is as follows:

"POOJA LAND AND PREMISES PRIVATE LIMITED

BALANCE SHEET AS AT 31ST MARCH 2015

Previous Particular Note Current Year Year Amount Amount No. Amount (Rs.) (Rs.) (Rs.)

EQUITY & LIABILITIES Shareholders funds Share Capital 2 2,05,000 2,05,000 (2, Reserve and Surplus 3 (2,70,64,372) 88,97,554) (3,18,50,172) (2,86,92,554

Non Current Liaibilities Long Term Borrowings 4 10,01,16,474 9,78,31,545"

Company Appeal (AT) (Insolvency) No.543 of 2022 11

12. It is relevant to notice that long term borrowings, which was reflected

in the previous year, i.e. year ending as on 31.03.2014 was totaling to

Rs.95,081,053/- and the said amount as on 31.03.2014 was shown as

Rs.9,78,31,545/-, which amount is reflected in the balance sheet of

31.03.2015 as a previous year amount and the amount as on 31.03.2015 has

been mentioned as Rs.10,01,16,474/- in the subsequent balance sheet, i.e.

2016-17 and 2017-18. The amount reflected in the balance sheet under the

long term borrowings is the same amount i.e., Rs.10,01,16,474/-. In the

Appeal, submission was advanced by the learned Counsel for the Appellant

that the said amount of Rs.10,01,16,474/- is the amount, which was given by

Romell Real Estates Pvt. Ltd. as loan and the balance sheet of the year 2015-

16, 2016-17 and 2017-18, which reflects the said amount is the loan given by

Romell Real Estates Pvt. Ltd. and Adjudicating Authority committed error in

noticing the same as acknowledgement of debt by the Corporate Debtor. In

view of the rival stand taken by the parties, this Tribunal on 01.11.2022,

passed the following order:

"01.11.2022: Learned Counsel for the Appellant prays for time to

file additional affidavit seeking details of the amount paid of Rs.

10,01,16,474/- as reflected in the balance sheet of 2017-2018.

Learned Counsel for the Appellant in the affidavit may also

indicate the relevant date with the balance sheet. Relevant documents

Company Appeal (AT) (Insolvency) No.543 of 2022 12 in support of the loan as claimed by the Appellant Romell should also

be given.

Learned Counsel for the Resolution Professional as well as

Respondent are also permitted to file the Reply to the Additional

Affidavit giving other relevant details regarding the aforesaid amount.

List this Appeal on 12th December, 2022."

13. By order dated 01.11.2022, the Appellant was directed to file relevant

documents in support of the loan as claimed by the Appellant, which is

advanced by the Romell. The Appellant filed affidavit dated 17.01.2023, where

to explain the loan from Romell Real Estates Pvt. Ltd., they have stated that

it is at the request of the Corporate Debtor, amount between 29.07.2015 to

04.01.2016 was paid by Romell Real Estates Pvt. Ltd. to Vijay Kamdar

Paragraphs 2 and 3 of the affidavit are as follows:

"2. The Corporate Debtor had addressed various letters to Romell Real Estate Private Limited requesting payments to be made on its behalf to Mr. Vijay C. Kamdar.

Sr. No. Date Amount (INR) a. 29th July 2015 50,00,000/- b. 8th August 2015 75,00,000/- c. 18th August 2015 75,00,000/- d. 24th August 2015 3,00,00,000/- e. 3rd December 2015 1,00,00,000/- f. 26th November 2015 50,00,000/- g. 28th December 2015 2,00,00,000/-

Company Appeal (AT) (Insolvency) No.543 of 2022 13 H 4th January 2016 1,50,00,000/- TOTAL 10,00,00,000

Hereto annexed and marked as Exhibit "A" to "H" is the copy of Letter dated 29th July 2015, Letter dated 8th August 2015, Letter dated 18th August 2015, Letter dated 24th August 2015, Letter dated 3rd September 2015, Letter dated 26th November 2015, Letter dated 28th December 2015, and Letter dated 4th January 2015 respectively.

3. Upon receipt of the above payment requests, Romell Real Estate Pvt. Ltd. has made payment of Rs.10,00,00,000/- (INR Ten Crore Only) to Mr. Kamdar in multiple tranches from it's a/c.

no.04102320000179 by issuing cheques from time to time. Hereto annexed and marked as Exhibit "I" is the copy of Certificate issued by HDFC Bank Ltd. along with extract of bank statement."

14. In the affidavit, no documents have been placed by the Appellant to

prove any loan or any disbursement made by Romell Real Estates Pvt. Ltd. to

the Corporate Debtor. The submission that the payment was made on the

letters given by Corporate Debtor to one Mr. Vijay Kamdar, is a loan

transaction to the Corporate Debtor, does not inspire any confidence. The

stand of the Appellant that amount of Rs.10,01,16,474/- is reflected in

balance sheets of the year 2015-16, 2016-17 and 2017-18 is the loan given

by Romell Real Estates Pvt. Ltd. is false plea, which is apparent from the

balance sheets of the Corporate Debtor on record. We have noticed the

balance sheet for the yar as on 31.03.2014, which balance sheet indicates

Company Appeal (AT) (Insolvency) No.543 of 2022 14 that long term borrowing as on 31.03.2014 was Rs.9,78,31,545/-, which

figure is reflected in balance sheet as on 31.03.2015. The balance sheet as

on 31.03.2015 has noted the figures of Rs.10,01,16,474/-, which we have

already extracted above. According to the Appellant, the amount of Rs.10

crore was paid by Romell Real Estates Pvt. Ltd. from 29.07.2015 to

04.01.2016 at the request of the Corporate Debtor. The figure of

Rs.10,01,16,474/- already find place in balance sheet of 31.03.2015 by that

time the alleged payment by Romell Real Estates Pvt. Ltd. was not even made.

In the balance sheet of 2016-17 and 2017-18, the said figure of long term

borrowing of Rs.10,01,16,474/- of the previous year and of the year ending

31.03.2017 has been mentioned. It is useful to extract the balance sheet as

on 31.03.2017, which is as follows:

"POOJA LAND AND PREMISES PRIVATE LIMITED

BALANCE SHEET AS AT 31ST MARCH 2017

Previous Particular Note Current Year Year Amount Amount No. Amount (Rs.) (Rs.) (Rs.)

EQUITY & LIABILITIES Shareholders funds Share Capital 2 205,000 205,000 Reserves and Surplus 3 (32,575,612) (32,335,664) (32,370,612) (32,130,664

Non Current Liaibilities Long Term Borrowings 4 100,116,474 100,116,474"

Company Appeal (AT) (Insolvency) No.543 of 2022 15

15. When the figure of Rs.10,01,16,474/- is continuing as long term

borrowings from the balance sheet as on 31.03.2015 and which figure is the

same figure, which is reflected in the balance sheet as on 31.03.2015, we fail

to see how the loan of Romell Real Estates Pvt. Ltd. of Rs.10,01,16,474/- is

reflected in the balance sheet. In event there is any amount of

Rs.10,01,16,474/- loan advanced by Romell Real Estates Pvt. Ltd., the

balance sheet ought to have reflected the same, in addition to

Rs.10,01,16,474/-. Thus, the balance sheet of the Corporate Debtor itself

makes it clear that the plea raised by the Appellant that the amount reflected

in the balance sheet is not the amount, which was given by the Financial

Creditor, rather it is the amount advanced by Romell Real Estates Pvt. Ltd.,

is false and misleading.

16. It is relevant to notice that in the present case, this Tribunal has

directed the Appellant to file an affidavit and explain the entry of

Rs.10,01,16,474. After the order of this Tribunal, an affidavit has been filed

dated 17.01.2023, which is nothing but misleading affidavit containing false

averments. We are satisfied that amount which was advanced to the

Appellant by the Financial Creditor, was duly disbursed, which is proved by

the Bank statement and is reflected in the balance sheet of 2010-11. The

amount reflected in the balance sheet of year 2010-11 under the heading 'long

term borrowing' have been increasing in subsequent years, which indicates

that interest component was added in subsequent balance sheets, which fully

Company Appeal (AT) (Insolvency) No.543 of 2022 16 supports the case of the Financial Creditor that loan was with interest @ 12%.

We, thus, reject the plea of the Appellant that amount of Rs.10,01,16,474/-

reflected in the balance sheet of 2016-17 and 2017-18 are amount which was

given by loan to the Corporate Debtor by Romell Real Estates Pvt. Ltd., which

is false and misleading plea.

17. What we have stated above, i.e., the Appellant has filed false affidavit,

the appeal could be dismissed on this ground alone. However, since learned

Counsel for the Appellant has made various other submissions in support of

the Appeal, we proceed to examine the submissions made by the Appellant.

18. Learned Counsel for the Appellant submits that there is no

acknowledgement in the balance sheet of the year 2017-18, since name of

Respondent No.1 Financial Creditor is not reflected in the balance sheet,

hence, there is no acknowledgement within the meaning of Section 18 of the

Limitation Act and Adjudicating Authority committed error in reading the

acknowledgement. The loan according to the Financial Creditor having been

disbursed on 23.06.2010 and the Application having been filed on 20.04.2020,

the same is barred by time.

19. The submission of the Appellant that Application is barred by time

cannot be accepted. After disbursement of loan on 23.06.2010, there is

continuance reflection of the debt in the balance sheet from 2011-12 onwards

till 2017-18. The submission of the Appellant is that balance sheet of 2017-

Company Appeal (AT) (Insolvency) No.543 of 2022 17 18 cannot be read as any acknowledgement, since the name of Respondent

No.1 is not mentioned in the balance sheet as creditor, hence there is no

acknowledgement. The submission cannot be accepted, in the balance sheet

of 2011-12, name of the creditor along with the amount disbursed to them

including Respondent No.1 have been reflected in the column 'unsecured

loans' and are subsequently reflected in the balance sheet, which is clear from

the extract of balance sheet as noted above. The mere fact that name of

Respondent No.1 is not mentioned as creditor in subsequent balance sheet

including the balance sheet of 2017-18 is of no consequence, since the name

of Respondent No.1 was mentioned as under the unsecured/ long term

borrowings in 2011-12, which unsecured loan/ borrowings continued to be

reflected in subsequent balance sheet of the Corporate Debtor. We have

already noted the plea raised by the Appellant that amount of long term

borrowings mentioned in balance sheet for the year 2017-18 is borrowing from

Romell Real Estates Pvt. Ltd., which plea has not been accepted for reasons

given above. We are satisfied that debt, which was reflected in 2011-12 of the

Financial Creditor, continued to be reflected under the long term borrowing

and there being continuous acknowledgement, the Application cannot be said

to be barred by time.

20. The learned Counsel for the Appellant has relied on the judgment of the

Hon'ble Supreme Court in Babulal Vardharji Gurjar vs. Veer Gurjar

Aluminium Industry Pvt. Ltd. & Anr. - (2020) 15 SCC 1. The Hon'ble

Company Appeal (AT) (Insolvency) No.543 of 2022 18 Supreme Court in the above case has laid down that acknowledgement under

Section 18 of the Limitation Act provided for extension of limitation. In

paragraph 35, following has been laid down:

"35. Apart from the above and even if it be assumed that the principles relating to acknowledgment as per Section 18 of the Limitation Act are applicable for extension of time for the purpose of the application under Section 7 of the Code, in our view, neither the said provision and principles come in operation in the present case nor do they enure to the benefit of Respondent 2 for the fundamental reason that in the application made before NCLT, Respondent 2 specifically stated the date of default as "8-7-2011 being the date of NPA". It remains indisputable that neither has any other date of default been stated in the application nor has any suggestion about any acknowledgment been made. As noticed, even in Part V of the application, Respondent 2 was required to state the particulars of financial debt with documents and evidence on record. In the variety of descriptions which could have been given by the applicant in the said Part V of the application and even in residuary Point 8 therein, nothing was at all stated at any place about the so-called acknowledgment or any other date of default.

35.1. Therefore, on the admitted fact situation of the present case, where only the date of default as "8-7-2011" has been stated for the purpose of maintaining the application under Section 7 of the Code, and not even a foundation is laid in the application for suggesting any acknowledgment or any other date of default, in our view, the submissions sought to be developed on behalf of Respondent 2 at the later stage cannot be permitted. It remains trite that the question of 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 of limitation, the relevant facts are required to be pleaded and requisite evidence is required to be adduced.

Company Appeal (AT) (Insolvency) No.543 of 2022 19 Indisputably, in the present case, Respondent 2 never came out with any pleading other than stating the date of default as "8-7-2011" in the application. That being the position, no case for extension of period of limitation is available to be examined. 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 acknowledgment. In this view of the matter, reliance on the decision in Mahabir Cold Storage [Mahabir Cold Storage v. CIT, 1991 Supp (1) SCC 402] does not advance the cause of Respondent 2."

21. We already having held that in the balance sheet, acknowledgement of

debt for the Financial Creditor was reflected continuously from 2010-11 till

2017-18 and the Application, which was filed on 22.04.2020, cannot be held

to be barred by time.

22. Learned Counsel for the Appellant further submitted that Application

filed under Section 7 was premature. When one of the submissions of the

Appellant is that Application was barred by time, we cannot accept the

submission of the Appellant that Application was premature. The submission

that Application is premature, is advanced on the basis of Loan Agreement

dated 31.12.2010. The learned Counsel for the Appellant referred to Clause

4 of the Loan Agreement, to contend that loan was repayable only after 10

years, hence, the application was premature. The Appellant before the

Adjudicating Authority has come with the categorical pleading that Loan

Agreement dated 31.12.2010 is a manufactured document, which pleadings

Company Appeal (AT) (Insolvency) No.543 of 2022 20 have been made in the reply filed by the Corporate Debtor to Section 7

Application. In paragraph 7 of the reply affidavit, the Corporate Debtor has

made following pleadings:

"7. I say that the present Petitioner alleges execution of a purported Loan Agreement dated 31.12.2010 between the Petitioner along with her relatives and Corporate Debtor. I say that the said document is a forged and fabricated document as no such document ever existed. It clearly appears to be an afterthought of the Petitioner."

23. When the Corporate Debtor's case is that the Loan Agreement is

fabricated and forged, it does not lie in the mouth of the Corporate Debtor to

contend that as per Loan Agreement, the Application under Section 7 was

premature. We further notice Clauses 4 and 5 of the Loan Agreement, on

which the Appellant has placed reliance, which are as follows:

"4. The outstanding principal amount of the Lender Family as a whole will be repayable along with interest compounded as stated in clause 3 on the expiry of ten years from the date of first disbursement of the loan by any member of the Lender Family (i.e. 10 years from 23rd June 2010 i.e. on or before 23rd June 2020). However, the option to drawdown the loan shall be available only for a period of 5 years from the date of this agreement."

5. During the first five years of the loan i.e. till 23rd June 2015, the Borrower shall have the right to repay the loan or any part thereof and then seek disbursement again by giving a 3 days' notice to the Lender family. At the end of 5 years, no further drawdown shall be available save and except the Lender family can replace

Company Appeal (AT) (Insolvency) No.543 of 2022 21 the loan from one Lender to another as stated in clause 2 above. The Borrower hereby confirms that if he makes any prepayment of the loan after 5 years, he shall not be entitled to draw it back again."

24. Clauses 4 and 5 mentions that outstanding principal amount will be

repayable along with interest on the expiry of 10 years from the date of first

disbursement of the loan, which was explained in bracketed portion, which

reads as "(i.e. 10 years from 23rd June 2010 i.e. on or before 23rd June 2020)".

Clause 5 also indicate that the Borrower has right to repay the loan in first

five years, i.e. till 23rd June 2015. The above Clauses 4 and 5 when read

together, makes it clear that loan could have been repaid by borrower before

23.06.2020 also. A Bank statement has also been brought on the record by

the Appellant indicating that payment has been made by the Corporate Debtor

to other family members of Respondent No.1 in the year 2015. We, thus, are

not persuaded to accept the submission of the Appellant that Application filed

under Section 7 of the Corporate Debtor was premature.

25. Learned Counsel for the Appellant has relied on the judgment of this

Tribunal in Hyline Mediconz P. Ltd. vs. Anandaloke Medical Centre P. Ltd.

- (2022) SCC OnLine 4286, where this Tribunal held that relevant point for

determination of maintainability of the Application under Section 7 is the date

of filing. Further reliance has been placed on the judgment of the Hon'ble

Supreme Court in Ramesh Kymal vs. Siemens Gamesa Renewable Power

Pvt. Ltd. - (2021) 3 SCC 224 and stated that the case of the Financial

Company Appeal (AT) (Insolvency) No.543 of 2022 22 Creditor has to be tested on its pleadings in the Form and cannot be allowed

to prevaricate from the same. There can be no quarrel to the proposition laid

down in the above cases. In Section 7 Application, which was filed by the

Financial Creditor, the amount in default and date of default was mentioned

as 18.12.2019. The repayment letter dated 18.12.2019 sent by Respondent

No.1 to Corporate Debtor was also filed along with Section 7 Application, by

which Financial Creditor demanded the repayment of the amount within 15

days and the principal amount along with interest was mentioned as

Rs.3,25,22,787/-. The Appellant has in the Section 7 Application clearly

pleaded about the Loan Agreement dated 31.12.2010 and the issuance of

repayment notice. In the rejoinder affidavit filed by the Financial Creditor, the

balance sheets of the Corporate Debtor were also brought on the record.

26. From the facts of the present case, as reflected from materials brought

on the record, it is clear that the Corporate Debtor, who has not denied the

disbursement of the amount in balance sheet of 2010-11 and subsequent

balance sheet has not made any pleading or brought on record any material

that amount at any time was paid to the Financial Creditor, although some

repayment was made to the other family members of the Financial Creditor in

2015. Disbursement, reflection in the balance sheets and repayment to family

members, who were part of the same Loan Agreement, are the materials on

which conclusion can be drawn that loan was taken by the Corporate Debtor,

but was not repaid and now the Appellant is making false and misleading

Company Appeal (AT) (Insolvency) No.543 of 2022 23 pleas to somehow get out from the liability from the debt and default, which

has been committed by the Corporate Debtor. We, thus, are of the view that

this Appeal deserved to be dismissed. Ordered accordingly. While dismissing

the Appeal, we also impose cost on Appellant of Rs.1,00,000/- (Rupees one

lakh) to be paid within four weeks to the Respondent No.1, in the facts and

circumstances of the case specially keeping in view the Appellant's attempt of

filing false and misleading affidavits in the Appeal.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

NEW DELHI

14th August, 2024

Ashwani

Company Appeal (AT) (Insolvency) No.543 of 2022 24