Singhania Buildcon Private Ltd vs Mr Vinod Kumar Ambavat Resolution ...

IN THE MATTER OF: Singhania Buildcon Pvt. Ltd. ...Appellant

Versus Vinod Kumar Ambavat, Resolution Professional of R.K. Jain Construction ...Respondents (India) Pvt. Ltd.

Present: For Appellant: Mr. Pallav Mognia and Tushar Srivastava, Advocates For Respondent: Ms. Pratiksha Sharma, Mr. Ankit Acharya, Mr. Mueed Shah, Advocates

ORDER

07.02.2023: Heard Learned Counsel for the Appellant as well as Learned

Counsel for the Resolution Professional.

2. This Appeal has been filed against the Order dated 07.07.2022 passed by

the Adjudicating Authority (National Company Law Tribunal, Cuttack Bench) in

I.A. No. 87/CB/2021 filed by the Appellant challenging the part rejection made

by the Resolution Professional.

3. Brief facts of the case necessary to be noted for deciding this Appeal are:- 2

 The 'Corporate Insolvency Resolution Process' (CIRP in short) against the

R.K. Jain Construction (I) Pvt. Ltd. was initiated by the Order dated

03.10.2019.

 The Appellant filed a claim before the Resolution Professional of Rs.

3,04,58,814/-. Resolution Professional accepted partial claim to the tune

of Rs. 27,75,000/- only.

 Appellant thereafter filed an I.A. No. 87 of 2021 questioning the part

rejection of the claim of the Applicant by the RP and I.A. No. 124 of 2021

was also filed seeking liberty to file Rejoinder.

 The Adjudicating Authority by the Impugned Order dismissed the I.A. No.

87 of 2021. In paragraph 7 of the order, following has been observed by

the Adjudicating Authority:-

"7. The one another legal aspect is as per agreement to sell dated 27.06.2014, in clause 3 specific date is fixed for completion of transaction by 30.08.2014. As per Article 54 of Limitation Act, 1963 when the date is fixed for completion of sale, the limitation is three years from the said date. Accordingly, limitation expired in this case on 30.08.2017. Thus, the entire claim of the petitioner is barred by limitation. The respondent failed to notice this limitation aspect. Further there is no reference about Board resolution of CD authorizing to sell the property. The entire building R.K. Mall was mortgaged with Allahabad Bank even in the year 2010, in this situation no prudent man will enter into sale agreement with the property which was already mortgaged with the Bank."

Company Appeal (AT) Ins. No. 1178 of 2022 3

 Challenging the order passed by the Adjudicating Authority, this Appeal

has been filed.

4. Learned Counsel for the Appellant challenging the Order contends that the

fact that the Resolution Professional has admitted claim of Rs. 27,75,000/-, this

shall be treated as acknowledgement for extension of limitation and the claim of

the Appellant could not have been stated to be barred by time. It is submitted

that entire payment made by the Appellant is reflected in the accounts. Learned

Counsel for the Appellant has relied on the Judgment of this Tribunal in "Arrow

Engineering Ltd. Vs. Golden Tobacco Limited" [CA (AT) I No. 183 of 2021]

decided on 02.12.2021 and also on the Judgement of "Asset Reconstruction

Company (I) Ltd. Vs. Bishal Jaiswal & Anr." [2021 6 SCC 366].

5. Learned Counsel for the Resolution Professional refuting the submissions

of Learned Counsel for the Appellant, contends that the Adjudicating Authority

has rightly come to the conclusion that entire claim was barred by time and the

fact the Resolution Professional has accepted part of claim shall not give any

extension of limitation to the Appellant. It is further submitted that in the present

case Resolution Plan has also been approved by the Adjudicating Authority on

27.07.2022 and the same has been implemented, on 05.12.2022. Closure Report

has also been filed.

6. We have considered the submissions of Learned Counsel for the parties

and have perused the record.

7. As noted above, the Adjudicating Authority came to the conclusion that

claim is barred by time since the transaction which was entered, was agreement Company Appeal (AT) Ins. No. 1178 of 2022 4

of sale dated 27th June, 2014. The Application under Section 7 was filed in the

year 2019 which was admitted by the Adjudicating Authority on 03.10.2019. The

claim of the Appellant was submitted on 17.11.2020. The submission which has

been pressed by the Learned Counsel for the Appellant is on the basis of part-

acceptance of the claim by RP. Learned Counsel for the Appellant has relied on

an Affidavit in Reply filed by the RP before the Adjudicating Authority and he

placed reliance on paragraph 15 of the Reply which is to the following effect:

"15. It is submitted that it is the duty of the Resolution Professional to make the best estimate of the amount of the claim based on the information furnished by the claimant as well as the information available with him. Therefore, in the instant case, after verifying the documents relied on by the Applicant and the ledger account of the Applicant maintained in the books of the Corporate Debtor, the claim of the Applicant was accepted to an extent of Rs. 27,75,000/- (Rupees Twenty- Seven Lakhs Seventy-Five Thousand Only) as unsecured loan. It is submitted that acceptance of the said claim to an extent of Rs. 27,75,000/- was even informed to the Applicant vide email dated 18.12.2020 which is annexed in the Application as Annexure A/8 at Pg. No. 100."

8. Learned Counsel for the Appellant has relied on Judgement of this

Tribunal in "Arrow Engineering Ltd." (supra) specifically paragraph 23 and 25

which is to the following effect:

"23. Thus, even if 01.09.2012 is treated to be the date of default, the three years' period will be there till 31.08.2015 and there being acknowledgment of the debt in the Balance

Company Appeal (AT) Ins. No. 1178 of 2022 5

Sheet for the years 2014-15 upto 2018-19 there shall be fresh period of limitation on each acknowledgment and Application filed on March, 2020 cannot be said to be barred by time. The question as to whether the acknowledgment in the Balance Sheet can give lease of fresh period of limitation is no more res integra in view of the recent judgment of the Hon'ble Supreme Court in "Asset Reconstruction Company (India) Limited vs. Bishal Jaiswal and Anr.- (2021) 6 SCC 366". The Hon'ble Supreme Court in the said judgment after considering all earlier judgments of the Hon'ble Supreme Court and High Courts has held that acknowledgment in the Balance Sheet is sufficient for attracting the provisions of Section 18 of the Limitation Act, 1963. The Hon'ble Supreme Court in the above case has quoted an earlier judgment of the Hon'ble Supreme Court in "Khan Bahadur Shapoor Fredoom Mazda vs. Durga Prasad Chamaria and Ors.- AIR 1961 SC 1236", a passage from the above judgment was quoted. Para 15 of the judgment is as follows:-

"15. In an illuminating discussion on the reach of Section 18 of the Limitation Act, including the reach of the Explanation to the said Section, this Court, in Khan Bahadur Shapoor Fredoom Mazda v. Durga Prasad, (1962) 1 SCR 140 ["Shapoor Fredoom Mazda"], after referring to Section 19 of the Limitation Act, 1908, which corresponds to Section 18 of the 1963 Act, held:

"6. It is thus clear that acknowledgement as prescribed by Section 19 merely renews debt; it does not create a new right of action. It is a mere acknowledgement of the liability in Company Appeal (AT) Ins. No. 1178 of 2022 6

respect of the right in question; it need not be accompanied by a promise to pay either expressly or even by implication. The statement on which a plea of acknowledgement is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words. Words used in the acknowledgement must, however, indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the intention to admit such jural relationship. Such intention can be inferred by implication from the nature of the admission, and need not be expressed in words. If the statement is fairly clear then the intention to admit jural relationship may be implied from it. The admission in question need not be express but must be made in circumstances and in words from which the court can reasonably infer that the person making the admission intended to refer to a subsisting liability as at the date of the statement. In construing words used in the statements made in writing on which a plea of acknowledgement rests oral evidence has been expressly excluded but surrounding circumstances can always be considered. Stated generally courts lean in favour of a liberal construction of such statements though it does not mean that where no admission is made one should be inferred, Company Appeal (AT) Ins. No. 1178 of 2022 7

or where a statement was made clearly without intending to admit the existence of jural relationship such intention could be fastened on the maker of the statement by an involved or far-fetched process of reasoning. Broadly stated that is the effect of the relevant provisions contained in Section 19, and there is really no substantial difference between the parties as to the true legal position in this matter.""

.........

25. It is true that each Balance Sheet has to be examined on a case to case basis to establish whether acknowledgment of liability in fact has been made. We have noted that all the Balance Sheets referred above clearly establish acknowledgment of liability by the Corporate Debtor. Thus, Section 18 is clearly attracted giving fresh period of limitation even in the event, we accept the submission of the Respondent that default was committed on 23 Comp. App. (AT) (Ins) No. 183 of 2021 01.09.2012. We, thus, are of the opinion that the Adjudicating Authority committed error in rejecting the Application filed by the Appellant under Section 7. The Appeal deserves to be allowed. The impugned judgment dated 25.01.2021 is set aside. We further direct the Adjudicating Authority to pass consequential orders including the order of Moratorium within one month from the date of copy of this order is produced before the Adjudicating Authority during which period it is always open to the parties to endeavor to enter into a settlement."

(Emphasis Supplied) Company Appeal (AT) Ins. No. 1178 of 2022 8

9. He has also relied on Judgement of "Bishal Jaiswal" (supra). The law as was

laid down by the Hon'ble Supreme Court in "Bishal Jaiswal" that on the basis of

is a clear acknowledgment in a Balance Sheet, the limitation under Section 18

extended. The Hon'ble Supreme Court in above case was considering the entries

in the Balance Sheet for the purposes of acknowledgement under Section 18 of

Limitation Act. It is not the case of the Appellant that any acknowledgement by

the Corporate Debtor was made in the Balance Sheet or there is any material

brought on record by the Appellant which contain any acknowledgement within

meaning of Section 18 of the Limitation Act, 1963. The reliance placed is on

paragraph 15 of the Affidavit in Reply of the RP where Resolution Professional

has partly accepted the claim of Rs. 27,75,000/-. It is to be noted that part

acceptance of claim was not under challenge before the Adjudicating Authority

and Application was filed by the Appellant against the rejection of the rest of the

claim. By any statement made in the Affidavit of Reply by the RP while replying

the Application, can not be treated to be an acknowledgement within the

meaning of Section 18 of the Limitation Act, 1963.

10. Learned Counsel for the Appellant submits that Resolution Professional

referred to books of the Corporate Debtor while accepting the part claim. Be that

as it may, in the present case, issue is not as to whether acceptance of the part

claim was in accordance with law or not, the issue is as to whether, rejection of

the part claim required any interference. Adjudicating Authority having come to

the conclusion that claim was barred by time, there has to be material to indicate

that Appellant is entitled for benefit of Section 18 of the Limitation Act, there

being no material on record for the extension of limitation under Section 18, no Company Appeal (AT) Ins. No. 1178 of 2022 9

benefit can be granted to the Appellant. We are of the view that the Judgement

of this Tribunal in "Arrow Engineering Ltd." as well as "Bishal Jaiswal" (supra)

does not help the appellant in the present case.

We do not find any error in the Order of the Adjudicating Authority. This

Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

Basant/nn

Company Appeal (AT) Ins. No. 1178 of 2022