Vidyasagar Parchuri vs State Bank of India
CA (AT) 184 of 2023
Facts:
1.M/s. Vibha Agro Tech Limited’ (Corporate Debtor’), has preferred the instant Comp. App (AT) (CH) (INS.) No. 184 of 2023, as an Aggrieved Person’, in respect of the impugned order’ dated 05.06.2023 in CP (IB) No. 645 / 7 / HDB / 2018 (Filed by the1st Respondent / Financial Creditor / Bank / Petitioner’), under Section 7 of the I & B Code, 2016, r/w Rule 4 of the I & B (AAA) Rules, 2016, passed by the `Adjudicating Authority.
Issue: Whether the order passed by AA is correct ?
Arguments:
Appellant:
1.Counsel submitted that AA relied upon a Time Barred Debt’, because of the fact that the Amendment Application’, was preferred, beyond the Statutory Period’ of three years’, from the `date of Last Cause of Action’. It was submitted that AA had failed to appreciate that the Debt’, sought to be enforced even by incorporating alleged acknowledgements in the Balance Sheets’ of the Corporate Debtor’, was Time Barred’, in as much as the last acknowledgement, as per the Amended Application’, under Section 7 was 27.08.2016 and the Amended Application’, was filed on 17.11.2021 Viz. beyond the statutory period of 3 years..
2.Counsel for the Appellant, takes a stand that the cardinal principle of Law’, that if an amendment made, introduces a different new cause of action’, based on fresh facts, then, the said amendment’, cannot possibly relate back to the Date of Filing’ of the Petition’, but, to the Date of Filing’ of the Amendment Application’.
3.Counsel submitted that the Entries in Balance Sheets’, cannot be read in Isolation’, and in the instant case, the amount exhibited in the Balance Sheets’, is different from what is being claimed by the Financial Creditor’, and hence, there is a Dispute’, in regard to the Acknowledgement of Liability’, by the `Corporate Debtor.
4.Counsel submitted that the Sum’, mentioned in the Balance Sheets’, is admittedly different, from what is being claimed by the Financial Creditor’, and further, that for the purpose of extending the period of Limitation (under Section 18 of the Limitation Act, 1963), the amount acknowledged’, must be exactly the same as claimed by the Financial Creditor’, otherwise, the Financial Creditor’, is not entitled to get the benefit of `extension of period of Limitation.
5.Counsel submitted that Debt’, is Time Barred’, for the reason that the Financial Creditor’, for the purpose of seeking an extension of Period of Limitation’, can only rely upon the Balance Sheets’, in respect of the Financial Years 2013-14 & 2014-15, signed on 16.08.2014 and 27.08.2015’ respectively and no reliance can be placed on the Balance Sheet’, for the Financial Year 2015-16’, signed on 27.08.2016, as the same was signed, after the expiration of the period of Limitation’, from the `Date of Default’.
Respondent:
1.Counsel submitted that Corporate Debtor’, was indicating the Debt and Default’, in their Balance Sheets’, from the years 2016 to 2020, and added further, the Corporate Debtor’, had not filed their `Balance Sheet’, after the year 2020, for the years 2021 to 2023.
2.Counsel further submitted that 1st Respondent / Bank, had initiated SARFAESI’ and Recovery Proceedings’, against the Corporate Debtor’, and because of the continuous default of the Corporate Debtor’, the 1st Respondent / Bank, in order to bring about a Resolution’ of the Account’, had filed a Section 7 Application, under the I & B Code, 2016 and originally, the said Application’, was dismissed’, by the Adjudicating Authority’ /Tribunal’, on the ground of Limitation’, and the Appeal’.
3.Counsel submitted that Appellant, was classified as a Wilful Defaulter’, by the 1st Respondent / Bank, on 25.03.2019, and further that, the Appellant’, was also classified as Wilful Defaulter’, by other two Banks (1) Punjab National Bank and (2) IDBI Bank, and the Corporate Debtor’, was also declared as `Fraud’, by the 1st Respondent / Bank, on 31.07.2019.
4.Counsel for the 2nd Respondent / IRP, points out that the Total Outstanding Sum’, dues of the Corporate Debtor’, is more than Rs.3,400/- Crores, as per the Claims’, received and further that the Appellant’ / Suspended Board’, is intentionally not revealing or disclosing the Records’, since, the same would have adverse implications on the `Corporate Debtor.
Decision: Hon’ble NCLAT dismissed the appeal.
Rationale:
1.Hon’ble NCLAT noted that the situation / circumstances’, under which, a Corporate Debtor’, could not repay’, the Financial Debt’, need not be taken as a Defence’, in a proceeding, under the Code’.
2.It noted that Adjudicating Authority’ / Tribunal’, is not a Civil Court’, to determine the Violation of Contract’, between the Parties’. A mere dispute, about the Quantum of Payment’, does not affect the Right of a Financial Creditor’, to initiate appropriate proceedings’, under the I & B Code, 2016. Under the Code, the shift is inability to pay’, to the existence of Default’. Merely because a Financial Creditor’, has approached the Debt Recovery Tribunal’, for an appropriate relief’, it cannot be said that, it cannot proceed under the `I & B Code’ 2016.
3.It further noted that Doctrine of Relation Back’, in the context of pleading’, is not of Universal Application’, the Court’ for reasons to be recorded’, has Jurisdiction’, to decide whether an amendment’, would be from the Date of Order’ or would Relate Back to the Institution of Suit’.
4.It held that Corporate Debtor’, had availed the benefit of a Restructuring Exercise’, on various occasions, had admitted the Debt’, including by providing One Time Settlement Proposals’, on 19.06.2015, 22.09.2017, 03.05.2019, 30.04.2021, 18.03.2021, 14.06.2021 and 26.07.2022 to the 1st Respondent / Bank. As such, this Tribunal’, in an unequivocal term holds that the Date of Non Performing Asset’ i.e., 30.04.2013, is not the Date of Commencement of Limitation’.
5.It is to be remembered, that the Date on which, the Balance Sheet’, is approved’, in the Board Meeting’, and signed by the Two Directors’, as per the Companies Act, is sufficient acknowledgement’, for the purpose of Limitation Act’.
Order Copy:
