Acknowledgement of Debt in B/S and OTS extends Limitation Period: NCLAT

Case  Details: Dinesh G Jaiswal v. Punjab National Bank - [2023] 147 taxmann.com 410 (NCLAT-New Delhi)

Judiciary and Counsel Details

• • Rakesh Kumar, Judicial Member & Dr Ashok Kumar Mishra, Technical Member
  • Varun Singh & Ms Archana Singh, Advs. for the Appellant.
  • Yasartha Gupta & Mukesh Verma, Advs. for the Respondent.

Facts of the Case

In the instant case, the corporate debtor had availed various credit facilities from the respondent-financial creditor. However, the corporate debtor failed to make payment of the due amount and the account of the corporate debtor was declared NPA on 30.09.2013.

Subsequently, the respondent filed an application u/s 7 of the IBC for initiating the CIRP against the corporate debtor. The appellant (i.e. director of the corporate debtor) contended that the application filed by the financial creditor on 10.06.2019 was time-barred, as the account of the corporate debtor was declared NPA on 30.09.2013.

However, the respondent submitted that the debt was acknowledged in the balance sheet of the corporate debtor for the financial years 2014-15 and 2015-16, and also an OTS proposal dated 27.12.2018 further extended the limitation period.

The Adjudicating Authority (NCLT) by the impugned order admitted the said application, holding that the debt and default were not under challenge and that the application filed by the financial creditor was within the limitation period. Thereafter, an appeal was made to the National Company Law Appellate Tribunal (NCLAT) against the order passed by the NCLT.

NCLAT Held

The NCLAT examined the facts and circumstances of the case and held that the balance sheet of the corporate debtor for the financial years 2014-15 and 2015-16, had extended the limitation period. Further, One Time Settlement (OTS) proposal submitted on 27.12.2018 had also extended the time limit.

As a result, an application filed on 10.06.2019 was well within the prescribed period of limitation. Accordingly, the appeal was to be dismissed.

List of Cases Reviewed

• • Punjab National Bank v. J – Marks Exim (India) (P.) Ltd. [2023] 147 taxmann.com 409 (NCLT – Mum.) (para 22) affirmed [See Annex].
  • Asset Reconstruction Co. (India) Ltd. v. Bishal Jaiswal [2021] 126 taxmann.com 200/166 SCL 82 (SC)/2021 SCC Online SC 321 (para 19) followed.

List of Cases Referred to

• • Dena Bank v. C. Shivakumar Reddy [2021] 129 taxmann.com 60 (SC)/2021 SCC Online SC 543 (para 8)
  • Asset Reconstruction Co. (India) Ltd. v. Bishal Jaiswal [2021] 126 taxmann.com 200/166 SCL 82 (SC)/2021 SCC Online SC 321 (para 8)
  • Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries (P.) Ltd. [2020] 118 taxmann.com 323 (SC)/[2020] 15 SCC 1 (para 9)
  • Laxmi Pat Surana v. Union Bank of India [2021] 125 taxmann.com 394/166 SCL 318 (SC) (para 19).