Balance & Security Confirmation Letters Sufficient Acknowledgment Of Debt For Extending Limitation : NCLAT

NATIONAL COMPANY LAW APPELLATE TRIBUNAL CHENNAI APPELLATE JURISDICTION) Company Appeal(CH)Arising out of the Order dated 18.01.2021 in CP(IB) No.599 7 HDB 2019 passed by the Hon’ble National Company Law Tribunal Hyderabad Bench Hyderabad) In the matter of: Lakshmi Narayan Sharma Promoter of Corporate Debtor R o Flat No.6113 Sector B 8 Vasant Kunj New Delhi 110070. 1. Punjab National Bank Respondent No.1 Large Corporate Branch Represented by its Deputy General Manager 8 2 672 Sifi Chambers Road No.1 Banjara Hills Hyderabad 500034. 2. Mr.T.S.N.Raja Interim Resolution Professional of Corporate Debtor No.16Shop cum Flat Huda Complex Kothapet Hyderabad 500035. Respondent No.2 Present : For Appellant : Mr. Rajashekar Rao Sr. Advocate For Mr. Suraj Prakash Mrinal Lotoria Advocates For Respondent No.1 : Shri T.Ravichandran Advocate For Respondent No.2 : Shri T.S.N.Raja PCA JUDGMENT The Appellant has preferred the present Appeal as an ‘Aggrieved Person’ against the ‘Impugned Order’ dated 18.01.2021 passed by the ‘Adjudicating Company Appeal(AT)(Ins) No.021 Authority’in The ‘Adjudicating Authority’ National Company Law Tribunal Hyderabad Bench Hyderabad while passing the ‘Impugned Order’ dated 18.02.2021 in C.P.(IB).No.599 7 HDB 2019at Paragraph 10 had among other things observed that the ‘Financial Creditor’ had established the ‘debt and default’ through various documents filed along with the Applications and ultimately admitted the ‘Application’ by declaring the ‘Moratorium’ and issued necessary directions thereto. Appellant’s Contentions: According to the Learned Counsel for the Appellant the Appellant is the ‘Promoter Suspended Director’ of ‘Corporate Debtor’ controlling the majority of shareholding 100% of the paid up capital of Saptarishi Hotels Private Limited ‘Corporate Debtor’) through its holding Company Maha Hotels Projects Private The Learned Counsel for the ‘Appellant’ submits that the ‘Corporate Debtor’ M s.Saptarishi Hotels Private Limited is a ‘Special Purpose Vehicle’ incorporated to undertake a Public Private Partnershipproject to develop and operate a Four Star Hotel on ‘Build Operate Transfer’Basis under Andhra Pradesh Infrastructure Development Enabling Act 2001 with National Institute of Tourism and Hospitality Management‘an undertaking of Telangana “Tourism Development Corporation Limited”(CH)No.021 developer was to develop the project on its own cost and operate on revenue sharing with National Institute of Tourism and Hospitality Management and transfer back the project to National Institute of Tourism and Hospitality Management at the end of 33 years. The Learned Counsel for the Appellant points out that the ‘Corporate Debtor’ was sanctioned ‘Consortium Loan’ by the 1st Respondent Punjab National Bank and Punjab Sind Bank as per ‘Consortium Loan Agreement’ and ‘Sanction Letters’. It is represented on behalf of the Appellant that the 1st Respondent Punjab National Bank had sanctioned credit facilities amounting to INR 90 Crores and Punjab Sind Bank had sanctioned facilities totalling INR 80 Crores on 11.08.2011 as per ‘Consortium Agreement’ dated 11.08.2011. Further the date of ‘CoD’ was extended upto 01.02.2016 by the ‘Consortium’ on 26.12.2014 and that the 1st Respondent Punjab National Bank on 04.04.2015 issued a ‘Sanction Letter’ for additional facilities to the tune of INR 18.67 Crores for which disbursal was to commence by 30.03.2015. Also that the development of construction of the project was delayed due to delay in clearance by the Local Authorities and that the interest payment was defaulted by the ‘Corporate Debtor’. The Learned Counsel for the Appellant comes out with a plea that the 1st Respondent Bank projected the application under Section 7 of the I & B Code which was served on the ‘Corporate Debtor’ by the Learned Counsel for the 1st Respondent Bank on 18.07.2019. Besides this it is the version of the Appellant that the application under Section 7 of the I & B Code 2016 was filed before the ‘Tribunal’ on 18.07.2019 or any subsequent date. Company Appeal(AT)(Ins) No.021 8. The Learned Counsel for the Appellant takes a stand that since the ‘Date of Default’ for all the facilities by the 1st Respondent Punjab National Bank as per Part IV of the Application under Section 7 of the Code was on 30.03.2016 and that the limitation lapsed on 29.03.2019. In any case the date of ‘Non Performing Asset’ was on 30.06.2016. The limitation period resting upon ‘NPA’ expired on 29.06.2019. As such it is the submission of the Learned Counsel for the Appellant that the Application filed by the 1st Respondent Punjab National Bankis barred by ‘Limitation’ as the same was filed on 18.07.2019 or any date thereafter. The Learned Counsel for the Appellant emphatically contends that if the ‘Date of Default’ is considered as the date from which the limitation starts running then the Petition under Section 7 of the I & B Code is barred by 111 days or more and if date of ‘NPA’ is considered to be date from which the limitation starts running then the Petition is barred by 19 days or more. 10. The Learned Counsel for the Appellant submits that the ‘Adjudicating Authority’ has no jurisdiction to admit the ‘Corporate Debtor’ for ‘Corporate Insolvency Resolution Process’ in spite of the fact the same being barred by ‘Limitation’. 11. The Learned Counsel for the Appellant points out that the impugned order was passed in violation of the principles of ‘Natural Justice’ since no finding was rendered on the issue of Section 7 Application being barred by ‘Limitation’. 12. The Learned Counsel for the Appellant projects an argument that ‘CIRP’ is a proceeding for ‘Resolution of Insolvency’ and not for repayment of ‘Debt’ Company Appeal(AT)(Ins) No.021 and therefore an ‘Acknowledgement of Debt’ will not help the cause of the ‘Applicant’. 13. The Learned Counsel for the Appellant submits that the ‘impugned order’ is a ‘nullity’ in the eye of Law because of the fact that the ‘Adjudicating Authority’ had not decided the ‘issue of limitation’. Appellant’s Decisions: 14. The Learned Counsel for the Appellant cites the Hon’ble Supreme Court decision in BabulalVardharji Gurjar v Veer Gurjar Aluminium Industries Pvt. Ltd. & anr reported in SCC Online SC 647 wherein under the caption ‘whether Section 18 Limitation Act could be applied to the present case’ at Paragraphs 91 to 93 it is observed as under: “91. While the aforesaid principles remain crystal clear with the consistent decisions of this Court the only area of dispute around which the contentions of learned Counsel for the parties have revolved in the present case is about applicability of Section 18 of the Limitation Act and effect of the observations occurring in paragraph 21 of the decision in Jignesh Shah(CH)No.021 the aforesaid paragraph 21 of Jignesh Shah to mean that the ratio of B.K. Educational Services has in any manner been altered by this Court. As noticed in B.K. Educational Services it has clearly been held that the limitation period for application under Section 7 of the Code is three years as provided by Article 137 of the Limitation Act which commences from the date of default and is extendable only by application of Section 5 of Limitation Act if any case for condonation of delay is made out. The findings in paragraph 12 in Jignesh Shah makes it clear that the Court indeed applied the principles so stated in B.K. Educational Services and held that the winding up petition filed beyond three years from the date of default was barred by time. 93. Even in the later decisions this Court has consistently applied the declaration of law in B.K. Educational Servicesthis Court rejected the contention suggesting continuing cause of action for the purpose of application under Section 7 of the Code while holding that the limitation started ticking from the date of issuance of recovery certificate dated 24.12.2001. Again the case of Gaurav Hargovindbhai Dave where the date of default was stated in the application under Section 7 of the Code to be the date of NPA i.e. 21.07.2011 this Court held that the limitation began to run from the date of NPA and hence the application filed under Section 7 of the Code on 03.10.2017 was barred by 1st Respondent’s Submissions: 15. The Learned Counsel for the 1st Respondent Bank contends that the Appellant had not filed two vital documents viz. the ‘Balance and Security Confirmation Letter’ dated 20.02.2018 executed by the ‘Corporate Debtor’. Further on behalf of the 1st Respondent Bank attention of this ‘Tribunal’ drawn ‘Balance Security Confirmation Letter’ dated 20.02.2018 Company Appeal(AT)(Ins) No.021 Rs.78 74 73 945 and the ‘Balance and Security Confirmation Letter’ dated 20.02.2018 for Rs.4 15 03 499.06 both of them duly signed by 16. The Learned Counsel for the 1st Respondent Bank brings to the notice of this ‘Tribunal’ that on 15.10.2018 a sum of Rs.15 262.75 was paid by the ‘Corporate Debtor’ to the Credit of the ‘Loan Account’ and the above facts will clearly establish that there was an ‘Acknowledgement of Debt’ as contemplated under Section 18 and 19 of the Limitation Act 1963. 17. The Learned Counsel for the 1st Respondent Bank cites the Judgment of this Tribunal in Yogeshkumar Jashwantlal Thakkar v Indian Overseas Bank & anr.No.2320 reported in 2020 SCC Online NCLAT 636 wherein at Paragraphs 23 25 30 33 34 36 and 38 it is observed and held as under: “23. It is to be pertinently pointed that that in the decision of Hon’ble Supreme Court ‘Sampuran Singh’ v. Naranjan Singh’ AIR 1999 SC 1047 at special page 1050 it is observed that Section 18 of sub sectionstarts with the words ‘where before the expiration of the prescribed period for a suit or application in respect of any property or right and acknowledgement of liability in respect of such property or right has been made’. 25. In the decision of Hon’ble Supreme Court in ‘Babulal Vardharji Gurjar’ v. ‘Veer Gurjar Aluminium Industries Pvt. Ltd.’at paragraph 33.1 it is observed as under: “33.1 Therefore on the admitted fact situation of the present case where only the date of default as ’08.07.2011’ has been stated for the purpose of maintaining the application u s 7 of the Code and not even a foundation is laid in the application for suggestions any acknowledgement or any other date of default in our view the Company Appeal(AT)(Ins) No.021 submissions sought to be developed on behalf of the respondent no.2 at the latest 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 provisions 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. Indisputably in the present case the respondent No.2 never came out with any pleading other than stating the date of default as ’08.07.2011’ 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 principle 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 acknowledgement. In this view of the matter reliance on the decision in Mahaveer Cold Storage Pvt. Ltd. does not advance the cause of the Respondent No.2. 30. An acknowledgement of debt interrupts the running of prescription. An acknowledgement only extends the period of limitation as per decision ‘P. Sreedevi’ v. ‘P. Appu’ AIR 1991 Ker 76. It is to be remembered that a mere denial will not take sheen off the document and the claim of creditor remains alive within the meaning of Section 18 of the Limitation Act. Besides this an acknowledgement is to be an ‘acknowledgement of debt’ and must involve anadmission of subsisting relationship of debtor and creditor: and an intention to continue it and till it is lawfully determined must also be evident as per decision ‘Venkata’ v. Company Appeal(AT)(Ins) No.021 ‘Parthasarathy’ 16 Mad 220. An acknowledgement does not create a new right. 33. It is to be relevantly pointed out that a judgment of the Court has to be read in the context of queries which arose for consideration in the case in which the judgment was delivered. Further an ‘obiter dictum’ as distinguished from a ‘ratio decidendi’ is an observation by the court on a legal question suggested in a case before it not arising in such manner as to require a determination. An ‘obiter’ may not have a binding precedent as the observation was not necessary for the decision pronounced. Even though an ‘obiter’ may not have a bind effect as a ‘precedent’ but it cannot be denied it is of immense considerable weight. 34. It is not out of place for this Tribunal to make a significant mention that in the decision ‘Quinn’ v. ‘Leathem’ A.C. 495 at 596 the dicta of Lord Halsbury is .. every judgment must be read as applicable to the particular facts proved or assumed to be proved since the generality of the expressions which may be found there are not intended to be expositions of the whole law but governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decides’. 36. The present case centres around mixed question of ‘Facts’ and ‘Law. The 1st Respondent Bank as per the format as mentioned at para 20 of this judgment had given the date of ‘Default’ ’NPA’ as 01.01.2016 and that the Section 7 of the application of ‘I&B’ Code was filed before the Adjudicating Authority 01.04.2019 by the 1st Respondent Bank. Prima facie the Appeal needs to be allowed if this is the single ground. However in the interest case the 1st Company Appeal(AT)(Ins) No.021 Respondent Bank had obtained balance confirmations certificate the last one being 31.03.2017 as mentioned elaborately in Para 21 of this judgment. Although this Appellate Tribunal had largely held in ‘Rajendra Kumar Tekriwal’ v. ‘Bank of Baroda’ in Company Appeal(Ins) No.2220 and in Jagdish Prasad Sarada v. Allahabad Bank in Company Appeal No.183 of 2020 both being three Members Bench) had taken a stand that the Limitation Act 1963 will be applicable to all NPA cases provided they meet the criteria of Article 137 of the Schedule to the Limitation Act 1963 the extension of the period can be made by way of Application under Section 5 of the Limitation Act 1963 for condonation of delay however the peculiar attendant facts and circumstances of the present case which float on the surface are quite different where the 1st Respondent Bank had obtained Confirmations Acknowledgements in writing in accordance with Section 18 of the Limitation Act periodically. As a matter of fact Section 18 of the Limitation Act 1963 is applicable both for ‘Suit’ and ‘Application’ involving ‘Acknowledgment of Liability’ creating a fresh period of limitation which shall be computed from the date when the ‘Acknowledgement’ 37. For better and fuller appreciation of the present subject matter in issue it is useful for this Tribunal to make a pertinent reference to Section 18 of the Limitation Act 1963 which runs as under: “18 Effect of acknowledgment in writing: 1) Where before the expiration of the prescribed period for a suit or application in respect of any property or right an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against Company Appeal(AT)(Ins) No.021 whom such property or right is claimed or by any person through whom he derives his title or liability a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. 2) Where the writing containing the acknowledgement is undated oral evidence may be given of the time when it was signed but subject to the provisions of the Indian Evidence Act 1872(72) oral evidence of its contents shall not be received. Explanation. For the purpose of this section a) an acknowledgement may be sufficient though it omits to specify the exact nature of the property or right or avers that the time for payment delivery performance or enjoyment has not yet come or is accompanied by a refusal to pay delivery perform or permit to enjoy or is coupled with a claim to set off or is addressed to a person other than a person entitled to the property or right b) the word “signed” means signed either personally or by an agent duly authorised in this behalf and c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right.” 38. At this stage this Tribunal had perused the various confirmation letters as stated supra which are legally valid and binding documents between the inter se parties and the same cannot be repudiated on one pretext or other. Therefore this Tribunal comes to an inevitable inescapable and irresistible conclusion that the date of default i.e. Company Appeal(AT)(Ins) No.021 01.01.2016 gets extended by the debit confirmation letters secured by the 1st Respondent Bank from the Corporate Debtortowards the outstanding debt in ‘Loan Account’. Indeed the application under Section 7 of the I & B Code 2016 was filed by the 1st Respondent Bank on 01.04.2019 before Authority’ within the period of Limitation. Furthermore in view of the fact that ingredients of Section 18 of the Limitation Act 1963 are quite applicable both for ‘Suit’ and ‘Application’ and the debit confirmation letters in the instant case were duly acknowledged in accordance with Law laid down on the subject the instant Appeal deserves to be dismissed and accordingly the same is dismissed since there being no legal infirmities found in the Impugned order passed by Adjudicating Authority in admitting CP No. declaring moratorium Resultantly all connected Interlocutory Applications are closed. There shall be no order as to costs.” 18. The Learned Counsel for the 1st Respondent Bank submits that the order of the Three Members Hon’ble Bench made in Bishal Jaiswal v Asset Reconstruction CompanyLtd. and AnotherINS 3820 on the file of National Company Law Appellate Tribunal New Delhi relates to the reference for reconsideration of the Judgment of the ‘Appellate Tribunal’ rendered in the case of V. Padmakumar vs. Stressed Assets Stabilisation Fund and in the said Judgment the issue that arose with the ‘Tribunal’ was whether an ‘Acknowledgement of Debt’ in the ‘Balance Sheet’ can be treated as a valid acknowledgement for an extension of limitation period. Company Appeal(AT)(Ins) No.021 Discussions: In the Application filed by the 1st Respondent Punjab National Bank ‘Financial Creditor’) Rules 2016] to initiate CIRP in respect of M s. Saptarishi Hotels Private Limited the Bank under Part IV ‘Particulars of the Financial Debt’ had mentioned the TOTAL AMOUNT OF DEBT AMOUNT CLAIMED TO BE IN DEFAULT AND THE DATE ON WHICH THE DEFAULT OCCURD ATTACH THE WORKINGS FOR COMPUTATION OF AMOUNT AND DAYS OF DEFAULT TABULAR FORM) 17 06 2011 Rs.90.00 crs and 30 03 2015 Rs.18.67 crs. Rs.78 74 73 945 as on 31.03.2016 against Term Loan 1 and Rs.4 15 03 499.06 as on 31.03.2016 against Term Loan II total Rs.82 89 77 444 . Presently total memorandum dues as at 30.06.2019 is Rs.144 02 51 063.009 It comes to be known that the 1st Respondent Applicant ‘Financial Creditor’ together with ‘Punjab and Sind Bank’ had sanctioned to the ‘Borrower’ a ‘Financial Assistance’ of an aggregate amount of Rs.170 Crores on 11.08.2011. In the aggregate sum of Rs.170 Crores the share of the ‘Financial Creditor’ is Rs.80 Crores in respect of the ‘Term Loan’ and Rs.10 Crores against the ‘Bank Guarantee Ltd.’ 21. As a matter of fact the Corporate Debtor M s.Saptarishi Hotels Private Limited had agreed to avail letters of an aggregate sum of Rs.15 Crores by means of sub limits within the overall limits of the ‘Term Loan’ of Rs.80 Crores and an aggregate sum of Rs.10 Crores in respect of ‘Additional Bank Guarantee’ based on the terms and conditions specified in the concerned ‘Sanction Letters’. 22. According to the 1st Respondent Bank the Applicant Bank ‘Financial Creditor’ and the Punjab and Sind Bank had sanctioned additional limits of Rs.35 Crores and issued ‘Sanction Letter’ in this regard. Indeed the Loans sanctioned Company Appeal(AT)(Ins) No.021 by the 1st Respondent Bank ‘Financial Creditor’ along with the ‘Punjab and Sind Bank’ aggregating in all a loan amount of Rs.205 Crores runs as under: Amount of Term Loan agreed to be availed by the Borrowerhad failed in its repayment of the balance amount inspite of repeated reminders given by the Bank ‘Financial Creditor’ in respect of the loan facilities availed by it. It is brought to the fore that the 1st Respondent Bank ‘Financial Creditor’ had issued a notice to the ‘Corporate Debtor’ on 02.06.2016 as per Section 13(2) of the SARFAESI Act and that the ‘Corporate Debtor’ had not paid the debt sum despite the lapse of 60 days’ time given to it. 26. As on 30.06.2019 the outstanding amount due to be paid to the 1st Respondent ‘Financial Creditor’ Bank was Rs.144.03 Crores. The ‘Corporate Company Appeal(AT)(Ins) No.021 Debtor’ and the ‘Guarantors’ had executed ‘Balance and Security Confirmation Letters’ dated 20.02.2018 in respect of the accounts of Saptarishi Hotels Pvt. Ltd. thereby acknowledging the ‘debt’ in unequivocal terms. Admittedly a payment of Rs.15 262.75 was made by the ‘Corporate Debtor’ to the credit of the loan 27. On behalf of the ‘Appellant’ the contention raised before this ‘Tribunal’ is that the Application filed by the 1st Respondent Punjab National Bank ‘Financial Creditor’) is barred by limitation because of the fact that the application was filed on 18.07.2019 or any date thereafter. Furthermore it is projected that the ‘Date of Default’ for all the facilities given by the Punjab National Bank in terms of Part IV of the Applicationis 30.03.2016 and that the limitation came to an end on 29.03.2019. Moreover the date of ‘Non Performing Asset’ is 30.06.2013. As such the Application filed by the 1st Respondent Punjab National Bank seeking initiation of ‘CIRP’ was admitted by the ‘Adjudicating Authority’ beyond the specified limitation period of 3 years. 28. The stand of the ‘Appellant’ is repelled by the 1st Respondent Bank that the total amount of debt granted on 17.06.2011 was Rs.90 Crores and on 30.03.2015 was Rs.18.67 Crores and that the amount claimed to be in default was Rs.78 74 73 945 as on 31.03.2016 against ‘Term Loan 1’ and Rs.4 15 03 499.06 as on 31.03.2016 against the ‘Term Loan 2’ totalling in all a sum of Rs.82 89 77 444 and the total memorandum dues as on 30.06.2019 was Rs.144 02 51 063.09. Further the guarantor(s) on 20.02.2018 had executed ‘Balance and Security Confirmation Letters’ for Rs.78 74 73 945 in respect of the account of Saptarishi Hotels Pvt. Ltd.in respect of the ‘Term Loan Facility’ which clearly point out there was an Company Appeal(AT)(Ins) No.021 ‘Acknowledgement of Debt’ in terms of Section 18 and 19 of the Limitation Act 29. That apart it is pertinently pointed out by this ‘Tribunal’ that the Hon’ble Supreme Court in the Judgment in Civil Appeal No.323 of 2021 with Civil Appeal No.32220 Civil Appeal No.21 Civil Appeal No. of 2021 SLP No.1168 of 2021) dated 15.04.2021 in the matter of ‘Asset Reconstruction Company India Ltd. v Bihsal Jaiswal and Anr.’ had setaside the Full Bench Judgment of the NCLAT dated 12.03.2020 in V. Padmakumar v Stressed Assets Stabilisation Fund CaseNo.57 of 2020) and the Full Bench Judgment of the NCLAT dated 22.10.2020 made in Bishal Jaiswal v Asset Reconstruction CompanyLtd. and Anr. Company AppealNo.3820and allowed the Appeal by remanding the matter to the NCLAT to be decided in accordance with law laid down in the Judgment. Insolvency and Bankruptcy Code 2016: 30. Section 3(6)(a) of the I & B Code 2016 defines “claim” meaning ‘a right to payment whether or not such right is reduced to judgment fixed disputed undisputed legal equitable secured or unsecured’. Section 3(8) of the Code defines “Corporate Debtor” meaning ‘a Corporate person who owes a debt to any person’. Section 3(10) defines “Creditor” meaning ‘any person to whom a debt is owed and includes a financial creditor an operational creditor a secured creditor an unsecured creditor and a decree holder. 31. Section 3(11) of the I & B Code defines “debt” meaning ‘a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt. Section 3(12) of the code defines “default” meaning ‘non payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor as the case may be.’ Company Appeal(AT)(Ins) No.021 Limitation Act 1963: 32. To be noted that Section 18 of the Limitation Act 1963 does not enjoin that an ‘acknowledgement’ has to be in any particular form or to be express. It must be borne in mind that an ‘acknowledgement’ is to be examined resting upon the attendant circumstances by an admission that the writer owes a ‘Debt’. No wonder an ‘Unconditional Acknowledgement’ implies a promise to pay because that is the natural inference if there is no other contrary material. Further the writing signed by an individual as an ‘Acknowledgement’ the person acknowledging must be conscious of his liability and the commitment ought to be made in respect of that liability. 34. Be that as if may on a careful consideration of respective contentions projected on either side this ‘Tribunal’ considering the prime fact that the Guarantor(s) in respect of the Accounts of the ‘Corporate Debtor’ M s.Saptarishi Hotels Private Limited had executed the ‘Balance and Security Confirmation Letters’ dated 20.02.2018 for the due amount of Rs.78 74 73 945 and keeping in mind yet another fact that a sum of Rs.15 262.75 was paid by the ‘Corporate Debtor’ on 15.10.2018 and as on 30.06.2019 the due amount was Rs.144 02 51 063.09 comes to an irresistible inevitable and inescapable conclusion that in respect of the loan account of the ‘Corporate Debtor’ there was an ‘Acknowledgement of Debt’ as per Section 18 and 19 of the Limitation Act 1963. In fact the Application filed by the 1st Respondent ‘Financial Creditor’ in July 2019 is perfectly maintainable in Law of course well within the period of Limitation. As such the Contra Plea taken on behalf of the ‘Appellant’ that the Application filed by the 1st Respondent ‘Financial Creditor’ Punjab National Bank) is barred by Company Appeal(AT)(Ins) No.021 limitation is legally untenable and is rejected. In the present case the 1st Respondent Bankhas proved the existence of ‘Debt and Default’filed along with the Application under Section 7 of the Code against the ‘Corporate Debtor’ and that the conclusion arrived at in admitting the ‘Application’ by the ‘Adjudicating Authority’ is free from legal infirmities as opined by this ‘Tribunal’. Resultantly the ‘Appeal’ fails. In fine the Instant Company Appeal No.01 of 2021 is dismissed but without costs. I.A.021is closed. Justice Venugopal M] MemberV.P. Singh] MemberCompany Appeal(AT)(Ins) No.021 

Summary: Balance and security confirmation letters’ would amount to sufficient acknowledgment of debt to extend limitation under Section 18 of the Limitation Act, for initiating insolvency proceedings. The order passed by the NCLAT New Delhi (principle bench), in its decision in   Lakshmi Narayan Sharma v. Punjab National Bank, (Company Appeal (AT) (CH) (Insolvency)No.01 of 2021)   by Hon’ble Shri  Justice Venugopal M The facts of the case was such that the Corporate Debtor alongside Maha Hotels Projects Pvt. Ltd. was granted a public-private organization venture to create and work a four-star inn on formwork move premise with the National Institute of Tourism and Hospitality Management. To work with the task, the Corporate Debtor has endorsed a consortium loan by Punjab National Bank/Respondent alongside Punjab and Sindh Bank according to a consortium loan arrangement and assent letters. Because of a few deferrals and complexities in the fruition of the undertaking, the Corporate Debtor defaulted to its greatest advantage installments. Against such default, Respondent favored an application under Section 7 of the Insolvency and Bankruptcy Code before the Adjudicating Authority. The Adjudicating Authority request dated 18 January 2021 conceded the Section 7 Application recorded by Respondent holding that the monetary leaser had set up the obligation and default through different archives documented, and accordingly proclaimed the ban. The Impugned Order came to be tested before the NCLAT by a Promoter of the Corporate Debtor as an oppressed individual. The counsel on behalf of the Appellant looked to challenge the accuracy of the Impugned Order on the ground of limitation. The Appellant battled that the Section 7 Application was liked past the endorsed limitation period and the Adjudicating Authority submitted a grave blunder in conceding something very similar. According to the Appellant, the date of default for all offices given by Respondent according to the Section 7 Application was 30 March 2016, though the Section 7 Application was documented uniquely on 18 July 2019 which is past the three-year period of limitation. The NCLAT clarified the law as under Section 18 of the Limitation Act to express, that the arrangement doesn’t urge that an ‘acknowledgment’ must be in a particular structure or to be express. The acknowledgment for each situation must be analyzed settling upon the chaperon conditions to close a confirmation that the author owes an obligation. Further, to be treated as an acknowledgment, the author should be aware of his risk and the responsibility should be made in regard of such obligation. The NCLAT saw that in the moment case, the underwriters of the Corporate Debtor had executed ‘equilibrium and security affirmation letters’ dated 20 February 2018 in regard of the records of the Corporate Debtor, in this manner recognizing the ‘obligation’ in unequivocal terms. The NCLAT noticed that under the ‘equilibrium and security affirmation letters’, the underwriters had explicitly affirmed the accuracy of the charge balance. The NCLAT was of the view that there was truth be told an acknowledgment of obligation as perceived under Section 18 of the Limitation Act, naming it as a powerful, unavoidable and unpreventable end considering the ‘equilibrium and security affirmation letters’. The period of limitation in this way stood reached out by prudence of the acknowledgment. The NCLAT inferred that the Section 7 Application liked by Respondent in July 2019 was viable in law and well inside the period of limitation. The NCLAT expressed that Respondent had demonstrated the presence of obligation as well as demonstrated the default through reports recorded alongside its application and there was no mistake submitted by the Adjudicating Authority in conceding said application. The appeal was in like manner dismissed.