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‘Balance and Security Confirmation Letter’ is sufficient ‘acknowledgement of debt’

In Lakshmi Narayan Sharma v. Punjab National Bank, appeal was filed before the NCLAT against the order of the NCLT, Hyderabad admitting an applicant under Section 7 of the Insolvency Code against the Corporate Debtor−Saptarishi Hotels (P) Ltd. The appellant was the promoter/suspended director of Saptrishi Hotels (P) Ltd and had filed the appeal as an 'Aggrieved Person'.

Appellant said 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’.

Appellant claimed 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.

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, the Application filed by the 1st Respondent/Punjab National Bank (under Section 7 of the I & B Code) is barred by ‘Limitation’, as the same was filed on 18.07.2019 or any date thereafter.

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 and therefore the application is being barred by ‘Limitation’.

Appellant also argued that ‘CIRP’ is a proceeding for ‘Resolution of Insolvency’ and not for repayment of ‘Debt’and therefore, an ‘Acknowledgement of Debt’ will not help the cause of the ‘Applicant’.

On their side, 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 to the ‘Balance Security Confirmation Letter’ dated 20.02.2018 for 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 the ‘Guarantor(s)’.

1st Respondent/Bank brought 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.

The 1st Respondent/Bank cites the Judgment of this Tribunal in Yogeshkumar Jashwantlal Thakkar v Indian Overseas Bank & anr. (Company Appeal (AT)(Insolvency) No.236 of 2020 reported in 2020 SCC Online NCLAT 636 wherein reference was made to the decision of Hon’ble Supreme Court in ‘Babulal Vardharji Gurjar’ v. ‘Veer Gurjar Aluminium Industries Pvt. Ltd.’ (Civil Appeal No.6357 of 2019 – decided on 14.08.2020) which had observed that 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.......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 an admission 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.‘Parthasarathy’, 16 Mad 220. An acknowledgement does not create a new right.

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.

33. Further, to treat 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/- [Confirmation of Correctness of Debit Balance] 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’ (Punjab National Bank) in July 2019 (vide intimation given by the 1st Respondent/Bank/Financial Creditor’s Advocate through communication dated 18.07.2019 addressed to the Saptarishi Hotels Pvt. Ltd.[Corporate Debtor]) 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) (under Section 7 of the I & B Code) is barred by limitation is legally untenable and is rejected. In the present case, the 1st Respondent/Bank (‘Financial Creditor’) has proved the existence of ‘Debt and Default’ (vide documents) 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.

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