National Company Law Appellate Tribunal
Gouri Shankar Chatterjee vs State Bank Of India & Anr on 24 February, 2023
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Company Appeal (AT) (Ins) No. 695-696 of 2021
IN THE MATTER OF:
Gouri Shankar Chatterjee ...Appellant
Son of Late Shaktipada Chatterjee
Resident of 2, G Road,
Belgachia, Howrah-711108.
West Bengal
Versus
...Respondent No. 1
State Bank of India, Stressed Assets Management Branch (SAMB-II) Jeevandeep Building, 1st Floor, 1 Middletion Street, Kolkata-700071.
...Respondent No. 2Hanumanta Engineering Pvt. Ltd.
Through the Liquidator, Sankrail Industrial Park, PO & Village Dhulagarh, PS. Sankrail, Howrah-711302.
...Respondent No. 3Sanjit Kumar Nayak, The Liquidator, Hanumanta Engineering Pvt. Ltd., 30E, Haramohan Ghosh Lane, Flat 2B, Suryadeep, Beliaghata, Kolkata 700085.
Present:
For Appellants : Mr. Devashish Bharuka, Mr. Kaushik Poddar, Mr. Saurabh Jain, Advocates.
For Respondents : Ms. Anannya Ghosh, Ms. Doel Bose, Mr. Mohit Seth, Advocates for R-1.
Mr. Aniruddha Choudhury, Mr. Rohit Tomar, Advocates for R-2 & 3.
Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 1 of 22 Judgment (Date: 24.2.2023) [Per.: Dr. Alok Srivastava, Member (Technical)]
1. The present appeal has been filed by the Appellant under section 61 of the Insolvency and Bankruptcy Code, 2016 (in short 'IBC') being aggrieved by the order dated 19.8.2019 (in short Impugned Order I) whereby an application under section 7 of the IBC was admitted by the Adjudicating Authority and order dated 20.2.2020 (Impugned Order-II) whereby the Adjudicating Authority (National Company Law Tribunal, Kolkata) has ordered for liquidation of the corporate debtor. Both the Impugned Orders have been passed by the Adjudicating Authority in CP (IB) No.1111/KB/2018.
2. It is the Appellant's case that on an application under section 7 of IBC filed by State Bank of India (Respondent No.1), it was admitted by the Adjudicating Authority vide Impugned Order - I and this order was challenged by way of Revision Petition under Article 227 of the Constitution of India being CO No. 1257 of 2020 before the Hon'ble High Court of Calcutta, wherein the Hon'ble High Court vide order dated 15.10.2020 allowed the Revision Petition thereby setting aside the initiation of Corporate Insolvency Resolution Process (in short 'CIRP') against the corporate debtor. The Appellant Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 2 of 22 has further stated that Respondent No. 1 State Bank of India thereafter challenged the said order of the Hon'ble High Court of Calcutta through a Special Leave Petition Civil Appeal No. 323 of 2021, wherein the Hon'ble Supreme Court set aside the order of Hon'ble High Court of Calcutta and granted liberty to the Appellant to prefer an appeal before NCLT within four weeks of the order of the Hon'ble Supreme court. The present appeal has been filed by the Appellant in pursuance of the liberty granted by Hon'ble Supreme Court, wherein the Impugned Order-I and Impugned Order-II have been challenged.
3. The Appellant has further stated that the date of default as stated in section 7 application by State Bank of India is 6.8.2012, which is the date when the account of the corporate debtor was classified as a non performing asset (in short NPA). Subsequent to classification of the account as NPA, State Bank of India filed OA No. 392 of 2014 before the Debt Recovery Tribunal, Kolkata for recovery of its debt amounting to Rs.100,52,94,787.26 and this proceeding before the Debt Recovery Tribunal is still pending adjudication. The Appellant has further stated that the corporate debtor filed Civil Suit being CS No. 191 of 2014 before the Hon'ble High Court of Calcutta praying for a declaration that the account of the corporate debtor was declared as NPA in an illegal manner and Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 3 of 22 the corporate debtor also sought damages to the tune of Rs. 100 crores and a decree of Rs.10 crores towards the excess interest charged by the Respondent No. 1.
4. The Appellant has further stated that the corporate debtor has mentioned the debt of the State Bank of India in its balance sheet for the financial years 2014-2015, 2015-2016 and 2016-2017 in accordance with the statutory requirements, but the mention of such debt is not unequivocal and the auditor's report attached with the balance sheet specifically state that the said debt is disputed in view of the pendency of the Civil Suit before the Hon'ble High Court of Calcutta. The Appellant has also stated that the date of the NPA being 6.8.2012 and the fact that the dispute was raised by the Appellant/corporate debtor in 2014 regarding the illegal declaration of the corporate debtor's account as NPA, the section 7 application is clearly barred by limitation and therefore, the initiation of CIRP as ordered in Impugned Order-I should be quashed and consequently the order for liquidation of corporate debtor vide Impugned Order-II is also ab-initio null and void and should also be quashed.
5. We heard the arguments of the Learned Counsels for both the parties and perused the record.
Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 4 of 22
6. The Learned Counsel for the Appellant has argued that the account of the corporate debtor was illegally declared as NPA for an alleged default on 6.8.2012, and thereafter the financial creditor State Bank of India issued a legal notice to the corporate debtor on 10.1.2013 seeking payment of outstanding dues. He has further argued that the financial creditor State Bank of India filed OA No. 392 of 2014 before the Debt Recovery Tribunal, Kolkata, which is presently pending, but the corporate debtor disputing the debt and declaration of its account as NPA to be illegal filed Civil Suit being CS No. 191 of 2014 before the High Court of Calcutta and the Respondent Bank has entered appearance in the said civil suit. He has further claimed that in response to the order of Hon'ble Supreme Court in SLP (Civil No. 1168 of 2021 dated 23.12.2020) the Appellant has filed the instant appeal challenging the section 7 admission order (impugned Order-I) and liquidation order (Impugned Order-II) passed by the Adjudicating Authority.
7. The Learned Counsel for Appellant has explained that even if it is admitted that account of the corporate debtor was declared as NPA on 6.8.2012, in the light of Civil Suit being CS No. 191 of 2014 filed by the corporate debtor before the Hon'ble High Court of Calcutta in 2014, the debt was disputed and the declaration of Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 5 of 22 account of the corporate debtor's account as NPA was also alleged to be illegal. He has further claimed that the primary challenge that he has made in the appeal is that the application under section 7 of IBC was time barred since it was filed after a period of over six years from the date of alleged default i.e. 6.8.2012. He has referred to the law laid down by the Hon'ble Supreme Court in its judgment dated 15.4.2021in Civil Suit No. 323 of 2021 (Asset Reconstruction Company (India) Ltd. vs. Bishal Jaiswal & Anr. [(2021) 6 SCC 366], to agree that it is important to note, while adjudicating an application under section 7, whether any caveat has been recorded in the Auditor's note annexed to the balance sheet with regard to acknowledgment of debt made by the corporate debtor. He has further referred to section 18 of the Limitation Act to claim that in the light of the said judgment Asset Reconstruction Company (India) Ltd. (supra), the acknowledgment of debt in the balance sheet would amount to extension of period of limitation only if such an acknowledgment has been made in the balance sheet in an unequivocal manner without any caveat.
8. The Learned Counsel for Appellant has further submitted that in Civil Suit being CS 191 of 2014, the specific prayer made by the Appellant before the Hon'ble High Court of Calcutta is regarding declaration of the NPA of the corporate debtor by State Bank of India Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 6 of 22 as illegal and the substratum of the debt has been challenged. He has thus contended that in the light of caveats entered into by the Auditor of the corporate debtor in the balance sheets for the years 2014-15, 2015-16 and 2016-17, it is clear that the said debt claimed by State Bank of India is disputed, and therefore, the financial creditor State Bank of India cannot claim extension of limitation under section 18 of the Limitation Act.
9. The Learned Counsel for Appellant has further submitted that the main prayer of the Appellant is still being considered in Civil Suit by the Hon'ble High Court of Calcutta and therefore, in such event the corporate debtor has not committed any default, if the debt account has been declared as NPA illegally. He has also claimed that the commission of default and classification of the loan account as NPA are two distinct aspects and classification of loan account as NPA would have no bearing regarding the admission of section 7 application, which is based on the default of the corporate debtor.
10. The Learned Counsel for Appellant has further argued that Civil Suit was filed by the corporate debtor in the year 2014 and the Respondent State Bank of India which appeared in the civil suit as is evident from the order date 21.7.2014, had complete knowledge Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 7 of 22 of the civil suit. Further, he has added that in the balance sheets for the financial years 2014-15 and 2015-16, the existence of a civil suit which disputed the declaration of NPA have not been added due to oversight, but in the balance sheet for the financial year 2016- 17, the Auditor's report categorically mentions the said debt is disputed in civil suit pending the Hon'ble High Court of Calcutta. He has further contended that the existence of the legality of NPA and therefore, the existence of default is contingent on the outcome of the said civil suit and therefore, the default in respect of the debt can only be established once the civil suit is decided in favour of the Respondent.
11. The Learned Counsel for Respondent No. 1 State Bank of India has argued that the debt is not disputed by the corporate debtor and the declaration of NPA with respect to the debt was made on 6.8.2012, which fact is stated in the section 7 application. He has further argued that the SBI filed an application before the Debt Recovery Tribunal and after this application was filed by the financial creditor before the DRT, Kolkata, the corporate debtor filed a civil suit before the Hon'ble High Court of Calcutta challenging the legality of the declaration of NPA. He has further argued that even though the NPA was declared on 6.8.2012, the corporate debtor never made any representation, objection or demur regarding the Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 8 of 22 declaration of the corporate debtor's loan account as NPA and it was only after the SBI filed an application for recovery of the amount due did the corporate debtor challenge the legality of NPA. He has further claimed that the stay granted by the Hon'ble High Court of Calcutta was finally set aside by the Hon'ble Supreme Court vide its judgment dated 15.4.2021 whereby in Civil Appeal No. 323 of 2021 and SLP (Civil No. 1168/2021 whereby the Hon'ble Supreme Court held that the balance-sheets considered by the Hon'ble High Court of Calcutta to extend limitation under section 18 of the Limitation Act should be considered with caveats entered in the auditor's note for the purpose of extension of limitation. The Hon'ble Supreme Court thereafter allowed the appeal setting aside the impugned judgment of Hon'ble High Court of Calcutta and permitted the Respondent (corporate debtor) to file an appeal before the NCLAT against the orders of the NCLT dated 19.8.2019 and 20.2.2020 within a period of four weeks from the date of the judgment i.e. 15.4.2021.
12. The Learned Counsel for Respondent No. 1 has claimed that in the light of Hon'ble Supreme Court's judgment dated 15.4.2021 in SLP Civil No. 1168/2021 (supra), the balance-sheets and the Auditor's note made therein have to be looked at to decide whether the statements in the Auditor's note can provide acknowledgment Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 9 of 22 of debt to give the benefit of extension of limitation under section 18 of the Limitation Act.
13. The Learned Counsel for Respondent No. 1 State Bank of India has further referred to the balance-sheet filed by the corporate debtor for the financial year 2014-15, wherein the corporate debtor has unambiguously and unequivocally admitted that the company has defaulted in payment of dues to the bank and later in the balance-sheet for the financial year 2015-16 the corporate debtor has shown its long term borrowing Rs.33,49,11,048 as on 31.3.2015 and also shown the long term borrowing as Rs.33,49,92,064 as on 31.3.2016.
14. The Learned Counsel for Respondent No.-1 State Bank of India has referred to Part IV of the section 7 application, wherein a total amount of Rs.173,85,76,484.56 has been shown as due from the corporate debtor and also stated that the said debt account of the corporate debtor was classified as NPA on 6.8.2012.
15. The Learned Counsel for Respondent-1 State Bank of India has further argued that the Adjudicating Authority has correctly admitted the application under section 7 of the IBC in as much as the debt stated in the application was within the prescribed period Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 10 of 22 of limitation and furthermore, the corporate debtor acknowledged the amount of debt it owed to the bank in the balance sheets for the financial years 2014-15, 2015-16 and 2016-17 and thus, the period of limitation for filing the application under section 7 of the IBC would get extended from the date of NPA i.e. 6.8.2012 under section 18 of the Limitation Act, 1963. He has also claimed that any dispute raised qua a financial debt would not be of any consequence in a proceeding under section 7 of IBC, and further the corporate debtor raised no demur or any objection regarding the declaration of NPA for almost two years from 2012 to 2014, which only goes to show that the civil suit filed before the Hon'ble High Court of Calcutta is to merely avoid repayment of its debt to State Bank of India.
16. The issue in question in this appeal is whether the three balance-sheets for the financial years 2014-15, 2015-16 and 2016- 17 provide extension of limitation for the debt claimed by State Bank of India in accordance with Section 18 of the Limitation Act, 1963.
17. We first look at the statement made in the Auditor's Report for the balance-sheet for the financial year 2014-15, which is as follows:-
"Textual information (23) Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 11 of 22 Disclosure in auditors report relating to default in repayment of financial dues.
ILLEGIBLE audit procedure and as per the information and explanation given to us, we are of the opinion that the company has defaulted in repayment of dues to the Bank. The cash creditor and term loan facilities is exceeding the sanction limit of Rs.34,18,00,000.00/- and the balance outstanding as on the Balance Sheet is Rs.33,49,92,064.00/."
18. The amount shown as long-term borrowings in the balance sheet for the year ending 31.3.2015 is Rs.33,49,11,048/-. Further in the balance-sheet for the financial year 2015-16, the Appellant has not submitted any evidence of statement in the Auditor's note regarding the debt being disputed, and the balance sheet shows term loan from bank as Rs.33,45,92,064/- as on 31.3.2016. In the balance-sheet for the year 2016-17, the following has been stated in Auditor's note (attached at pg. 122 of the appeal paperbook, vol.I):-
"Textual Information (15) "Disclosure in auditors report relating to default in repayment of financial dues.
8) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institutions, banks and debenture holders except the Secured Term Loan from State Bank of India of Rs.334992064/- which has been declared by the bank Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 12 of 22 as Non-Performing Assets. The same has been disputed by the company in the High Court."
19. It is noted that the SBI declared NPA of the corporate debtor's loan account on 6.8.2012, a fact which has been not disputed by the corporate debtor in the civil suit before Hon'ble High Court of Calcutta. Further, it is also noted that after declaration of the loan account as NPA on 6.8.2012, the corporate debtor did not dispute the legality of the declaration of NPA before the competent authority of the State Bank of India and the bank filed OA No. 392 of 2014 under section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 on 25.3.2014 within the period of limitation before Debt Recovery Tribunal, Kolkata. This suit is still pending before the Debt Recovery Tribunal. The corporate debtor filed civil suit being CS No. 191 of 2014 before the Hon'ble High Court of Calcutta contesting the legality of declaration of NPA and also inter alia seeking damages to the tune of Rs.100 crores from the State Bank of India. This civil suit is pending before the Hon'ble High Court of Calcutta. In the facts of the case, it is quite clear that neither the corporate debtor raised the issue of illegality of declaration of NPA of its loan account before the bank authorities and also participated in the proceedings before Debt Recovery Tribunal, Kolkata.
Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 13 of 22
20. The Hon'ble Supreme Court in the matter of Asset Reconstruction Company (India) Limited (supra) considered the question whether an entry made in a balance-sheet of a corporate debtor would amount to an acknowledgment of liability under section 18 of the Limitation Act. The Hon'ble Supreme Court in this case considered this issue and observed as follows:-
"14. Several judgments of this Court have indicated that an entry made in the books of accounts, including the balance sheet, can amount to an acknowledgment of liability within the meaning of Section 18 of the Limitation "Act. Thus, in Mahabir Cold Storage v. CIT, 1991 Supp (1) SCC 402, this Court held:
12. The entries in the books of accounts of the appellant would amount to an acknowledgment of the liability to M/s Prayagchand Hanumanmal within the meaning of Section 18 of the Limitation Act, 1963 and extend the period of limitation for the discharge of the liability as debt....."
21. Thereafter, in the same judgment the Hon'ble Supreme Court held as follows:-
"22. ` A perusal of the aforesaid Sections would show that there is no doubt that the filing of a balance sheet in accordance with the provisions of the Companies Act is mandatory, any transgression of the same being punishable by law. However, what is of importance is that notes that are annexed to or forming part of such financial statements expressly recognised by Section 134 (7). Equally, the auditor's report may also enter caveats with regard to acknowledgments made in in the books of accounts including the balance sheet. A perusal of the aforesaid would show that the statement of law contained in Bengal Silk Mills (supra), that Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 14 of 22 there is a compulsion of law to prepare a balance sheet but no compulsion to make any particular admission, is correct in law as it would depend on the facts of each case as to whether an entry made in a balance sheet qua any particular creditor is unequivocal or has been ener4ed into with caveats, which then has to be examined on a case by case basis to establish whether an acknowledgment of liability has, in fact, been made, thereby extending limitation under Section 18 of the Limitation Act."
22. From the above mentioned observations of the Hon'ble Supreme Court in the Asset Reconstruction Company (India) Limited (supra) judgment, we follow that the balance-sheets and the entries regarding the debt recorded therein constitute admission of liability, but such admission has to be seen along with the caveat which may be entered in the balance-sheet regarding any particular creditor, which has to be examined on case by case to decide whether an acknowledgment of liability has in fact been made which would qualify for extension of limitation under the Limitation Act.
23. Section 18 of the Limitation Act, 1963 is as follows:-
"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 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.
Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 15 of 22 (2) Where the writing containing the acknowledgment 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 (1 of 1872), oral evidence of its contents shall not be received.
Explanation. --For the purposes of this section,--
(a) an acknowledgment 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, deliver, 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."
24. Thus, it is clear that before the expiration of prescribed period for an application (in the present case section 7 application) in respect of any right, an acknowledgment of liability of such right made in writing signed by the party against whom such right is claimed, shall permit a fresh period of limitation to be computed from the time when the acknowledgment was so signed.
25. We note that the NPA of the corporate debtor loan account was declared on 6.8.2012. Thereafter, while it is noted that the Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 16 of 22 corporate debtor filed a civil suit before the Hon'ble High Court of Calcutta that suit is yet to be decided and therefore in the present, no illegality attaches to the declaration of NPA, as the stay order granted by Hon'ble High Court of Calcutta vide order dated 15.10.2020 was vacated by the Hon'ble Supreme Court by its judgment in SLP Civil No. 1168/2021. The Hon'ble Supreme Court vacated the said order passed by the Hon'ble High Court of Calcutta vide judgment dated 15.4.2021 as follows:-
"5.
xx xx xx xx Civil Appeal arising out of SLP (Civil) No 1168 of 2021
1. Leave Granted.
2. This appeal is against the judgment dated 15.10.2020 of the Calcutta High court which set aside two orders of the NCLT - (i) order dated 19.8.2019 whereby the NCLT admitted the appellant's application under Section 7 of the IBC, and (ii) order dated 20.02.2020, whereby the NCLT ordered liquidation of the corporate debtor.
xx xx xx xx
5. Given the judgment delivered in Civil Appeal No. 323 of 20212, the imp8ugned judgment in this appeal also deserves to be set aside. The appeal is, therefore, allowed. If the respondent wishes to file an appeal before the NCLAT against the orders of the NCLT dated 19.8.2019 and 20.02.2020, it may do so within a period of four weeks from the date of this judgment. The appeal will thereafter be decided on its merits, keeping in view the statement of the law laid down in Civil Appeal No. 323 of 20212."
Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 17 of 22
26. Thus, it is clear that there is no stay order operative on the order of NCLT dated 19.8.2019, whereby the application under section 7 was admitted.
27. In the light of the above judgment of Hon'ble Supreme Court in the matter of Asset Reconstruction Company (India) Ltd. (supra) and its judgment with respect to SLP (Civil) No. 1168 of 2021, we now examine the balance-sheets and the entries made therein to decide whether they provide an extension of limitation to the debt of State Bank of India with regard to section 18 of the Limitation Act, 1963.
28. The State Bank of India declared the loan account of the corporate debtor as NPA on 6.8.2012 and quite clearly the declaration of NPA has not been declared as illegal or incorrect. Therefore, the limitation for section 7 application starts from 6.8.2012. As per Article 137 of the Limitation Act, 1963 the period of limitation prescribed for an application under section 7 of IBC is three years. Therefore, the limitation of section 7 application would be valid upto 5.8.2015. Before the expiry of the limitation period, the balance sheet for FY 2014-15 filed by the corporate debtor (attached at pp.86-100 of the appeal paperbook Vol.I) mentions the amount of long-term borrowings as Rs.33,49,92,064/- and the Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 18 of 22 balance sheet very clearly mentions in Textual Information 23 "that the company has defaulted in repayment of dues to the Bank. The cash credit and term loan facilities is exceeding the sanction limit of Rs.34,18,00,000/- and the balance outstanding as on the balance sheet is Rs.33,49,92,064/-." Thus, the corporate debtor has unequivocally acknowledged that it has defaulted in repayment of dues of bank and also stated the balance outstanding with regard to the said loan. This balance sheet is for the year ending 31.3.2015 and therefore, the limitation of the loan under section 7 application is extended for three years from 3.1.3.2015 i.e. upto 31.3.2018. It is noted that while this limitation period was running, another acknowledgment was made by corporate debtor in its balance sheet for the FY 2015-16, wherein again the long-term borrowings for the year ended 31.3.2016 has been shown as Rs.33,49,92,064/-. Further, since no caveat by way of any textual information is shown by the corporate debtor in its appeal with the balance-sheet (attached at pp.101-114 of the appeal paperbook, vol.II) , the limitation would again get extended from the last date of the balance sheet i.e. 31.3.2016 for another three years, which would make it upto 31.3.2019.
29. It is observed from the section 9 application that it was filed on 8.8.2018, which is within the limitation period, which extends Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 19 of 22 upto 31.3.2019. On the basis of above analysis, it is clear that the application under section 7 is within the prescribed limitation period.
30. We also consider the argument of the Learned Counsel for Appellant that the dispute regarding the declaration of NPA as illegal, which was raised by it before the Hon'ble High Court of Calcutta could not be entered in the balance-sheets for the Financial Years 2014-15 and 2015-16 on account of oversight. We are not convinced by this argument of the Appellant since the declaration of NPA which was done on 6.8.2012 by the State Bank of India was not challenged for almost two years by the corporate debtor and therefore, it was considered a valid action. Further the challenge to the illegality of the declaration of NPA through a civil suit is still pending before the Hon'ble High Court of Calcutta and therefore, even if there is an alleged dispute, merely the existence of such a dispute cannot be taken to negate the legality of the declaration of NPA. Therefore, the balance-sheets on which the section 7 application is based are considered as valid acknowledgments of the debt of the corporate debtor without any caveat of dispute.
Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 20 of 22
31. In the light of the above discussion, we are convinced that the loan account of corporate debtor declared by State Bank of India as NPA on 6.8.2012 the date of default and the balance-sheets for the financial years 2014-15 and 2015-16 provide an unequivocal and clear extension of limitation of the debt by virtue of section 18 of the Limitation Act, 1963. Such a limitation is validly extended through acknowledgment of liability of the said debt upto 31.3.2019 and the section 7 application, which was filed on 8.8.2018, is clearly within limitation.
32. We thus hold that the admission order passed by the Adjudicating Authority admitting the section 7 application to be correct, and therefore, Impugned Order-I does not need to be interfered with. Further, in view the fact that the Impugned Order- I has been held to be correct, the order of liquidation i.e. Impugned order-II also is held to be correct and therefore, we see no reason to interfere with it. The appeal, therefore, is devoid of merit, and accordingly it fails.
33. The appeal is disposed of with no order as to costs.
[Justice Rakesh Kumar] Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 21 of 22 Member (Judicial) [Dr. Alok Srivastava] Member (Technical) New Delhi 24th February, 2023 /aks/ Company Appeal (AT) (Ins) No. 695-696 of 2021 Page 22 of 22