Thursday, 19 November 2020

Rupesh Kumar Gupta vs. Punjab National Bank & Anr. - Minutes of Board Meeting, Ack. U/s 18 of Limitation Act, 1963.

NCLAT (28.02.2020) in Rupesh Kumar Gupta vs. Punjab National Bank & Anr. [Company Appeal(AT) (Insolvency) No. 1119 of 2019] held that ; Minutes of Board Meeting of the CD can be taken as an acknowledgement under Section 18 of Limitation Act, 1963.

Excerpts of the order;

28.02.2020 The Respondent No. 1- Punjab National Bank filed Application under Section 7 of Insolvency and Bankruptcy Code, 2016 (in short ‘IBC’) against Respondent No. 2 M/s Kut Energy Pvt. Ltd. before the Adjudicating Authority (National Company Law Tribunal) Chandigarh Bench, Chandigarh. The Application under 7 of IBC came to be admitted after hearing the parties.


# 2. Punjab National Bank- Financial Creditor claimed before the Adjudicating Authority that the Account of the Corporate Debtor had become NPA on 31.03.2015 and the debt outstanding as on 31.8.2018 was of Rs. 89,30,56,987.58. It is stated that Bank Guarantee concerned had not been invoked till then.


# 3. The present Appeal has been filed against the admission of the Application under Section 7 IBC. The grievance of the Appellant is that the claim was time barred and thus Application under Section 7 of IBC should not have been admitted.


# 4. Learned Counsel for the Appellant states that Application under Section 7 of IBC was filed on 19.09.2018 which was beyond the period of three years from the date of NPA which is 31.05.2015. The Counsel states that the Application should have been dismissed.


# 6. Learned Counsel for the Appellant states that if the Financial Creditor wants to rely on the Facility Agreement, there would be no default as Schedule- III of the Facility Agreement shows that repayment would be in 34 structured quarterly instalments commencing from June, 2016. It is stated that if this is so, there was no default till June, 2016 and the Financial Creditor should not have relied on the NPA dated 31.03.2015. Learned Counsel further states that this Tribunal in Judgment in the matter of “C. Shivkumar Reddy Vs. Dena Bank and Anr.” – Company Appeal(AT)(Insolvency) No. 407 of 2019 dated 18th December, 2019 held in paragraph-7 that Application moved by Corporate Debtor to restructure debt or payment of interest does not amount to acknowledgement of debt. It is stated that the Bank could not rely on such document, like the present one, which is the Facility Agreement.


# 7. Learned Counsel for the Appellant further stated that Facility Agreement was entered but was not acted upon as no further loan was issued to the Corporate Debtor. To this the learned Counsel for the Respondent points out that the Sanction letter dated 29.09.2015 itself had provided the Terms and Conditions which required the Company to complete the project before 31.03.2016 and no further extension would be warranted again. The Counsel states that the Corporate Debtor default on count and thus the restructured document did not take off.


# 9. Learned Counsel for the Respondent states that apart from the restructuring documents, there are Minutes of Meeting of Board of Directors of the Company as at page no. 19 of the Reply, which also can be taken as an acknowledgement under Section 18. Learned Counsel referred to resolution adopted by the Corporate Debtor Company in the Board of Directors meeting dated 30.09.2015, the relevant portion of which reads as under:

  • “1. THAT the Company do borrow the following additional financial assistance by way of Term Loan VI (Additional TL) (the “Facility”) in addition to the existing facility amounting to Rs. 228.00 Crores already availed by the Company from Punjab National Bank, Large Corporate Branch, Bhagwati Tower, R.K. Road, Near Cheema Chowk, Ludhiana, Corporation Bank, SCO 137-138, Sector 8C, Madhya Marg, Chandigarh & Central Bank of India. The Mall, Combere Mere Complex, Shimla to be provided to the Company on the terms and conditions as specified in sanction letter(s) issued by the aforesaid Banks as per the details given hereinbelow: …..”


# 10. The Resolution then referred to the name of lenders and the facility given by three different banks.


# 11. For deciding the present matter, we need to decide the question whether documents of restructuring are to be ignored for which the learned Counsel for Appellant has referred judgment “C. Shivkumar Reddy Vs. Dena Bank and Anr.” – Company Appeal(AT)(Insolvency) No. 407 of 2019. In the present case we have the Minutes of Meeting of the Board of Directors to which we have already referred and it can be clearly stated that there was an acknowledgement of debt by the Corporate Debtor as on 30.09.2015 under Section 18. Account had become NPA on 31.03.2015. With Acknowledgement dated 30.09.2015, the Application under Section 7 of IBC filed on 19.9.2018 was in time. It cannot be stated that the Application under Section 7 of IBC was barred by limitation.


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Disclaimer:

The sole purpose of this post is to create awareness on the "IBC - Case Law" and to provide synopsis of the concerned case law, must not be used as a guide for taking or recommending any action or decision. A reader must refer to the full citation of the order & do one's own research and seek professional advice if he intends to take any action or decision in the matters covered in this post.