NCLAT (22.01.2020) in M M Ramachandran Vs South Indian Bank Ltd. & Ors.[Company Appeal (AT) (Insolvency) No. 57 of 2020] held that;
Learned counsel appearing on behalf of the Respondent Bank relied on an email received on 2nd May, 2016 followed by a letter received on 30th May, 2016 to support that the Appellant has acknowledged the dues as on 30th May, 2016 and therefore the Bank is entitled to take advantage of Section 18 of the Limitation Act, 1963.
Email dated 2nd May, 2016, which was also sent by the Appellant and undated letter received by the Bank on 30th May, 2016 shows that the Appellant acknowledged the dues and intimated that he has taken Rs.220 Crores and the outstanding amount subsequently rose to Rs.250 Crores with interest.
Excerpts of the order;
22.01.2020: Pursuant to application under Section 7 filed by ‘South Indian Bank Ltd.’ (Financial Creditor) by impugned order dated 19th November, 2019, the Adjudicating Authority (National Company Law Tribunal), Kochi Bench, Kochi initiated Corporate Insolvency Resolution Process against M/s Atlas Gold Townships (India) Pvt. Ltd.’ (Corporate Debtor). The Appellant/ Promoter has challenged the same on two grounds:-
(a) The Application under Section 7 is barred by limitation.
(b) There is no record of default enclosed in terms of Section 7(3)(b).
# 2. It was submitted by learned counsel for the Appellant that the account of Corporate Debtor was declared Non Preforming Asset (NPA) on 31st December, 2015 and the application under Section 7 was filed on 10th April, 2019 i.e. much beyond the period of three years.
# 3. Learned counsel appearing on behalf of the Respondent Bank relied on an email received on 2nd May, 2016 followed by a letter received on 30th May, 2016 to support that the Appellant has acknowledged the dues as on 30th May, 2016 and therefore the Bank is entitled to take advantage of Section 18 of the Limitation Act, 1963.
# 4. Email dated 2nd May, 2016, which was also sent by the Appellant and undated letter received by the Bank on 30th May, 2016 shows that the Appellant acknowledged the dues and intimated that he has taken Rs.220 Crores and the outstanding amount subsequently rose to Rs.250 Crores with interest. In the end of it, it was informed that the Appellant is determined to pay all the amounts granted by the Bank and requested not to give any adverse publicity that may result in reduction in the value of the properties. Email dated 2nd May, 2016 is extracted below:-
# 5. The Appellant denied the said email and letter on the ground that it is forged. An additional affidavit has been filed by the Bank which also produced the cover by which the letter, which is typed out copy of email dated 2nd May, 2016, was despatched by Mr. M M Ramachandran under his signatures from Dubai on 16th May, 2016 and received by the Bank on 25th May, 2016. The original letter is also produced before us, therefore, we hold that the email dated 2nd May, 2016 is genuine. The Appellant has taken wrong plea that it is forged.
# 6. When asked, learned counsel for the Appellant submits that the Appellant was in jail in Dubai for having defaulted to pay creditors there and was under travel restrictions. It shows that he is a habitual defaulter. However, it is not clear how he has sworn affidavit in India.
# 7. From the record we also find that Bank has enough records to support that there is a default and therefore, the Adjudicating Authority rightly admitted the application under Section 7. In absence of any merit, the appeal is dismissed. No costs.
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Supreme Court (17.11.2020) in M M Ramachandran Vs South Indian Bank Ltd. & Ors..[Civil Appeal No. 2951 of 2020] held that;Heard. We do not find any merit in the appeal. The appeal is, accordingly, dismissed. Pending application(s), if any, shall stand disposed of.
ReplyDeleteExtracts from the article of Parag Maini , Abhimanyu Chopra , Amit Shrivastava
The importance of this decision is more so as the Full Bench of the Supreme Court was dealing with its appellate jurisdiction under Section 62 of the Code and not under Article 136 of the Constitution of India. Thus, the doctrine of merger will apply to make the order of NCLAT absolute on the said issue of Section 18.
Conclusion
From the above analysis of law and in our humble opinion, both the judgments of the Supreme Court in Jignesh Shah and BVG are not the relevant authorities on the application of Section 18 of the Limitation Act as the said issue never arose for consideration before the Supreme Court. The said cases were certainly not decided on the said basis by the Supreme Court as the doctrine of precedents makes it clear that a judgment is a precedent only on the issue which it decides and nothing more beyond it.
On the other hand, the judgment in M M Ramachandran, having been affirmed by the Supreme Court, is an authority on the application of Section 18 of the Limitation Act on proceedings under the Code and would help in countering the argument that Section 18 doesn’t apply to the Code.