On 12th May 2021, National Company Law Appellate Tribunal decided the case concerning the breach of Insolvency and Bankruptcy Code, 2016 which included Lakshmi Narayan Sharma as a corporate debtor on the appellant side and a huge corporation such as Punjab National Bank on the respondent side.
Facts of the case
The appellant had stated to be a promoter of Saptarishi Hotels Private Limited(Corporate debtor), governing the majority of shareholdings through the holding company, Maha Hotels Projects Private Ltd. They undertook a special public-private partnership project to develop and multifid a Four-Star Hotel in accordance to Andhra Pradesh Infrastructure Development Enabling Act, 2001 with the National Institute of Tourism and Hospitality Management (NITHM). It was indicated that Punjab National Bank sanctioned consortium loans facilitating credit up to INR 90 crores and Punjab Sindh Bank sanctioned facilities totaling INR 80 crores as per the consortium agreement which was dated 11.08.2011.
Arguments of the Petitioner
The primary argument of the learned counsel dealt with the limitation that comes under section 7 of the Insolvency and Bankruptcy Code. From their standpoint, all the applications filed by Punjab National Bank should be barred since the date of default as per part IV of the Application under section 7 of the code was on 30.06.2016 and the limitation period lapsed on 29.03.2019. Even in the case of Non-Performing Asset, the limitation period expired on 29.06.2016 and therefore the Corporate Debtor should not be held liable under Corporate Insolvency Resolution Process. Further stated, how the Adjudicating Authority had not taken into consideration the issue of limitation and hence, the status of impugned order totally nullifies in the eyes of the law.
Arguments of the Respondent
The counsel prioritized the absence of two fundamental documents i.e. the Balance and Security Confirmation Letter dated 20.02.2018 which was then duly signed by the Guarantors. They pointed out the acknowledgment of debt that took place as the result of payment done by the Corporate Debtor to the credit of the loan account on 15.10.2018. This further leads us to the claim that acknowledgment of debt only leads to the extension of the period of limitation.
Court’s Analysis
Taking into account the perfect execution of the ‘Balance and Security Confirmation Letter’ done by M/s.Saptarishi Hotels Private Limited and the sum total of Rs.15,262.75 that was being paid, the court couldn’t avoid the acknowledgment of debt under sections 18 and 19 of the Limitation Act,1963. The existence of ‘debt and default’ was proven to exist.
Court Decision
The bench consisting of Venugopal and V.P Singh rejected the Contra plea filed by Respondent (Punjab National Bank) and held it to be legally untenable. The tribunal freed the ‘Adjudicating Authority’ from legal delicacy. The Instant Company Appeal of 2021 was dismissed and the stay application remains closed.
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