Full Judgment Text
NONREPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.4228 OF 2020
SVG FASHIONS PVT. LTD. (EARLIER KNOWN AS
SVG FASHIONS LTD. …APPELLANT(S)
VERSUS
RITU MURLI MANOHAR GOYAL & ANR. …RESPONDENT(S)
J U D G M E N T
V.RAMASUBRAMANIAN, J.
1. Aggrieved by the order of the National Company Law Appellate
Tribunal (for short “ NCLAT ”), reversing the order of ‘Admission’ passed
by the National Company Law Tribunal (for short “NCLT”) and holding
that their application under Section 9 of the Insolvency and
Signature Not Verified
Bankruptcy Code, 2016 (for short “the Code” ) was barred by
Digitally signed by
SWETA BALODI
Date: 2022.03.29
16:27:44 IST
Reason:
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limitation, the operational creditor has come up with the present
appeal.
We have heard the learned counsel for the appellantoperational
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creditor; the learned counsel for the first respondentshareholder and
Director of the corporatedebtor and the learned counsel for the
second respondentInterim Resolution Professional.
3. The appellant herein filed an application under Section 9 of the
Code on 20.04.2018 against M/S Arpita Filaments Private Limited,
contending inter alia: that the corporatedebtor started having
business dealings with them from 2013; that they sold and delivered
various fabrics to the corporatedebtor; that the corporatedebtor was
irregular in making payments as per the bills; and that the demand
notice issued by them under Section 8 of the Code read with Rule 5
did not invoke any response.
Before , the corporatedebtor raised four major objections,
4. NCLT
one of which was that the claim was barred by limitation. But NCLT
found on the basis of a letter dated 28.09.2015 produced by the
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operational creditor that six cheques had been issued in favour of the
operational creditor. These cheques returned dishonoured when
presented for payment. The stand taken by the corporatedebtor was
that those six cheques were lost by the corporatedebtor in March
2017 and that they had already issued “ stop payment instructions ” to
the bank on 4.03.2017. The corporatedebtor also claimed that the
letter dated 28.09.2015 relied upon by the operational creditor was
issued by Shree Adeshwar Textiles and that therefore, the operational
creditor cannot rely upon the same to save limitation.
However, the NCLT, by an order dated 26.09.2019 overruled the
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objections and held that there was an acknowledgment of liability on
the part of the corporatedebtor and that therefore, the application
was within the period of limitation. Consequently, the NCLT ordered
the admission of the application under Section 9 of the Code and also
declared moratorium in terms of Section 14.
On an appeal filed by the appellant, the NCLAT held that the
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debt arose during the period from 11.08.2013 to 02.09.2013 and that
the six cheques purportedly issued towards part payment of the
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liability having been issued on 5.12.2017, will not save limitation. The
NCLAT further held that even if the date of default is taken to be
7.10.2013 as pleaded by the operational creditor, the acknowledgment
of liability in terms of Section 18 of the Limitation Act ought to have
happened on or before 07.10.2016. But the cheques were dated
December 2017 and hence NCLAT reversed the decision of NCLT and
dismissed the application of the operational creditor.
7. But we find from the order of NCLAT that there was no
discussion at all about the letter dated 28.09.2015. According to the
operational creditor, the six cheques in question were handed over
along with the letter dated 28.09.2015. The cheque numbers and the
bank on which the cheques were drawn, given in the letter dated
28.09.2015 tallied with the particulars of those six cheques allegedly
lost by the corporate debtor in March 2017. Though the first
respondent herein clamed in his affidavit in reply that the corporate
debtor had issued stop payment instructions, he conceded that the
acknowledgment issued by the banker contained the date 01.01.2018.
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The following extract from the affidavit in reply/objections of the
Director of the corporatedebtor makes an interesting reading:
“...Hereto annexed and marked collectively as
AnnexureC
are copies of the intimation issued by the banker of the
Corporate Debtor duly recording the instruction of stop
payment qua the cheques in question taking record that
the cheques had been lost. It is submitted that the banker
of the Corporate Debtor has issued such notices
acknowledging stop payment instruction on account of loss
of the cheques on 04/03/2017, however inadvertently due
to the error in the computers of the banker, the date on the
top right shows as 01/01/2018. the Corporate Debtor in
the process of obtaining appropriate letter from the banker
of the Corporate Debtor to the effect that the error in the
date has occurred due to some problem in the computers of
the banker, and the Corporate Debtor craves leave to
produce copy of the same as and when referred to and
relied upon and available with the Corporate Debtor from
the banker.”
8. Unfortunately NCLAT completely overlooked the pleadings
revolving around the letter dated 28.09.2015 and the six cheques.
The failure of the NCLAT as the first appellate authority to look into a
very vital aspect such as this, vitiates its order, especially when NCLT
has recorded a specific finding of fact on this.
9. It is needless to point out that the law relating to the applicability
of Section 18 of the Limitation Act, 1963 is fairly well settled. In
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Jignesh Shah and Another vs. Union of India and Another , this
Court pointed out that when time begins to run, it can only be
extended in the manner provided in the Limitation Act. For holding so
this Court made a reference to Section 18 of the Limitation Act.
Though in Babu Lal Vardharji Gurjar vs. Veer Gurjar Aluminium
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, a two member Bench of
Industries Private Limited and Another
this Court held that the reference in Jignesh Shah (supra) to Section
18 of the Limitation Act was only illustrative and that the ratio in B.K.
Educational Services Private Limited vs. Parag Gupta and
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Associates did not stand altered by Jignesh Shah , no discordant
note was struck. But the cloud of doubt created by (supra)
Babu Lal
was cleared subsequently in Laxmi Pat Surana vs . Union Bank of
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. In
India And Another Asset Reconstruction Company (India)
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Limited vs. Bishal Jaiswal and Another , this Court, while applying
Section 18 of the Limitation Act, even went to the extent of holding
that an entry in the balance sheet of the company could also be
1 (2019) 10 SCC 750
2 (2020) 15 SCC 1
3 (2019) 11 SCC 633
4 (2021) 8 SCC 481
5 (2021) 6 SCC 366
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treated as an acknowledgment in writing, subject however to any
caveat found in the accompanying reports.
10. The law as it has developed on the applicability of Section 18 of
the Limitation Act and the circumstances in which it would apply,
have also not been examined by NCLAT. Therefore, the order of NCLAT
is liable to be set aside and the matter liable to be remanded back for
a fresh consideration. Accordingly, the appeal is allowed, the
impugned order of NCLAT is set aside and the matter remanded back
to NCLAT for a fresh consideration in the light of the observations and
the principles of law indicated above. There will be no order as to
costs.
…………………………….J.
(Hemant Gupta)
…………………………….J.
(V. Ramasubramanian)
New Delhi
March 29, 2022.
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