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The National Company Law Appellate Tribunal (NCLAT) recently upheld the decision of the National Company Law Tribunal (NCLT), Kochi Bench, initiating the corporate insolvency resolution process against Atlas Gold Townships India Pvt Ltd (Corporate Debtor/Atlas) under the Insolvency and Bankruptcy Code, 2016 (IBC).
An order to this effect was passed by the Bench of Chairperson SJ Mukhopadhaya and Judicial Members Bansi Lal Bhat and Anant Bijay Singh.
The NCLT had admitted the application filed by South Indian Bank (Financial Creditor) under Section 7 of the IBC on account of the default of the Corporate Debtor in clearing its outstanding dues. The Corporate Debtor had been declared as a Non-Performing Asset (NPA) on December 31, 2015.
The appeal was filed by MM Ramachandran (appellant) in his capacity as promoter of the Corporate Debtor (Atlas). The appellant contended that the application that was filed in 2019 was barred by limitation. In this regard, he pointed out that the Section 7 application was filed on April 10, 2019, much beyond the limitation period of three years after Atlas having being declared an NPA in 2015.
Additionally, the appellant also contended that no record of default was enclosed in terms of Section 7(3)(b) of the IBC.
In response, South Indian Bank (respondent) relied on an e-mail dated May 2, 2016, as well as a letter from May 2016, wherein the appellant had acknowledged the debt.
On the basis of these, it was argued that the respondent was entitled to the advantage of Section 18 of the Limitation Act, 1963.
Section 18 of the Limitation Act, 1963 deals with the effect of acknowledgement in writing. It provides, inter alia, that where the acknowledgement of a liability is made in writing before the expiration of the prescribed limitation date, a fresh period of limitation would run from the time at which the written acknowledgement is made.
The appellant is this case contended that the cited e-mail and letter were forged. However, the NCLAT examined the documents, including the original of the letter along with the cover that was dispatched by the appellant, and concluded that the letter and e-mail were genuine.
Before parting with the order, the NCLAT also observed,
"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."
As for the second contention of the appellant, the NCLAT concluded that,
"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 view of these observations, the NCLAT dismissed the appeal with costs.
South Indian Bank was represented by Parag Maini, Abhimanyu Chopra and Amit Srivastava from AZB & Partners.
[Read the Order dated January 22, 2020]