The status of balance sheets as valid acknowledgment of debts needs to be examined depending upon the facts of each case while considering the mention of such non-acknowledging statements in the annexed notes or the auditor’s report – Mr. Sanil Prakash Sahu, Erstwhile Director of Gwalior Polypipes Ltd. Vs. Kotak Mahindra Bank Ltd. and Ors. – NCLAT New Delhi
NCLAT held that:
(i) The law is well settled that for finding out acknowledgement within the meaning of Section 18 of the Limitation Act, balance sheets can be looked into.
(ii) In Bishal Jaiswal, observed that it would depend on the facts of each case as to whether an entry made in a balance sheet qua, any particular creditor, is unequivocal or has been entered into with caveats.
(iii) the status of balance sheets as valid acknowledgment of debts needs to be examined depending upon the facts of each case while considering the mention of such non-acknowledging statements in the annexed notes or the auditor’s report.
(iv) Merely because the notes to the account and the director’s report narrate the different stages of subsequent litigation with respect to the said unsecured loan, it cannot be said that these notes in any manner diminish the relevance and import of the debt which finds mention in the balance sheets for the purposes of Section 18 of the Limitation Act. Such caveat/information, read together with the balance-sheet do not negate the acknowledgment of that liability.
(v) the Vidarbha judgement was given under very specific set of facts where the realizable dues of the Corporate Debtor were more than the payable dues. The facts in the present case being clearly distinguishable, the Vidarbha judgement cannot be said to apply ipso facto as claimed by the Appellant.