Section 18 of the Limitation Act, 1963 provides for effect of acknowledgement in writing. It says where before the expiration of the prescribed period for a suit in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, a fresh period of limitation shall commence from the time when the acknowledgement was so signed. A statement in a balance sheet of a company presented to a creditor- share holder of the company and duly signed by the directors constitutes an acknowledgement of the debt. The balance sheets and in explaining the statements in the balance-sheets, the balance-sheets together with the Directors' report must be taken together. NCLAT held that the statement recorded by the Auditor with regard to the pending litigation cannot be read as an acknowledgement by Company under Section 18 of the Limitation Act.
NCLAT held that the choice of issuance of demand notice u/s 8(1) of the Code, either in Form 3 or Form 4, under the Application to Adjudicating Authority Rules 2016, depends on the nature of Operational Debt. Section 8(1) does not provide the Operational Creditor, with the discretion to send the demand notice either Form 3 or Form 4, as per its convenience. The applicability of Form 3 or Form 4 depends on whether the invoices were generated during the course of transaction or not. It is also made clear that the copy of the invoice is not mandatory if the demand notice is issued in Form 3 of the Application to Adjudicating Authority Rules 2016 provided the documents to prove the existence of operational debt and the amount in default is attached with the application.
Case Reference Case Citation : 134(IBC)99/2020 Case Name : Anubhav Anilkumar Agarwal Vs. Om Prakash Rohra Company Appeal : Company Appeal (AT) (Insolvency) No. 1455 of 2019 Company Appeal Ref. : Arising out of Order dated 14th November, 2019 passed…
A writing, to be treated as an acknowledgment of liability should consciously admit his liability to pay or admit his intention to pay the debt. Let us illustrate. If a creditor sends a demand notice demanding payment of Rs 1 lakh due under a promissory note executed by the debtor and the debtor sends a reply stating that he would pay the amount due, without mentioning the amount, it will still be an acknowledgment of liability. If a writing is relied on as an acknowledgment for extending the period of limitation in respect of the amount or right claimed in the suit, the acknowledgment should necessarily be in respect of the subject-matter of the suit. If a person executes a work and issues a demand letter making a claim for the amount due as per the final bill and the defendant agrees to verify the bill and pay the amount, the acknowledgment will save limitation for a suit for recovery of only such bill amount, but will not extend the limitation in regard to any fresh or additional claim for damages made in the suit, which was not a part of the bill or the demand letter. Again, we may illustrate. If a house is constructed under the item rate contract and the amount due in regard to work executed is Rs two lakhs and certain part-payments say aggregating to Rs 1,25,000 have been made and the contractor demands payment of the balance of Rs 75,000 due towards the bill and the employer acknowledges liability, that acknowledgment will be only in regard to the sum of Rs 75,000, which is due. If the contractor files a suit for recovery of the said Rs 75,000 due in regard to work done and also for recovery of Rs 50,000 as damages for breach by the employer and the said suit is filed beyond three years from completion of work and submission of the bill but within three years from the date of acknowledgment, the suit will be saved from bar of limitation only in regard to the liability that was acknowledged, namely, Rs 75,000 and not in regard to the fresh or additional claim of Rs 50,000 which was not the subject-matter of acknowledgment.
This development the appeal is disposed of with direction to Appellant to approach the IRP for placing the matter before the Ld. Adjudicating Authority in terms of provisions of Section 12A of the Code. IRP shall not constitute the ‘Committee of Creditors’ for a week from today to enable the Appellant to take effective steps in this regard. NCLAT held that it clear that in event of Appellant not taking the requisites steps, IRP shall be at liberty to constitute the Committee of Creditors.
Case Reference Case Citation : 131(IBC)97/2020 Case Name : Mrs. R. Mangalam C/O Viswapriya Vs. M/S SPML Infra Ltd. Company Appeal : Company Appeal (AT) (Ins) No. 1067/2019 Company Appeal Ref. : Arising out of Order dated 19.07.2019 passed by…
n this case, it is clear that on the day of filing the petition U/S 7 of the Code, there was a subsisting liability on the corporate debtor, and due to the acknowledgement of debt in writing, though the account of the corporate debtor which was classified as NPA on 29th August, 2012, its validity got extended from time to time by acknowledgement of debt in writing and a fresh period of limitation started after the acknowledgement of debt as per provision of Sec 18 of the Limitation Act. During the argument, the Learned Counsel for the Appellant has assailed the impugned order only on the Limitation point. Based on the discussion as above, we are of the considered opinion that the petition filed by the Respondent Oriental Bank of Commerce is not barred by limitation.