Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Insolvency and Bankruptcy |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Act(s) Referred | Insolvency and Bankruptcy Code, 2016 (31 of 2016) |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Allowed |
Headnote | Insolvency and Bankruptcy Code, 2016 – s.7 – CompaniesAct, 1956 – Limitation Act, 1963 – Clauses (19) to (21) of Part II ofthe Schedule – The respondents filed a petition on 25.04.2018u/s.7 of the IBC, as ‘Financial creditor’, claiming principal amountof Rs.2.10 crores together with interest – According to the appellantcompany, Rs.80,40,000/- was repaid to the respondents between2003 to 2004 – Further, respondents requested to convertRs.90,00,000/- from the outstanding loan as share application moneyfor issuance of shares in the appellant company in name ofrespondent no. 2, which was later requested to be treated as thesaid share application of ‘MK’ and to treat the same as loan fromrespondent no. 2 – Also, during the period from 2004 to 2006, theappellant company paid Rs.43,25,000/- to the respondents and withthat payment the loan liability was completely liquidated – The NCLTvide its judgment and order dated 19.12.2018 held that therespondents were not Financial creditors of the appellant companyand the claim of the respondents was barred by limitation – Further,it was held that the respondents had failed to prove that there wasany debt due from the appellant company to the respondents,observing that the appellant company had produced proof ofpayments – By the impugned judgment and order dated 02.09.2019the Appellate Tribunal set aside the order dated 19.12.2018 of theNCLT – On appeal, held: Under clauses (19) to (21) of Part II ofthe Schedule of the Limitation Act 1963, the period of limitation forinitiation of a suit for recovery of money lent, is three years fromthe date on which the loan is paid – In the instant case, the last loanwas advanced in 2004-2005 – Apparently, the debt was barred bylimitation even in the year 2012, when winding up proceedings ofthe appellant company were initiated in the Madras High Court bythe respondents – The NCLT rightly refused to admit the applicationu/s. 7 of the IBC, holding the same barred by limitation – TheAppellate Tribunal erred in law in reversing the judgment and orderof the earlier Adjudicating Authority – Disputes as to whether thesignatures of the respondents are forged or whether records werefabricated can be adjudicated upon evidence including forensicevidence in a regular suit and not in proceedings u/s. 7 of IBC –Even otherwise, the application u/s. 7 of the IBC was notmaintainable – As the payment received for shares, duly issued to athird party at the request of the payee as evident from official records,cannot be a debt, not to speak of financial debt – The NCLT rightlyheld that there was not financial debt in existence – Thus, impugnedjudgment and order of the Appellate Tribunal is set aside and theorder of the Adjudicating Authority dismissing application isrestored. |
Judge | Hon'ble Ms. Justice Indira Banerjee |
Neutral Citation | 2020 INSC 518 |
Petitioner | M/s. Radha Exports (india) Pvt. Limited |
Respondent | K.p. Jayaram & Anr. |
SCR | [2020] 8 S.C.R. 272 |
Judgement Date | 2020-08-28 |
Case Number | 7474 |
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