LexVIDYASAGAR PRASAD versus UCO BANK & ANR.
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[2024] 10 S.C.R. 1462 : 2024 INSC 810 Vidyasagar Prasad v. UCO Bank & Anr. (Civil Appeal No. 1031 of 2022) 22 October 2024 [Pamidighantam Sri Narasimha* and Sandeep Mehta, JJ.] Issue for Consideration Whether specific and clear acknowledgement of debt by the Corporate Debtor in its balance sheet is necessary while considering limitation under Section 18 of the Limitation Act, 1963. Headnotes† Insolvency and Bankruptcy Code, 2016 – s.238A – s.18 of Limitation Act – No specific and clear acknowledge of debt in the balance sheet entries necessary while computing limitation u/s.18 Limitation Act r/w s.238A of the IBC: Held: It was contended by the Appellant that there is no unequivocal, unambiguous and specific acknowledgement of debt owed to Respondent – Financial Creditor in the balance sheet entries of Corporate Debtor for the years 2017 and 2019 – The CIRP was admitted by the NCLT on the ground that there is acknowledgement of debt in the balance sheet entries as well as Auditors Report for the year ending 31.01.2017 – The order of admission of CIRP affirmed by the NCLAT – The Appellant contended that the name of Financial Creditor in question is not specifically mentioned in the relied upon entry in the balance sheet – It was contended that in the absence of clear demarcation as to what the Corporate Debtor owes to the Financial Creditor in question, the balance sheet entries cannot be relied on for the purpose of extending the period of limitation in terms of Section 18 of the Limitation Act – By relying on Asset Reconstruction Company (India) Ltd. v. Bishal Jaiswal [2021] 3 SCR 524, the Civil Appeal filed by the Appellant was dismissed – The contention of the Financial Creditor that there was no compulsion for Companies to make any particular admissions in the balance sheet was accepted by the Court – The entry made in the balance sheet * Author [2024] 10 S.C.R. 1463 Vidyasagar Prasad v. UCO Bank & Anr. coupled with the note of the auditor of the Appellant clearly amounts to acknowledgement of the liability – The Court noted that the Corporate Debtor’s proposal of One Time Settlement (OTS) also fortifies the case against the Appellant – The Civil Appeal dismissed accordingly. [Paras 8-13] List of Acts Insolvency and Bankruptcy Code, 2016; Limitation Act, 1963 List of Keywords Acknowledgement of debt; Limitation; CIRP; Admission of CIRP; Balance-Sheet; Entries in Balance Sheet. Case Arising From CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1031 of 2022 From the Judgment and Order dated 04.10.2021 of the National Company Law Appellate Tribunal, New Delhi in Company Appeal (AT) (Insolvency) No. 238 of 2020 Appearances for Parties Balbir Singh, Sr. Adv., Sandeep Bajaj, Soayib Qureshi, Devansh Jain, Naman Tandon, Ms. Vasudha Chadha, Advs. for the Appellant. Partha Sil, Tavish Bhushan Prasad, Ms. Sayani Bhattacharya, Abhiraj Chaudhary, Srijit Datta, Gopal Prasad, Ms. Shalya Agarwal, Dhananjaya Sud, Advs. for the Respondents. Judgment / Order of the Supreme Court Judgment Pamidighantam Sri Narasimha, J. 1. By the present appeal, the suspended director of the Corporate Debtor assails the order of the NCLAT1 affirming the order of the Adjudicating Authority2 admitting the application under Section 7 1 National Company Law Appellate Tribunal in Company Appeal (AT) (Insolvency) No. 238 of 2020, dated 04.10.2021. 2 Adjudicating Authority/National Company Law Tribunal, Kolkata Bench, Kolkata order dated 13.12.2019 in CP No. 254/KB/2019. 1464 [2024] 10 S.C.R. Digital Supreme Court Reports of IBC3 for initiating CIRP4 proceedings against the Corporate Debtor. 2. The undisputed facts before us are that the Corporate Debtor (respondent No. 2 herein), now represented by its Insolvency Resolution Professional (IRP), availed loan and credit facilities from UCO Bank (respondent No. 1 herein) and other consortium of banks under agreements dated 21.06.2010, 30.08.2012, 19.07.2012 and 31.12.2012. The said loan and other credit facilities were availed for funding of Corporate Debtor’s Thermal Power Plant. 2.1 Having defaulted on repayment of principal as well as interest levied thereupon, Corporate Debtor’s account was declared as Non-Performing Asset (NPA) on 05.11.2014. Further, proceedings under SARFAESI5 Act and DRT6 for recovery of dues were also initiated. However, we are not concerned with these proceedings for disposal of the present appeal. 3. The root of the pres
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