J U D G M E N T

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 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 Signature Not Verified

1 National Company Law Appellate Tribunal in Company Appeal (AT) (Insolvency) No. 238 of Digitally signed by Indu Marw2ah020, dated 04.10.2021.

Date: 2024.10.22

19:15:09 IST Reason:2 Adjudicating Authority/National Company Law Tribunal, Kolkata Bench, Kolkata order dated 13.12.2019 in CP No. 254/KB/2019.

3 Insolvency and Bankruptcy Code, 2016.

4 Corporate Insolvency Resolution Process.

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 present controversy arose on 13.02.2019 when UCO Bank filed an application under Section 7 of the Code to initiate CIRP proceeding against the Corporate Debtor before the Adjudicating Authority (NCLT, Kolkata Bench). These proceedings were resisted by the Corporate Debtor, primarily on the grounds of limitation. Additionally, the Section 7 application was also challenged on the grounds that it was not signed by a competent person and also that there is no liability to pay as per the terms of the agreement and as such there is no debt.

5 Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest.

6 Debts Recovery Tribunal.

4. On the issue of competency of the Bank to file the petition under Section 7, the Adjudicating Authority held that the General Manager of Bank was legally authorized as attorney to do all acts and also act on behalf of the Bank and he had the authority to sign the application. On the issue relating to the existence of debt, the Adjudicating Authority, examined the contract, the terms and conditions of sanction letter as well as the relevant credit agreements in detail and came to the conclusion that the amount was disbursed as a loan and the Corporate Debtor had in-fact defaulted in repayment of principal as well as interest levied thereupon. Thus, the contention that there was no debt was also rejected.

4.1 The main objection to the initiation of CIRP proceedings on the ground of limitation was rejected by the Adjudicating Authority on the ground that there is an acknowledgement of debt in the financial statements as well as auditor’s report of the Corporate Debtor for the year ending on 31.03.2017. On the basis of Section 238A of the Code, incorporating the Limitation Act, the Adjudicating Authority relied on Section 18 of the Limitation Act to reckon the period of limitation from the date of acknowledgement of the debt and concluded that the institution of CIRP on 13.02.2019 is within the period of limitation. The further contention of the Corporate Debtor that name of UCO Bank, the financial creditor, is not specifically mentioned in the relied upon entry in the balance sheet was rejected by NCLT by referring to the Explanation to Section 7(1) of the Code providing that the proceedings thereunder get triggered even in the case of a default by debtor in respect of any financial creditor other than the applicant.

5. Aggrieved by the admission of Section 7 application, initia