IL & FS Financial Services Limited Vs Adhunik Meghalaya Steels Private Limited (Supreme Court of India)
The Supreme Court in its recent judgment has ruled that entry in a company’s balance sheet amounts to a valid acknowledgment of debt under Section 18 of the Limitation Act, 1963 and allowed the plea of IL&FS for a default of ₹55.45 crore.
The short question that arises for consideration is whether the National Company Law Appellate Tribunal (‘NCLAT’) and the National Company Law Tribunal ( ‘NCLT’) were justified in dismissing the Section 7 application filed by IL & FS Financial Services Limited, the appellant against the respondent under the Insolvency and Bankruptcy Code, 2016 (for short ‘IBC’), on the ground that the same was being barred by limitation.
On 27.02.2015, a Loan Agreement was entered into between the appellant and the respondent for a term loan facility of Rs. 30 crores. The loan was secured, inter alia, by way of a pledge of 8,10,804 shares of Adhunik Metaliks Ltd. in favour of the appellant by virtue of a Pledge Agreement dated 27.02.2015.The account of the respondent was admittedly declared as a Non-Performing Asset (NPA) as the respondent was unable to meet its debt obligations.
