Tribunal rejects insolvency application, cites genuine dispute and time-barred claim.

The tribunal held that the corporate debtor established a genuine dispute regarding the claim and that the claim was time-barred. Consequently, the application under section 9 of the Insolvency and Bankruptcy Code was rejected. No costs were awarded, and certified copies of the order would be issued to the parties upon compliance with formalities.

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Issues Involved:
1. Existence of a dispute regarding the claim.
2. Limitation period for the claim.

Issue-wise Detailed Analysis:

1. Existence of a Dispute Regarding the Claim:

The operational creditor, Mr. Kumar Dutta, filed an application under section 9 of the Insolvency and Bankruptcy Code, 2016, to initiate the corporate insolvency resolution process against the corporate debtor, Simplex Infrastructure Ltd., alleging default in repayment of Rs. 17,51,781 towards the principal amount and Rs. 17,82,760.60 towards interest up to November 2017. The operational creditor completed the work as per work orders issued by the corporate debtor and raised bills, but the corporate debtor failed to pay the outstanding amounts.

The corporate debtor contested the claim, arguing that the application was mala fide and that the operational creditor had raised unlawful demands. The corporate debtor asserted that the operational creditor failed to disclose its sales turnover correctly, resulting in a significant tax liability for the corporate debtor. The corporate debtor also indicated that it intended to initiate arbitration proceedings for damages due to the operational creditor's breach of contract.

The operational creditor denied these allegations and provided tax returns to substantiate its claim. However, the corporate debtor reiterated its contentions, stating that the operational creditor's failure to disclose accurate turnover led to the corporate debtor's financial liability to the tax authorities.

The tribunal noted that the corporate debtor had raised a genuine dispute regarding the amount retained due to the operational creditor's alleged non-compliance with tax obligations. The tribunal referred to previous demand notices and replies, which indicated a pre-existing dispute. The tribunal concluded that the corporate debtor successfully established the existence of a bona fide dispute, thereby rendering the application under section 9 of the I and B Code not maintainable.

2. Limitation Period for the Claim:

The corporate debtor also argued that the claim was barred by limitation. The last bill issued by the operational creditor was in March 2014, and the amounts claimed were due from work orders dated between September 30, 2013, and September 30, 2014. The application was filed on February 9, 2018, which the corporate debtor argued was beyond the limitation period.

The operational creditor contended that the limitation period should run from the date of the corporate debtor's admission of the amount retained, which was September 24, 2016. However, the tribunal found that the reply notice did not constitute a clear admission of liability, as it included a specific denial and a claim for damages by the corporate debtor.

The tribunal also referenced the applicability of the Limitation Act, 1963, to proceedings under the I and B Code, as affirmed by the Supreme Court and the Amendment Ordinance 2018. Applying the law of limitation, the tribunal determined that the claim was indeed time-barred.

Conclusion:

The tribunal concluded that the corporate debtor successfully proved the existence of a bona fide dispute regarding the claim and that the claim was barred by limitation. Consequently, the application was rejected under section 9(5)(ii)(d) of the I and B Code. The order emphasized that no costs were awarded, and certified copies of the order would be issued to concerned parties upon compliance with requisite formalities.

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