2020 (6) TMI 456 - Tri - Insolvency and Bankruptcy

Tribunal Admits CIRP Application, Appoints Interim Resolution Professional

M/s. Superfine Bleachingcompany Limited Versus M/s. Alkas Spinning Mills Private Limited

The Tribunal admitted the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, initiating the Corporate Insolvency Resolution Process ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Time Limitation - HELD THAT:- Apart from the plea of limitation, the rest of the plea raised by the Corporate Debtor are baseless and without any documents being produced to substantiate the same. Further, it may also be seen that the Corporate Debtor has not replied to the Demand Notice issued by the Operational Creditor and the plea of pre-existing dispute is an afterthought. As to the contention of the Learned Counsel for the Corporate Debtor that the Application is barred by limitation, it may be seen that the Operational Creditor has filed the present Application before this Tribunal on 24.09.2019. The date of the first invoice is 19.07.2016 and the date of the last invoice is 13.12.2016. Since the account is a running account, as no evidence has been placed on record by the Corporate Debtor that it should be treated otherwise and for the purpose of calculating the period of limitation, if the date of the last invoice is to be reckoned i.e. 13.12.2016, then the Application which was filed by the Operational Creditor before this Tribunal on 24.09.2019 is sufficiently well within the prescribed period of Limitation - bare reading of Section 29(2) of the Limitation Act, 1963 would posit the position that Section 4 to Section 24 (inclusive) of the Limitation Act, 1963 shall be applicable to the applications filed under IBC, 2016. Therefore, the contention of the Corporate Debtor that Section 19 of Limitation Act, 1963 is not applicable to the Application filed under Section 9 of the IBC, 2016 is required to be brushed aside. From the list of invoices filed, it is evident that the claim as raised by the Operational Creditor is within the prescribed period of limitation of 3 years. The registered office of the Corporate Debtor is situated within the State of Tamilnadu, amenable to its territorial jurisdiction and this Authority has no hesitation in admitting this Petition and initiating the Corporate Insolvency Resolution Process (CIRP) as against the Corporate Debtor - this Tribunal is perforce to initiate CIRP in relation to the Corporate Debtor by admitting this Petition under the provisions of Insolvency and Bankruptcy Code, 2016 read with Application to Adjudicating Authority Rules, 2016. Application admitted - moratorium declared. Issues Involved:1. Initiation of Corporate Insolvency Resolution Process (CIRP)2. Limitation period for filing the application3. Pre-existing dispute between the parties4. Application of Section 19 of the Limitation Act, 19635. Appointment of Interim Resolution Professional (IRP)6. Declaration of MoratoriumIssue-wise Detailed Analysis:1. Initiation of Corporate Insolvency Resolution Process (CIRP):The application was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (I&B Code-2016) by the Operational Creditor against the Corporate Debtor to initiate the CIRP, declare moratorium, and appoint an Interim Resolution Professional. The Operational Creditor, a Public Limited Company, sought to recover a debt of Rs. 38,37,972/- inclusive of interest at 24% p.a. from the Corporate Debtor, a Private Limited Company.2. Limitation Period for Filing the Application:The Corporate Debtor contended that the application was barred by limitation. However, the Tribunal noted that the application was filed on 24.09.2019, with the last invoice dated 13.12.2016. As the account was a running account, the application was deemed to be within the prescribed limitation period of 3 years, making it timely filed.3. Pre-existing Dispute Between the Parties:The Corporate Debtor argued a pre-existing dispute, claiming the Operational Creditor did not dye the cotton as per specifications, leading to non-payment by the Corporate Debtor’s client. However, the Tribunal found these claims unsubstantiated and noted that the Corporate Debtor had not replied to the Demand Notice, indicating the dispute was an afterthought.4. Application of Section 19 of the Limitation Act, 1963:The Corporate Debtor argued that Section 19 of the Limitation Act, 1963, which extends the limitation period upon acknowledgment of debt, was not applicable to applications under Section 9 of the IBC, 2016. The Tribunal dismissed this argument, citing Section 238A of the IBC, 2016, which makes the Limitation Act applicable to IBC proceedings. Thus, Section 19 was applicable, and the Corporate Debtor’s contention was brushed aside.5. Appointment of Interim Resolution Professional (IRP):The Operational Creditor proposed Mr. Kannan Sambasivam as the IRP, who consented to the appointment. The Tribunal appointed him as the IRP, as required by the IBC, 2016 and the IBBI Rules and Regulations.6. Declaration of Moratorium:Upon admitting the application, the Tribunal declared a moratorium as per Section 14(1) of the IBC, 2016. This included the suspension of suits or proceedings against the Corporate Debtor, prohibition on transferring or disposing of assets, and halting actions to enforce security interests. Essential goods and services to the Corporate Debtor were to remain uninterrupted during the moratorium period, which would last until the completion of the CIRP or the approval of a resolution plan or liquidation order.Conclusion:The application was admitted, initiating the CIRP against the Corporate Debtor. The moratorium came into effect immediately, and the IRP was appointed. The Tribunal directed the Registry to communicate the order to the relevant parties and authorities.