Tribunal Admits CIRP Application, Appoints Interim Resolution Professional

The Tribunal admitted the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The application was deemed timely filed within the limitation period. The Tribunal dismissed the Corporate Debtor's contentions regarding a pre-existing dispute and the inapplicability of Section 19 of the Limitation Act, 1963. Mr. Kannan Sambasivam was appointed as the Interim Resolution Professional, and a moratorium was declared as per Section 14(1) of the IBC, 2016.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Limitation period for filing the application
3. Pre-existing dispute between the parties
4. Application of Section 19 of the Limitation Act, 1963
5. Appointment of Interim Resolution Professional (IRP)
6. Declaration of Moratorium

Issue-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.

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