2020 (10) TMI 822 - Tri - Insolvency and Bankruptcy

Operational Creditor's Insolvency Application Dismissed: Barred by Limitation, Pre-existing Dispute

The application under Section 9 of the Insolvency and Bankruptcy Code, 2016, filed by the Operational Creditor against the Corporate Debtor was dismissed ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute or not - time limitation - HELD THAT:- The time begins to run in this case for filing this application was on 21st July, 2009 and nothing in this case to hold that the period of 3 years starting from the said date can be extended to 29.06.2018 as attempted to establish on the side of the Operational Creditor - thus, the application filed on 29.06.2018 is hopelessly barred by limitation. Pre-existing dispute or not - HELD THAT:- The Corporate Debtor has raised dispute regarding the non compliance of terms in the work orders and the Ld. Additional District Judge had been given the liberty to the Corporate Debtor to raise the dispute again if the Operational Creditor preferred a fresh claim before the Micro, Small & Medium Enterprise Facilitation Council. The dismissal of the award of Facilitation Council was mainly for the reason of non consideration of dispute raised by the CD before the Facilitation Council. So the said order evidenced that the preexisting dispute between the OC and the CD is still pending. That being so the CD has successfully established existence of dispute before the date of issuance of demand notice. Accordingly it can be rightly concluded that the Operational Creditor has failed in establishing that the debt as claimed by the Operational Creditor is due and payable under any law and that the claim preferred by the Operational Creditor was within the period of limitation. Moreover, the Corporate Debtor here in the instant case established existence of disputes. Accordingly, this application is liable to be dismissed. Application dismissed. Issues Involved:1. Maintainability of the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (I&B Code).2. Limitation period for filing the application.3. Existence of a pre-existing dispute between the Operational Creditor and the Corporate Debtor.Issue-wise Detailed Analysis:1. Maintainability of the Application:The Operational Creditor, M/s. Emdee Digitronics Private Limited, filed an application under Section 9 of the I&B Code for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/s. Medicare Insurance TPA Services (India) Private Limited, alleging default in payment of Rs. 78,38,847.54 inclusive of interest. The Corporate Debtor contended that the application was not maintainable due to suppression of material facts and that the Operational Creditor had previously approached the West Bengal Micro and Small Enterprises Facilitation Council, whose award was set aside by the Additional District Judge. The Corporate Debtor argued that the application was barred by principles of res judicata and limitation, and was also bad for non-joinder of necessary parties.2. Limitation Period:The Operational Creditor claimed that the unpaid principal amount due was Rs. 14,51,396 for services rendered from January 2009 to September 2009. The last payment was received on 23rd June 2009, and the application was filed on 29th June 2018. The Operational Creditor argued that the period taken for litigation before the West Bengal Micro and Small Enterprises Facilitation Council (up to 27th April 2017) should be excluded from the limitation period. However, the Tribunal held that Article 137 of the Limitation Act, 1963 applies to applications under the I&B Code, and the right to sue accrues when a default occurs. Since the default occurred on 21st July 2009, the application should have been filed within three years from that date. The Tribunal concluded that the application filed on 29th June 2018 was barred by limitation.3. Existence of Pre-existing Dispute:The Corporate Debtor argued that there was a pre-existing dispute regarding the non-compliance of terms in the work orders, as evidenced by the judgment of the Additional District Judge, which set aside the Facilitation Council's award due to non-consideration of the dispute raised by the Corporate Debtor. The Tribunal found that the pre-existing dispute was still pending, and the Corporate Debtor successfully established the existence of a dispute before the issuance of the demand notice.Conclusion:The Tribunal concluded that the Operational Creditor failed to establish that the debt was due and payable under any law and that the claim was within the period of limitation. The existence of a pre-existing dispute was also established by the Corporate Debtor. Accordingly, the application was dismissed.Order:The application CP(IB) No. 1249/KB/2018 was dismissed with no order as to costs. The Registry was directed to communicate the order to the Operational Creditor and the Corporate Debtor by Speed Post and E-mail, and to issue a certified copy of the order to all concerned parties upon compliance with requisite formalities.