2021 (3) TMI 985 - Tri - Insolvency and Bankruptcy

Application to initiate insolvency process dismissed due to limitation bar, preserving rights for other forums.

The Tribunal dismissed the Operational Creditor's application to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor due ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor or not - existence of debt and dispute or not - time limitation - HELD THAT:- The claim of the applicant is not admitted by the respondent. In fact there are certain issues which should be adjudicated before ascertaining the claim of the applicant. At this stage it is immaterial to consider who will succeed. Besides this forum, in the present proceeding, is not supposed to examine the merit of the disputed claims made by the parties. Time Limitation - HELD THAT:- A financial/operational creditor will have to be vigilant while initiating proceedings under the Code and ensure that application is within 3 years from the date of default. The creditor will be unable to take the benefit of the provisions of the Limitation Act, which provide for a fresh period of limitation to run/exclusion of time in computing limitation. The same rule shall apply for the operational creditor. Existence of dispute - HELD THAT:- Existence of dispute largely depends on the facts and circumstances of each case. In the factual background of this case 'existence of real dispute' cannot be totally overruled - That apart the respondent has placed copies of invoices for re-supply of materials in place of defective materials. The said invoices have been disputed by the applicant in its rejoinder. Therefore, there exist various questions which require a proper adjudication in order to ascertain the claim of applicant. Application is dismissed as barred by limitation. Issues Involved:Initiation of CIRP under Section 9 of IBC 2016 for alleged default in payment by Corporate Debtor. Objections raised by Respondent regarding the claim, including issues of limitation, acknowledgment of debt, and existence of dispute.Detailed Analysis:1. Alleged Default and Claim by Operational Creditor:The Operational Creditor filed a petition seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for default in settling the amount of &8377;1,45,69,392/- along with interest component towards goods supplied. The Operational Creditor claimed that the Corporate Debtor failed to pay the outstanding amounts under 7 invoices, leading to the petition.2. Respondent's Objections and Legal Arguments:The Respondent raised objections, including the absence of the default date in the initial form, making the proceeding void-ab-initio. They argued that the claim was time-barred, citing recent judgments by the Hon'ble Apex Court. The Respondent also disputed the acknowledgment of debt and raised concerns about the identification of materials supplied and returned.3. Tribunal's Analysis and Decision:The Tribunal considered both parties' arguments and examined the case records. It highlighted that the claim was disputed, and certain issues needed adjudication before determining the claim's validity. The Tribunal noted the Respondent's criminal complaint regarding the disputed acknowledgment and emphasized the importance of the limitation period under Article 137 of the Limitation Act.4. Legal Precedents and Application:The Tribunal referred to legal precedents, including judgments by the Hon'ble NCLAT and the Supreme Court, to analyze the limitation period and the applicability of the Limitation Act in insolvency proceedings. It emphasized the need for vigilance in adhering to the limitation period while initiating proceedings under the Insolvency and Bankruptcy Code, 2016.5. Dismissal of Application and Conclusion:Based on the analysis of the arguments, objections, and legal principles, the Tribunal dismissed the application as barred by limitation. It clarified that the dismissal did not reflect an opinion on the underlying controversy and preserved the applicant's rights before other forums. The Tribunal highlighted the importance of adherence to limitation periods and the need for proper adjudication of disputed claims.This comprehensive analysis encapsulates the key legal issues, arguments, precedents, and the Tribunal's decision in the judgment regarding the initiation of CIRP and objections raised by the Respondent in the case.