2021 (5) TMI 539 - Tri - Insolvency and Bankruptcy

Debt acknowledgment allows maintainable petition in corporate insolvency. Interim Resolution Professional appointed.

The petition was found maintainable as it was filed within the limitation period due to the acknowledgment of debt by the Corporate Debtor. The Tribunal ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- Though the provision of Sec. 19 of Limitation Act, 1963 is met here, the Bench takes note of the fact that in the present age of digital payments very few payments would be accompanied by a handwritten and signed note. It is mostly accomplished by the transfer of an amount from one bank account to the other through a digital format. All the banks in this regard require a borrower to have the saving/current account in the bank before a loan is disbursed and the transfer of funds might be repayment of the loan from saving/current bank account to the loan account on a periodic basis as per the terms of the loan regarding disbursement. In the present instance the provision of Section 19 of the Limitation Act, 1963 is squarely met as an acknowledgment of payment has been signed by the Director of the Respondent Company. Therefore, from 31.03.2017 a fresh period of limitation of 3 years commences which would end on 30.03.2019. Since the present Petition was filed on 09.03.2020 it is within the period of limitation as prescribed under Section 19 of the Limitation Act. The Petitioner has not received the outstanding Debt from the Respondent and that the formalities as prescribed under the Code have been completed by the Petitioner, we are of the conscientious view that this Petition deserves 'Admission'. Petition admitted - moratorium declared. Issues Involved:1. Maintainability of the petition.2. Limitation period for filing the petition.3. Authority to file the petition.4. Allegations of misappropriation of funds.5. Sufficiency of stamp duty on the loan agreement.Issue-wise Detailed Analysis:1. Maintainability of the Petition:The Corporate Debtor argued that the Petitioner, being a cooperative society, should resolve disputes under Section 72 of the Maharashtra Cooperative Societies Act, 1960, and that the petition was filed beyond the three-year limitation period. The Tribunal examined the application of Section 18 and 19 of the Limitation Act, 1963, to proceedings under Section 7 of the Insolvency and Bankruptcy Code (IBC). It was established that both sections are applicable, and the acknowledgment of debt by the Corporate Debtor in a letter dated 23.07.2019 reset the limitation period. Consequently, the petition filed on 09.03.2020 was within the limitation period.2. Limitation Period for Filing the Petition:The Tribunal noted that the date of default was 01.02.2016, and the petition was filed on 09.03.2020. However, the acknowledgment of debt by the Corporate Debtor in a letter to the Commissioner, Cooperative Department of Maharashtra, and the last payment made on 31.03.2017 extended the limitation period under Sections 18 and 19 of the Limitation Act. The Tribunal concluded that the petition was not time-barred.3. Authority to File the Petition:The Corporate Debtor contended that the petition was filed without express authority from the general body of the Petitioner. The Petitioner clarified that no Administrator was appointed, and the Board had authorized the filing of the petition through a resolution dated 03.12.2019. The Tribunal found this contention insufficient to dismiss the petition, as the primary consideration was the existence of a financial debt and default.4. Allegations of Misappropriation of Funds:The Corporate Debtor alleged that the Petitioner’s Director induced them to part with Rs. 98,58,000/- on the loan disbursement date. The Tribunal noted that any transaction between the Corporate Debtor and an individual Director could not form the basis for admitting or rejecting the application under the IBC. Moreover, the complaint filed by the Corporate Debtor against the Petitioner was withdrawn.5. Sufficiency of Stamp Duty on the Loan Agreement:The Corporate Debtor argued that the loan agreement was executed on insufficient stamp paper as per the Maharashtra Stamp Act, 1958. The Tribunal referred to Section 4 of the Maharashtra Stamp Act, which states that the principal instrument (the mortgage deed) was fully stamped, and the loan agreement required a duty of only Rs. 100/-. Thus, there was no deficiency in stamp duty payment.Conclusion:The Tribunal found that the Petitioner had not received the outstanding debt from the Corporate Debtor and that the formalities under the Code were completed. The petition was admitted, and an Interim Resolution Professional (IRP) was appointed to conduct the Corporate Insolvency Resolution Process (CIRP). The Tribunal dismissed the IA challenging the maintainability and allowed the Company Petition, initiating CIRP against the Corporate Debtor. The commencement of the CIRP was effective from the date of the order.