Debt Repayment Deadline Set at Six Months; New Petition Allowed for Non-Compliance

The Tribunal concluded that the Respondent should be given an opportunity to clear the outstanding debt within six months, considering the economic scenario and the willingness of the parties to settle. Failure to repay within the stipulated time would allow the Petitioner to file a fresh petition. The case was disposed of with no order as to costs.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the IBC, 2016.
2. Existence of a pre-existing dispute.
3. Bar of limitation.
4. Compliance with procedural requirements under IBC.
5. Financial health and solvency of the Respondent.
6. Impact of COVID-19 pandemic on the financial scenario.

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the IBC, 2016:
The Petitioner, McNally Sayaji Engineering Limited, sought to initiate CIRP against Scorpio Engineering Private Limited for a default amount of Rs. 2,51,66,080/- including interest. The Petitioner claimed that the Respondent had committed default by not paying the outstanding amount despite several invoices and statutory demand notices.

2. Existence of a pre-existing dispute:
The Respondent argued that there was a pre-existing dispute regarding the quality of work, citing emails from 13.10.2015 to establish the existence of a dispute. The Respondent claimed that the Petitioner failed to supply supporting structures and other deliverables as per the purchase orders, leading to delays and additional costs.

3. Bar of limitation:
The Respondent contended that the application was barred by limitation as the amounts were due on 30.06.2015, and the petition was filed after more than five years on 29.01.2020. The Petitioner, however, argued that the Respondent had acknowledged the debt within the limitation period through letters dated 10.05.2016, 18.10.2016, and 02.02.2017, which created a fresh limitation period.

4. Compliance with procedural requirements under IBC:
The Respondent argued that the petition was incomplete as it did not include the 'record of default' from an Information Utility, which is a non-compliance under Section 9(3)(d) of the Code. The Petitioner refuted this, stating that the Respondent had acknowledged the debt multiple times, and there was no pre-existing dispute.

5. Financial health and solvency of the Respondent:
The Tribunal noted that the Petitioner had not provided material evidence to establish the insolvency of the Respondent company. The master data details from the MCA website indicated that the Respondent company was active, compliant, and had no pending charges on assets, showing good financial health.

6. Impact of COVID-19 pandemic on the financial scenario:
The Tribunal acknowledged the financial distress caused by the COVID-19 pandemic and the legislative measures to protect industries, including increasing the minimum threshold of default from Rs. 1 Lakh to Rs. 1 Crore. The Tribunal emphasized that the objective of the IBC is not to push companies into insolvency but to support them during financial stress.

Conclusion:
The Tribunal concluded that the Respondent should be given an opportunity to clear the outstanding debt, considering the economic scenario and the willingness of the parties to settle the claims. The Tribunal directed the Respondent to repay the debt or settle the amount with the Petitioner within six months, failing which the Petitioner could file a fresh petition. The petition was disposed of with no order as to costs.

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