Tribunal Dismisses Insolvency Application for Time-Barred Debt

The Tribunal dismissed the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 as not maintainable due to the debt being time-barred. Despite a decree in favor of the Operational Creditor in 2014, insufficient evidence was provided to prove the debt was within the limitation period. The Operational Creditor's attempt to initiate Corporate Insolvency Resolution Process in 2019 for non-payment of the decreed sum was rejected by the Tribunal, citing failure to enforce the decree within the limitation period as cautioned by the Supreme Court.

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Issues:
1. Maintainability of the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 based on the ground of limitation.

Analysis:
The Tribunal received an application from the Operational Creditor seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor due to alleged default in repayment of dues. The Operational Creditor provided papers to the Corporate Debtor in 2010, leading to a default in repayment of a sum of Rs. 6,43,176. A suit was filed and decreed in favor of the Operational Creditor for Rs. 10,63,600 on 02.06.2014. A demand notice under Section 8 of the IBC, 2016 was sent to the Corporate Debtor on 19.09.2019, with no response. The application to initiate CIRP was filed on 16.12.2019, claiming non-payment of the decreed sum by the Corporate Debtor.

The Tribunal noted that besides the decree from 02.06.2014, the Operational Creditor failed to provide additional documents to prove the debt. The Operational Creditor mentioned the default date as 02.06.2014 in the application filed on 16.12.2019, without evidence that the debt was within the limitation period. The Operational Creditor neglected to enforce the decree within the limitation period, attempting to use the Tribunal as a Court of execution, contrary to the Supreme Court's ruling in Mobilox Innovations (P) Ltd. vs. Kirusa Software (P) Ltd. (2018) 1 SCC 353, cautioning against such use.

Consequently, the Tribunal determined that the debt claimed by the Operational Creditor was time-barred. Due to the lack of supporting documents within the limitation period, the Tribunal dismissed the application as not maintainable at the stage of scrutiny.

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