Tribunal rules in favor of Financial Creditor in debt dispute under IBC

The Tribunal found in favor of the Financial Creditor, holding that the debt was due and payable by the Corporate Debtor and had not been paid. The Tribunal rejected the Corporate Debtor's argument that the claim was barred by limitation, citing relevant case law and determining that the application for initiating Corporate Insolvency Resolution Process (CIRP) was within the limitation period. Consequently, the Tribunal admitted the petition under Section 7 of the IBC, declared a moratorium, appointed an Interim Resolution Professional, and ordered public announcement of the CIRP.

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Issues Involved:
1. Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid.
2. Whether the financial claim by the Applicant is barred by limitation.

Issue-wise Detailed Analysis:

1. Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid:

The Tribunal noted that the Corporate Debtor availed credit facilities from the Financial Creditor and defaulted on repayment. The Financial Creditor initiated recovery proceedings before the DRT Hyderabad, resulting in a recovery certificate dated 29.11.2018. The Financial Creditor also initiated measures under the SARFAESI Act and realized part of the dues through the sale of secured assets. Despite an OTS offer, the Corporate Debtor failed to comply. The Tribunal relied on the ruling in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited, which states that the adjudicating authority only needs to see the records of the information utility or other evidence to satisfy itself that a default has occurred. The Tribunal found that there was a debt payable by the Corporate Debtor, which had not been paid, thus answering this point affirmatively.

2. Whether the financial claim by the Applicant is barred by limitation:

The Corporate Debtor argued that the claim was barred by limitation, referencing Supreme Court judgments in Gaurav Hargovindbhai Dave Vs. Asset Reconstruction Company (I) Ltd. and Jignesh Shah vs IL&FS. However, the Tribunal found no merit in this argument. The Tribunal referred to the Supreme Court's ruling in Dena Bank (now Bank of Baroda) vs C. Shivakumar Reddy and Anr., which clarified that an application under Section 7 of the IBC is not barred by limitation if there is an acknowledgment of debt within the limitation period, extending it by three years. Additionally, a judgment or recovery certificate provides a fresh cause of action to initiate proceedings under Section 7 of the IBC. As the recovery certificate was dated 29.11.2018 and the application was filed on 26.12.2019, the Tribunal held that the application was within the limitation period, thus answering this point negatively.

Conclusion:

The Tribunal concluded that the application for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor was valid. The Tribunal admitted the petition under Section 7 of the IBC, declared a moratorium, and appointed an Interim Resolution Professional. The Tribunal also directed the public announcement of the CIRP and ordered the Registry to mark appropriate remarks against the Corporate Debtor on the MCA site.

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