2022 (10) TMI 289 - Tri - Insolvency and Bankruptcy

Operational Creditor's CIRP Petition Rejected Due to Limitation Bar and Lack of Supporting Contract Copy

KVTEK Power Systems Private Limited Versus Nuclear Power Corporation Of India Limited

The petition filed by the Operational Creditor seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor was ... Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - petition filed beyond period of three years - HELD THAT:- The Corporate Debtor has brought to notice that the present Petition is barred by limitation. The invoice is dated 11.06.2015, which is stated to be the date of default by the Operational Creditor in Part IV of his petition and the present petition is filed on 13.03.2019, which is beyond the period of three years. Hence, the present petition is clearly barred by limitation. Rebutting the same, the Operational Creditor has relied upon the terms mentioned in the contract, however no copy of the contract has been annexed to the petition by the Operational Creditor to establish this very fact. Thus, without going into the merits, it is held that the present Petition is completely misconceived and non-maintainable. Petition dismissed. Issues Involved:1. Jurisdiction and maintainability of the petition.2. Alleged default in payment by the Corporate Debtor.3. Dispute over the quality and installation of equipment.4. Bar of limitation on the claim.5. Compliance with contractual terms and dispute resolution mechanisms.Issue-wise Detailed Analysis:1. Jurisdiction and Maintainability of the Petition:The petition was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) by the Operational Creditor seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The Corporate Debtor was incorporated under the Companies Act, 1956, and its registered office is within the jurisdiction of the Mumbai Bench of the National Company Law Tribunal (NCLT).2. Alleged Default in Payment by the Corporate Debtor:The Operational Creditor claimed that the Corporate Debtor failed to make a payment of INR 47,93,013, which includes the principal amount and interest. The default date was stated as 11.06.2015. The Operational Creditor supplied and installed the equipment as per the purchase order, but the Corporate Debtor allegedly did not make the payment despite multiple reminders and communications.3. Dispute Over the Quality and Installation of Equipment:The Corporate Debtor contended that the work performed by the Operational Creditor was unsatisfactory and did not meet the specified standards. Discrepancies were noted in the equipment's performance, specifically abnormal sound and discrepancies in CO2 and CO readings. The Corporate Debtor argued that the Operational Creditor failed to rectify these issues despite repeated reminders and that the equipment was not installed satisfactorily.4. Bar of Limitation on the Claim:The Corporate Debtor argued that the petition was barred by the law of limitation as the invoice dated 11.06.2015 was beyond the three-year period when the petition was filed on 13.03.2019. The Operational Creditor's reliance on contractual terms was not substantiated with a copy of the contract in the petition, leading the Tribunal to conclude that the petition was barred by limitation.5. Compliance with Contractual Terms and Dispute Resolution Mechanisms:The Corporate Debtor highlighted that the Operational Creditor did not obtain a 'Satisfactory Installation Certificate' as required by the purchase order and raised the invoice prematurely. The Corporate Debtor also pointed out that the purchase order included a dispute resolution mechanism through arbitration, which the Operational Creditor did not utilize before filing the petition under IBC.Findings and Conclusion:The Tribunal noted that the petition was barred by limitation as it was filed beyond the three-year period from the date of default. Additionally, the Tribunal found that the Operational Creditor failed to provide a copy of the contract to support its claims. As a result, the Tribunal held that the petition was misconceived and non-maintainable.Order:The petition filed by the Operational Creditor under Section 9 of the IBC for initiating CIRP against the Corporate Debtor was rejected.