2022 (10) TMI 887 - AT - Insolvency and Bankruptcy

Dismissal of Insolvency Appeal due to Failure to Establish Creditor Status and Acknowledgment of Debt

BKP Enterprise Versus Air India Limited

The appeal under the Insolvency and Bankruptcy Code was dismissed as the appellant failed to demonstrate sufficient cause for condoning the delay in ... Condonation of delay in filing petition - sufficient cause for delay is shown or not - whether the section 9 petition was filed within limitation and therefore it concerns IA No. 3425/2021, which is an application for condonation of delay under section 5 of the Limitation Act? - HELD THAT:- A perusal of pleadings made in section 5 application under Limitation Act shows that the operational creditor has admitted that the last acknowledgment by the corporate debtor was on 21.11.2017 through an e-mail from corporate debtor to Mr. Bruno Claeys, former Commercial Director of the ex Orbest Airlines which was actually to check the authenticity of letter dated 11.3.2013 and also enquiring whether the said letter was signed by him in his capacity as Commercial Director of Orbit Airlines. Clearly this e-mail is checking on the authenticity of his signature in letter dated 11.3.2013 and cannot be considered as acknowledgment of the operational debt by the corporate debtor. The Orbest Airlines went into liquidation on 21.1.2014, and that in the event of Mr. Bruno Claeys refusing to accept that the signature on the letter dated 11.3.2013 was not in his hand-writing, it is not established that so-called operational debt is due and payable to the Appellant. We have also looked at the Charter Agreement between Air India and Orbest Airlines (attached at pp.148-159 of the appeal paperbook, Vol.II) wherein there is no mention of BKP Enterprise to act and collect payment on behalf of the original operational creditor Orbest Airlines. Significantly, vide a letter dated 28.11.2012, Mr. Sohil B. Zaveri and Mr. Bharat N. Zaveri of BKP Enterprise were authorized to reconcile the Orbest accounts with Air India in respect of the Haj operation undertaken in the year 2012. The e-mails that have been cited by the Appellant in his application IA No. 3425/2021 for condonation of delay do not provide clear and unequivocal acknowledgment of debt that is due to be paid to the Appellant. These e-mails only allude to the fact that there was no clarity between whether payment should be made to BKP Enterprise and moreover, Orbest airlines after liquidation certified that no payment was due to be received from Air India. The application for condonation of delay does not contain sufficient cause and has, therefore, been correctly dismissed by the Adjudicating Authority - Appeal dismissed. Issues Involved:1. Condonation of delay in filing the section 9 application under the Insolvency and Bankruptcy Code (IBC).2. Establishment of operational creditor status and acknowledgment of debt.Issue-wise Detailed Analysis:1. Condonation of Delay in Filing the Section 9 Application:The appeal was filed under section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC) against the order dated 02.11.2021 by the National Company Law Tribunal (NCLT), New Delhi. The appellant, an operational creditor, was aggrieved by the finding that he failed to demonstrate 'sufficient cause' for condoning the delay in filing the petition IB No. 332/ND/2021.The appellant contended that he was authorized by Orbest Airlines to act on its behalf regarding a charter agreement with Air India. Despite repeated requests for payment from 2013 to 2017, Air India did not make the payment, citing incomplete formalities. The appellant filed a writ petition in May 2018, which was dismissed on 28.11.2018 by the Delhi High Court. Subsequently, a demand notice was issued on 28.4.2021, and a section 9 application was filed on 30.6.2021, which was dismissed for delay.The NCLT observed that the date of default was 11.3.2013, and the section 9 application was filed after more than eight years. The appellant was advised to address the limitation issue, leading to the filing of IA No. 3425/2021, which was dismissed for failing to show sufficient cause for condoning the delay.2. Establishment of Operational Creditor Status and Acknowledgment of Debt:The appellant argued that the debt was acknowledged by the corporate debtor through various communications and was delayed due to procedural formalities. He claimed that the time spent pursuing the writ petition should be excluded from the limitation period.The respondent countered that the appellant was not an operational creditor, merely authorized to act on behalf of Orbest Airlines, and not to receive payments. The respondent also highlighted that Orbest Airlines went into bankruptcy on 4.4.2013, and the appellant did not provide the necessary documentation for payment.The NCLT noted that the last acknowledgment by the corporate debtor was on 21.11.2017, which was merely to verify the authenticity of a letter and not an acknowledgment of debt. The court found that the appellant failed to establish a jural relationship as an operational creditor and that the debt was not unequivocally acknowledged.The court referred to the Supreme Court judgment in Assets Reconstruction Company (India) Limited vs. Bishal Jaiswal, emphasizing the need for a clear acknowledgment of a subsisting liability to establish a jural relationship. The emails cited by the appellant did not constitute such acknowledgment.The court also noted that the appellant's pursuit of a writ petition, which was dismissed, did not constitute sufficient cause for condonation of delay. The section 9 application was filed long after the High Court's dismissal, with no sufficient cause shown for the delay.Conclusion:The application for condonation of delay was correctly dismissed by the Adjudicating Authority, as the appellant failed to demonstrate sufficient cause. The appeal was dismissed, and no costs were awarded.