2023 (3) TMI 242 - Tri - Insolvency and Bankruptcy

Tribunal dismisses time-barred claim in Insolvency case; debtor admits loans but disputes amount claimed

The Tribunal rejected the application for the initiation of Corporate Insolvency Resolution Process under section 7 of the Insolvency & Bankruptcy ... Limitation - date of default - date of NPA - running of limitation from date of default - effect of Supreme Court suo motu order dated 08.03.2021 on limitation - initiation of CIRP under section 7 of Insolvency & Bankruptcy Code, 2016Limitation - date of default - date of NPA - running of limitation from date of default - effect of Supreme Court suo motu order dated 08.03.2021 on limitation - Whether the petition under section 7 for initiation of CIRP is barred by limitation. - HELD THAT: - The Bench applied the settled principle that limitation for a section 7 petition runs from the date of default and not from the date of declaration of account as NPA. The petition, filed on 30.03.2021, records differing dates: Part-IV of the petition states the Date of Default as 02.12.2016 and Date of NPA as 31.03.2017, while the Information Utility record shows Date of Default as 01.03.2017. On the material before it the Tribunal found that the claim was time-barred when measured from the Date of Default shown in the petition and IU records. The submitted audited financial statement signed on 13.12.2016 (for period ending 31.03.2016) did not cure the limitation defect. Further, because the period of limitation had expired before 24.03.2020, the extension of limitation relied upon from the Supreme Court's suo motu order dated 08.03.2021 did not operate to save the petition. For these reasons the petition was held to be barred by limitation and not maintainable. [Paras 10, 11, 12, 13, 14]The section 7 petition is barred by limitation and is rejected.Final Conclusion: The application filed by the financial creditor under section 7 seeking initiation of CIRP is dismissed as time-barred; observations in the order are without prejudice to the petitioner's rights before other fora. Issues:1. Application for initiation of Corporate Insolvency Resolution Process under section 7 of Insolvency & Bankruptcy Code, 2016.2. Default amount claimed by the Financial Creditor.3. Date of default and limitation period.4. Admittance of liability by the Corporate Debtor.5. Applicability of the period of limitation and Covid-19 extension.Analysis:1. The application filed sought the initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor by the Financial Creditor under section 7 of the Insolvency & Bankruptcy Code, 2016. 2. The Financial Creditor claimed a total default amount of Rs.28,26,69,996/-, including interest and penal interest, based on a Corporate Loan and Short-Term Loan provided to the Corporate Debtor. The Financial Creditor supported its claim with a Ledger Statement and other relevant documents.3. The discrepancy in the Date of Default and the Date of NPA was noted, with the Financial Creditor relying on the Hon'ble Supreme Court decision to extend the period of limitation. However, the Tribunal found that the application, filed on 30.03.2021, was barred by limitation as the Date of Default was deemed to be 02.12.2016, making the petition time-barred.4. The Corporate Debtor admitted to the loans but disputed the outstanding amount claimed by the Financial Creditor. Despite acknowledging the loans, the Corporate Debtor expressed its inability to repay the debt, further supporting the Financial Creditor's claim.5. The Tribunal highlighted that the limitation period had expired before the Covid-19 extension granted by the Hon'ble Supreme Court, rendering it inapplicable to the present petition. Consequently, the petition for initiating CIRP against the Corporate Debtor was dismissed on the grounds of being time-barred.Judgment:The Tribunal, comprising Mr. Prabhat Kumar and Mr. Kishore Vemulapalli, rejected the application filed by STCI Finance Limited, the Financial Creditor, seeking the initiation of Corporate Insolvency Resolution Process against Man Infraprojects Limited, the Corporate Debtor, under section 7 of the Insolvency & Bankruptcy Code, 2016. The Tribunal clarified that the dismissal should not prejudice the petitioner's rights before any other judicial forum and that the observations made in the order should not be construed as expressing an opinion on merits.