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of <h1>Debt Dispute: Tribunal Upholds Dismissal of Insolvency Application</h1> <h3>ABHIRUCHI VISION PRIVATE LIMITED Versus JAYASWAL NECO INDUSTRIES LIMITED</h3> ABHIRUCHI VISION PRIVATE LIMITED Versus JAYASWAL NECO INDUSTRIES LIMITED - TMI Issues Involved:1. Maintainability of the Section 7 Application under the Insolvency and Bankruptcy Code, 2016.2. Existence of Financial Debt.3. Impact of Arbitration Proceedings and Settlement.4. Acknowledgement of Debt in Balance Sheets.5. Limitation Period for Filing the Section 7 Application.Summary:1. Maintainability of the Section 7 Application:The Appellant challenged the Order dated 09.02.2023 passed by the National Company Law Tribunal (NCLT), Mumbai Bench, which dismissed the Section 7 Application of the Insolvency and Bankruptcy Code, 2016 (the Code) as not maintainable. The Adjudicating Authority held that the claim made by the Financial Creditor emanated from an Indenture of Family Settlement (IFS) dated 31st July, 2008, which had been amicably settled and compromised, leaving no debt due and payable by the Corporate Debtor.2. Existence of Financial Debt:The Adjudicating Authority found that the payments made by CIAL to various banks and institutions were not disbursed to the Corporate Debtor-JNIL and no money was received by JNIL for the time value of money. Thus, it concluded that there was no financial debt. The Appellant argued that the liability of the Corporate Debtor was set out in the scheme of arrangement between CIAL and JNIL and that the debt was acknowledged in the balance sheets.3. Impact of Arbitration Proceedings and Settlement:The arbitration proceedings between BLS Group and MKJ Group, which included a counterclaim by MKJ Group for Rs. 102,26,78,728/-, were settled and all claims and counterclaims were withdrawn. The Adjudicating Authority held that since the alleged debt was the subject of arbitration and had been amicably settled, no debt remained payable by the Corporate Debtor.4. Acknowledgement of Debt in Balance Sheets:The Appellant contended that the debt was acknowledged in the balance sheets of the Corporate Debtor. However, the Adjudicating Authority noted that subsequent financial statements from 2015-16 to 2020-21 contained notes disputing the claim. The Tribunal emphasized that the entries in the balance sheets, accompanied by caveats, did not constitute an unequivocal acknowledgment of debt.5. Limitation Period for Filing the Section 7 Application:The Respondent argued that the claim was barred by limitation, as the assignment deed was executed on 24th March, 2017, and the Section 7 Application was filed in 2022, more than five years later. The Tribunal did not find merit in the Appellant's claim of acknowledgment of debt extending the limitation period.Conclusion:The Tribunal concluded that there was no financial debt owed by JNIL to CIAL, and the Section 7 Application was not maintainable. The Appeal was dismissed, affirming the Adjudicating Authority's decision. The Tribunal also rejected the Appellant's contention that the order was non-speaking, noting that the Adjudicating Authority had provided detailed reasons for its decision.
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