Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + AT Insolvency and Bankruptcy - 2018 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (9) TMI 1998 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - time limitation - HELD THAT - The Insolvency and Bankruptcy Code, 2016 having come into force on 1st December, 2016 and as per Article 137 (Part II) of the Limitation Act, 1963, the application preferred within three years from the date of right to apply accrues. This apart, it is also found that there is continuous cause of action as the appellant has claimed the interest since the default, it cannot be held to be barred by limitation. Appeal dismissed.
Issues:
1. Maintainability of application under Section 7 of the Insolvency and Bankruptcy Code due to pending arbitration proceedings. 2. Explanation of Sections 7, 8, and 9 of the Insolvency and Bankruptcy Code. 3. Impact of filing a winding-up petition under Section 433 and 434 of the Companies Act, 1956 on the application under Section 7 of the I&B Code. 4. Barred by limitation argument for filing the application under Section 7. Issue 1: The appellant, a Shareholder of a Corporate Debtor, challenged the admission of an application under Section 7 of the Insolvency and Bankruptcy Code due to pending arbitration proceedings. The argument that the application was not maintainable because of the ongoing arbitration was rejected by the Tribunal. It was clarified that the pendency of arbitration does not preclude the admission of an application under Section 7 of the I&B Code. Issue 2: The Tribunal referred to the Supreme Court's explanation of Sections 7, 8, and 9 of the I&B Code in the case of Innoventive Industries Ltd. v. ICICI Bank. Section 7 deals with financial creditors triggering the process, emphasizing the importance of establishing a default. The scheme of Section 7 differs from Section 8, where operational creditors must first deliver a demand notice before proceeding. The existence of a dispute does not affect an application under Section 7, unlike Section 8. Issue 3: The appellant contended that a winding-up petition under the Companies Act, 1956 was filed, which could impact the application under Section 7. However, since the winding-up petition had not been admitted or initiated, the Tribunal held that this did not affect the maintainability of the application under Section 7 of the I&B Code. Issue 4: Regarding the limitation argument, the appellant claimed that the application was barred by limitation. The Tribunal cited Article 137 of the Limitation Act, 1963, which allows for a three-year period for such applications. As the application was filed within this timeframe and there was a continuous cause of action due to interest claims, the Tribunal dismissed the limitation argument. In conclusion, the appeal challenging the admission of the application under Section 7 of the Insolvency and Bankruptcy Code was dismissed by the National Company Law Appellate Tribunal, emphasizing the importance of establishing defaults for financial creditors and clarifying the impact of pending arbitration proceedings and winding-up petitions on such applications.
|