2019 (10) TMI 1362 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - Time limitation - HELD THAT - From the perusal of Section 19 of The Limitation Act, it appears to this Adjudicating Authority that it is admitted position of law that subsequently if any payment is made by the borrower than the limitation shall run from the date when the last amount was paid by the Corporate Debtor. Therefore, this Adjudicating Authority finds force in the contention of the submission placed by the learned counsel for the petitioner, that this case comes under Sec 19 of The Limitation Act. From the perusal of Article 62 of The Limitation Act as well as the decision referred it appears to this Adjudicating Authority that it is admitted position of law that Article 62 will not apply to the applications filed under Section 7 of The Insolvency And Bankruptcy Code, 2016 rather it would fall only under Article 137 of the Limitation Act. Therefore, this Adjudicating Authority does not finds force in the contention of the submission placed by the learned counsel for the petitioner, that this case comes under Article 62 of The Limitation Act. From the perusal of averments made in the application filed on behalf of petitioner, in counter affidavit filed by the respondent and reply to the counter affidavit filed by the petitioner, this adjudicating Authority finds, the Corporate Debtor in the Counter affidavit admits the debt and his only grievance is the entire properties of the Corporate Debtor are in hands of the Financial creditor - the application filed on behalf of financial creditor/Applicant under Section 7 of IBC is found complete and it is within limitation. It further appears that there is default in non-payment of the debt owed by the corporate debtor, applicant has annexed sufficient evidence to show the default on behalf of the corporate debtor. Therefore application filed U/S 7 of IBC deserves to be admitted. Application admitted - moratorium declared.

Summary

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Existence of Financial Debt and Default
3. Limitation Period for Filing the Application
4. Appointment of Interim Resolution Professional (IRP)
5. Declaration of Moratorium

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The petition was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by the Bank of India (financial creditor) against M/s. Amitech Textiles Limited (corporate debtor) to initiate the CIRP. The corporate debtor had previously been known as M/s. Amitech Industries Ltd., and the name change was duly communicated to relevant parties.

2. Existence of Financial Debt and Default:
The financial creditor provided evidence of various credit facilities granted to the corporate debtor, including acknowledgments of debt and security interests. The corporate debtor had acknowledged its liabilities on multiple occasions, including a sum of ?1,45,40,467.64 in the Cash Credit (Hypothecation) and ?50,51,088 in the Cash Credit (Books Debts) Account. The account of the corporate debtor turned into a Non-Performing Asset (NPA) on 30.09.2015, with a total default amount of ?28,28,76,087.83 plus future interest and other charges. The corporate debtor did not provide any document to refute the existence of debt and default.

3. Limitation Period for Filing the Application:
The financial creditor argued that the application was within the limitation period under Section 19 of the Limitation Act, 1963, due to payments made by the corporate debtor on 30.09.2016 and 03.10.2016. This restarted the limitation period. However, the adjudicating authority clarified that Article 62 of the Limitation Act, which provides a 12-year limitation for enforcing payment of money secured by a mortgage, does not apply to applications under Section 7 of the IBC. Instead, Article 137, which provides a 3-year limitation period, is applicable. Despite this, the application was found to be within the limitation period.

4. Appointment of Interim Resolution Professional (IRP):
The financial creditor proposed Mr. Aditya Agarwal as the IRP, and he filed a declaration affirming his registration and the absence of any disciplinary proceedings against him. The adjudicating authority appointed him as the IRP.

5. Declaration of Moratorium:
A moratorium was declared under Sections 13 and 14 of the IBC, prohibiting:
- The institution or continuation of suits or proceedings against the corporate debtor.
- Transferring, encumbering, or disposing of the corporate debtor's assets.
- Actions to foreclose, recover, or enforce any security interest.
- Recovery of property by an owner or lessor.

The supply of essential goods or services to the corporate debtor was to continue uninterrupted during the moratorium period.

Conclusion:
The application filed by the financial creditor under Section 7 of the IBC was found complete and within the limitation period. The corporate debtor's default was established, and the IRP was appointed. A moratorium was declared, and the case was scheduled for a progress report filing.