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2022 (3) TMI 995 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - time limitation - existence of forged signatures and creation/fabrication of documents, to establish a Debt when no Debt is owed by the Corporate Debtor to the 1st Respondent/Operational Creditor/Applicant or not - existence of debt and pre-existing dispute or not - contention of 1st Respondent is that the failure of the Company to pay its dues is a Continuing Breach and hence it is a continuous cause of action as per Section 22 of the Limitation Act 1963 - Whether the application filed by the first Respondent herein is within the period of limitation or barred by limitation? - Difference of Opinion. HELD THAT - In view of the divergent judgments delivered by the Hon ble Members, on 21st March, 2022, the Registrar of NCLAT , Principal Bench, New Delhi, is to place the record in Company Appeal (AT) (CH) (INS) No. 29 of 2022 together with the copies of the said judgments before the Hon ble Chairperson of NCLAT , Principal Bench, New Delhi, for constituting an appropriate Bench / nominating the Hon ble Third Member for rendering his Opinion / Decision in Appeal .
Issues Involved:
1. Whether the application filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016, is barred by limitation. 2. Whether the alleged debt is a genuine operational debt or a disputed debt. 3. Whether the claims of forgery and fabrication of documents by the Operational Creditor hold merit. 4. Whether the Adjudicating Authority (NCLT) has jurisdiction to decide on issues of fraud and forgery in summary proceedings. 5. Whether the failure to allot shares can be treated as an operational debt under the IBC. Detailed Analysis: 1. Limitation: The Adjudicating Authority (NCLT) observed that the application was within the limitation period, considering the letters dated 28.08.2016 and 17.10.2016, which acknowledged the outstanding dues of ?7.5 crores. However, the dissenting opinion by the Member (Technical) highlighted that the date of default as per the application was 25.07.2011, and the three-year limitation period expired on 24.07.2014. The acknowledgment letter dated 29.01.2015 was beyond this limitation period, making the application barred by limitation. 2. Genuine Operational Debt or Disputed Debt: The Appellant contended that the debt was disputed, alleging that the Operational Creditor had fabricated documents and forged signatures to establish a debt that did not exist. The Operational Creditor, however, provided several communications and letters indicating a contract of employment and the services rendered, which the NCLT found to be genuine and within the definition of operational debt under Section 5(21) of the IBC. 3. Claims of Forgery and Fabrication: The Appellant argued that the Operational Creditor had misused the company's letterhead and created false documents. The Operational Creditor countered by presenting evidence of genuine transactions and communications. The NCLT relied on the final report from the CID, which found no evidence of forgery, and concluded that the claims of forgery by the Appellant were unsubstantiated. 4. Jurisdiction of NCLT on Fraud and Forgery: The NCLT, referring to the judgment in Embassy Property Developments v. State of Karnataka, held that it has the jurisdiction to inquire into allegations of fraud within the context of insolvency proceedings. The Tribunal found that the allegations of fraud and forgery by the Appellant were not supported by evidence, as the CID report had cleared the Operational Creditor of such charges. 5. Failure to Allot Shares as Operational Debt: The Appellant argued that the non-allotment of shares could not be treated as an operational debt under the IBC and should be addressed under Sections 58 and 59 of the Companies Act, 2013. The NCLT, however, considered the claim for compensation for services rendered, which included the promise of shares, as falling within the definition of operational debt. Conclusion: The NCLT admitted the application under Section 9 of the IBC, finding that the Operational Creditor's claim was genuine and within the limitation period. The dissenting opinion by the Member (Technical) disagreed, concluding that the application was barred by limitation. The case was referred to the Hon'ble Chairperson of NCLAT for constituting an appropriate Bench to resolve the divergent judgments.
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