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Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + AT Insolvency and Bankruptcy - 2023 (12) TMI AT This

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2023 (12) TMI 1172 - AT - Insolvency and Bankruptcy


Issues Involved:
1. Jurisdiction and Compliance with Insolvency and Bankruptcy Code (IBC)
2. Existence of Debt and Default
3. Malicious Initiation of IBC Proceedings
4. Pre-existing Dispute
5. Fraud and Suppression Allegations
6. Limitation Period
7. Power of Attorney and Authorization

Summary:

1. Jurisdiction and Compliance with IBC:
The Appellant argued that the Bank of Baroda did not comply with the Insolvency and Bankruptcy Board of India (Information Utilities) Regulation, 2017, specifically Regulation 20(1A), which mandates filing information of default with the Information Utilities before initiating a Corporate Insolvency Resolution Process (CIRP). The Tribunal held that the Financial Creditor can furnish other records or evidence of default as specified under Section 7(3) of the IBC and Regulation 2A of the CIRP Regulations, 2016. Thus, the absence of a record from the Information Utility does not invalidate the application.

2. Existence of Debt and Default:
The Appellant contended that there was no debt and that the Bank owed money to the Corporate Debtor, citing a counter-claim of Rs. 45 crores filed with the Debt Recovery Tribunal (DRT) and a pending money suit. The Tribunal rejected this argument, noting that the existence of a counter-claim does not negate the debt and default. The Tribunal emphasized that debt and default were sufficiently proven by the Financial Creditor through bank statements and other documentation.

3. Malicious Initiation of IBC Proceedings:
The Appellant claimed that the Bank's initiation of proceedings under Section 7 of the IBC was malicious, as it did not file similar proceedings against two other sister companies. The Tribunal found no merit in this argument, stating that the Financial Creditor is within its rights to initiate proceedings against the Corporate Debtor for default.

4. Pre-existing Dispute:
The Appellant argued that there was a pre-existing dispute, citing the counter-claim and money suit. The Tribunal held that the concept of a pre-existing dispute is relevant only for operational debts, not financial debts. The Tribunal referred to the Supreme Court's ruling in "Innoventive Industries Ltd. vs. ICICI Bank and Anr," which stated that the existence of a dispute does not preclude the Adjudicating Authority from deciding on debt and default.

5. Fraud and Suppression Allegations:
The Appellant alleged that the Bank committed fraud by not disclosing the counter-claim and money suit in its IBC petition. The Tribunal dismissed these allegations, stating that the mere existence of a counter-claim or money suit does not absolve the Corporate Debtor from its liability to discharge its debt.

6. Limitation Period:
The Appellant contended that the application was barred by limitation, as the date of default was 13.03.2017, and the application was filed on 12.01.2023. The Tribunal noted that the Corporate Debtor had acknowledged its liability through various One Time Settlement (OTS) proposals, which extended the limitation period under Section 18 of the Limitation Act. The Tribunal cited the Supreme Court's ruling in "Dena Bank (Now Bank of Baroda) vs. C. Shivakumar Reddy and Anr," which held that an acknowledgment of debt extends the limitation period.

7. Power of Attorney and Authorization:
The Appellant argued that the Section 7 application was not maintainable as it was filed by an unauthorized person. The Tribunal found that the Power of Attorney granted to Nidhi Kumar allowed her to appoint Pawan Sharma as the lawful attorney, thereby validating the application filed by Pawan Sharma.

Conclusion:
The Tribunal dismissed the appeal, finding no merit in any of the Appellant's arguments. The Tribunal upheld the Adjudicating Authority's order admitting the Section 7 application, imposing a moratorium, and appointing an Interim Resolution Professional (IRP).

 

 

 

 

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