2017 (3) TMI 1573 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - Held that - As per section 60 of IBC this Tribunal has been designated as adjudicating authority in relation to corporate persons. Further as per clause (c) sub-section (5) section 60, this tribunal is enjoined with the jurisdiction to entertain or dispose off any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this code. Sec 255 of IBC provides that the Companies Act 2013 shall be amended in the manner specified in the eleventh schedule to IBC and a perusal of the eleventh schedule of IBC discloses the amendments made to the Companies Act 2013 of several provisions though not section 433 of the Act wherein specifically the provisions of the Limitation Act 1963 (36 of 1963) is made applicable and that it shall, as far as may be apply to the proceedings or appeals before the Tribunal or Appellate tribunal as the case may be. Hence in the absence of any specific bar in the IBC to the application of the Limitation Act, 1963 coupled with the provisions of Sec 433 of the Act as contained in the Companies Act 2013 which makes Limitation Act applicable to this Tribunal the debt as claimed by the petitioner is barred by limitation and hence cannot be the basis for invoking IBC before this Tribunal. In relation to the decree obtained from the civil court in relation to the amounts claimed, we are of the considered view that the petitioner is well within its rights to have it executed before the appropriate civil courts meant for execution and that this Tribunal cannot be converted into an executing court of the above said ex parte decree obtained.

Summary

Issues:
- Claim of being an Operational Creditor under the Insolvency and Bankruptcy Code, 2016.
- Recovery of balance amount due from the respondent company.
- Validity of the Notice of Demand issued under the IBC.
- Consideration of time-barred debt under the IBC.
- Interpretation of the definitions of 'debt,' 'claim,' 'operational debt,' and 'operational creditor' under the IBC.
- Jurisdiction and limitations of the National Company Law Tribunal.
- Execution of a civil court decree in relation to the claimed amounts.

Analysis:

1. The petitioner claimed to be an Operational Creditor under the Insolvency and Bankruptcy Code, 2016, seeking recovery of a balance amount due from the respondent company. The transaction involved the sale of goods based on specific invoices, with a portion of the amount already paid by the respondent.

2. A Summary Suit was initiated by the petitioner in a civil court, resulting in an ex-parte decree in their favor for the balance amount. Subsequently, a Notice of Demand was issued under the IBC, triggering the Corporate Insolvency Resolution Process due to non-payment by the respondent.

3. The Tribunal examined the invoices and ledger accounts provided by the petitioner, noting that the claimed debt was time-barred as per the provisions of the IBC. The respondent had not confirmed the ledger accounts or acknowledged the debt, leading to the dismissal of the petition.

4. Definitions of 'debt,' 'claim,' 'operational debt,' and 'operational creditor' under the IBC were scrutinized to determine the eligibility of the petitioner's claim. The Tribunal emphasized the application of the Limitation Act, 1963, to insolvency proceedings before the Tribunal.

5. The Tribunal clarified its jurisdiction as an adjudicating authority in corporate insolvency matters, highlighting that the petitioner should execute the civil court decree through appropriate channels rather than seeking multiple remedies for the same cause of action.

6. Ultimately, the petition was dismissed with costs imposed on the petitioner, emphasizing the limitations of the Tribunal in executing civil court decrees and preventing forum shopping by petitioners seeking insolvency resolutions.