2019 (2) TMI 1662 - Tri - Insolvency and Bankruptcy

Admissibility of petition - Initiation of Corporate Insolvency Resolution Process - time limitation - Section 7 of the Insolvency and Bankruptcy Code, 2016 read with, rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - Corporate Debtor - main objection raised by respondent company is that the claim of the applicant is barred by the limitation - HELD THAT - It is true that Limitation Act, 1963 has been made applicable and the provisions of Article 136 provide for 12 years period to execution of decree or order of a Civil Court. The argument received by the counsel, for Respondent is wholly without substance. Moreover the decree was modified on 04.04.2016. We do not find any substance in the raised by the Respondent and reject the same. Admittedly, the present petition was filed on 12.08.2018 and is within the period of limitation - Admittedly, the claim of the applicant was become due in the year 2010 and the decree in favour of the applicant was passed in the year 2013 as modified on 04.02.2016. The applicant in its application itself has submitted that more than five years have already lapsed and the respondent has not paid the decreed amount to the applicant. In the present case the applicant had given the loan amount which is recoverable with applicable interest by entering into loan agreements with the corporate debtor. The corporate debtor had borrowed the loan against payment of interest as agreed between the parties. The loan was disbursed against the consideration for time value of money with a clear commercial effect of borrowing. Moreover the debt claimed in the present application includes both the component of outstanding principal and interest - In that view of the matter not only the present claim comes within the purview of 'Financial Debt' but also the applicant can clearly be termed as 'Financial Creditor' so as to prefer the present application under Section 7 of the Code. In terms of Section 7(5)(a) of the Code, the present application is admitted - Moratorium declared.

Summary

Issues:
1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process.
2. Territorial jurisdiction of the Adjudicating Authority.
3. Appointment of Interim Resolution Professional.
4. Claim of loan repayment and default by the respondent company.
5. Objection of limitation raised by the respondent.
6. Application of Limitation Act, 1963 to insolvency proceedings.
7. Definition and requirements of a Financial Creditor under the Code.
8. Admissibility of the application under Section 7.
9. Imposition of moratorium under Section 14.

Analysis:
1. The application was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking Corporate Insolvency Resolution Process for the respondent company, based on default in loan repayment.
2. The Tribunal established its territorial jurisdiction over the matter due to the location of the respondent company's registered office in Delhi.
3. Mr. Lekhraj Bajaj was appointed as the Interim Resolution Professional after meeting the necessary requirements and making the required disclosures.
4. The applicant claimed default in loan repayment by the respondent company, supported by relevant documents such as the loan agreement and court decrees.
5. The respondent raised an objection of limitation, citing status quo orders by the High Court, which was countered by the applicant citing modifications to the decree.
6. The Tribunal applied the Limitation Act, 1963 to the proceedings, finding the application within the limitation period.
7. The applicant was deemed a Financial Creditor under the Code, meeting the criteria of financial debt and default occurrence.
8. The application under Section 7 was admitted as the debt was proven due, and default by the respondent was established.
9. A moratorium was imposed under Section 14, prohibiting suits, asset transfers, and security enforcement against the respondent, with exceptions for essential services and sureties.

This detailed analysis covers the key issues addressed in the judgment, outlining the legal proceedings and decisions made by the Tribunal concerning the application for Corporate Insolvency Resolution Process.