2018 (8) TMI 1871 - Tri - Insolvency and Bankruptcy

Maintainability of petition - Initiation of Corporate Insolvency Resolution Process - Time limitation - Corporate Debtor - inability to liquidate its outstanding dues - Section 9 of Insolvency Bankruptcy Code - HELD THAT - The submissions made by the Corporate Debtor in respect of limitation do not merit any consideration as various amounts have been paid to reduce the liability in the court at Gurgaon. Payments have been made on adhoc basis and not invoice wise. Payments have also been made during the period of Limitation thereby extending the same from time to time. As noted above, the last payment made in acknowledgment of the existing debt was on 18.03.2016, therefore the aforesaid amount is legally recoverable. In the absence of any real dispute, the prayer of the operational Creditor has to be admitted. Petition admitted - moratorium declared.

Summary

Issues:
1. Initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency Bankruptcy Code.
2. Dispute over outstanding dues and liability between Operational Creditor and Corporate Debtor.
3. Validity of demand notice under Section 8 of the Code.
4. Defense raised by Corporate Debtor regarding limitation and interest claimed by Operational Creditor.
5. Appointment of an Interim Resolution Professional (IRP) and directions for further proceedings.

Issue 1: Initiation of Corporate Insolvency Resolution Process
The petition was filed under Section 9 of the Insolvency Bankruptcy Code seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor due to its failure to liquidate outstanding dues.

Issue 2: Dispute over outstanding dues and liability
The Operational Creditor supplied goods on credit to the Corporate Debtor and raised invoices totaling &8377; 66,10,786, with 51 cheques issued by the Corporate Debtor between April and June 2014. The cheques were dishonored, leading to pending cases under the Negotiable Instruments Act. Despite partial payments, a significant balance remained unpaid, prompting the petition.

Issue 3: Validity of demand notice
A demand notice was issued under Section 8 of the Code, accompanied by necessary documents, claiming interest on the outstanding debt. The notice was sent due to the Corporate Debtor's failure to respond or clear the liability.

Issue 4: Defense raised by Corporate Debtor
The Corporate Debtor argued that the invoices were time-barred and disputed the interest claimed by the Operational Creditor. However, the acknowledgment of partial payment of the debt undermined the limitation defense, as payments were made within the limitation period, rendering the outstanding amount legally recoverable.

Issue 5: Appointment of an Interim Resolution Professional (IRP)
An IRP was appointed to oversee the resolution process, with specific directions to comply with statutory requirements. The IRP was instructed to submit a report within the stipulated period, and the case was scheduled for further consideration on a specified date.

This judgment highlights the legal intricacies involved in insolvency proceedings, emphasizing the importance of adherence to statutory provisions and timely resolution of disputes between creditors and debtors. The decision to admit the petition and initiate the Corporate Insolvency Resolution Process underscores the significance of upholding the legal framework to address financial insolvency effectively.