2018 (12) TMI 1709 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor - condonation of delay - time limitation - section 9 of the Insolvency and Bankruptcy Code, 2016, read with rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rule, 2016 - HELD THAT - In the present application, the applicant has failed to explain the delay as their claim pertains to the year 2012, which is beyond the limitation period of 3 years. The same should not be entertained for triggering Corporate Insolvency Resolution Process under Section 9 of the Code. The petition is dismissed, primarily on the grounds of limitation and also as the entire principal operational debt has been paid before filing of the petition. The only outstanding is of interest, which does not qualify as an operational debt u/s 5(21) of the Code.

Summary

Issues involved:
Application under section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency process. Dispute over unpaid invoices and interest claim. Interpretation of "Operational Debt" and "Operational Creditor."

Analysis:
The judgment delivered by the National Company Law Tribunal in New Delhi pertained to an application filed under section 9 of the Insolvency and Bankruptcy Code, 2016, seeking the initiation of Corporate Insolvency resolution process against a corporate debtor. The applicant alleged a business relationship with the respondent since 2012, involving the supply of goods like Iron & Steel and Coal. The applicant claimed unpaid invoices amounting to &8377; 54,46,440.26, out of which a partial payment was made by the respondent through demand drafts. The respondent contended that the principal amount had been settled, and the interest mentioned in the demand notice was disputed.

The Tribunal noted that the respondent had indeed paid the principal amount after the issuance of the demand notice, leaving only the interest amount in dispute. The applicant's claim, dating back to 2012, was considered beyond the limitation period of 3 years, thus not suitable for triggering the Corporate Insolvency Resolution Process under Section 9 of the Code. The judgment emphasized the definitions of "Operational Debt" and "Operational Creditor" under the Code, highlighting that the interest claim, disputed by the respondent, did not qualify as operational debt as the principal amount had been settled.

Ultimately, the petition was dismissed on grounds of limitation and full payment of the principal operational debt before the filing of the petition. The outstanding interest amount was deemed not qualifying as operational debt under the relevant section of the Code. The judgment concluded by clarifying that the dismissal should not prejudice the rights of the applicants before any other forum and directed the service of the order copy to the parties involved.