2019 (9) TMI 1296 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment - existence of debt and dispute - time limitation - HELD THAT - The banks were pursuing the litigations on the basis of legal provisions as were available earlier. It cannot be said that the debt was time barred. This is apart from the fact that admittedly Respondent has been showing the debt in its balance sheet even right up to 2015 and 2016. Only because the Respondent has added note in the balance sheet that litigations regarding the debt are pending does not mean that existence of debt outstanding is denied. With the Application there were already sufficient documents showing existence of debt and particulars were given of the litigations pending and thus the Adjudicating Authority should not have dismissed the Application holding that the debt was time barred. The matter is remitted to the Adjudicating Authority (National Company Law Tribunal New Delhi Bench) - The Application under Section 7 is restored.

Summary

Issues:
1. Appellant's claim of outstanding debt due from Corporate Debtor.
2. Adjudicating Authority's dismissal of the Application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
3. Appellant's appeal against the Impugned Order.

Analysis:
1. The Appellant, as the assignee of the debt from IDBI Bank and Axis Bank, filed an Application under Section 7 of the IBC claiming an outstanding debt of &8377; 39,20,76,489 due from the Corporate Debtor. The Adjudicating Authority dismissed the Application, stating that there was nothing to extend the limitation period. The Appellant, in the appeal, presented various documents to prove the enforceability of the debt, including litigations initiated by the banks and the Corporate Debtor's balance sheet reflecting the loans.

2. The Respondent argued that the debt became time-barred as per the Limitation Act and cited a Supreme Court judgment to support this claim. The Respondent denied that the balance sheet acknowledgment constituted an acknowledgment under the Limitation Act. The Appellate Tribunal reviewed the records, highlighting the loan transactions, mortgage deeds, and litigations initiated by both banks, concluding that the debt was not time-barred as the banks had taken legal actions before the IBC came into force.

3. The Appellate Tribunal disagreed with the Adjudicating Authority's decision, stating that there were sufficient documents to prove the existence of the debt and pending litigations. The Tribunal allowed the appeal, quashed the Impugned Order, and remitted the matter to the Adjudicating Authority for further proceedings. The Corporate Debtor was given the opportunity to pay the dues before the admission order. No costs were awarded in this judgment.