2019 (9) TMI 1330 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - time limitation - HELD THAT - During the course of hearing the respondent-corporate debtor has never denied the liability due nor has challenged the veracity of the invoices being attached as Annexure A-3 of the petition. Hence there is no dispute as to the liability in respect of supplies in the form of grocery and goods between the operational creditor and the respondent-corporate debtor. We agree with the submission made by the respondent s counsel with regard to the limitation. Admittedly the instant petition is filed basing on the goods supplied in the month of September 2014 and the corresponding invoices issued thereon i.e. in the month of September 2014 itself. Thereafter there was no payment made by the respondent-corporate debtor which can extend the period of limitation. There was no acknowledgement of debt except seeking information with regard to the claim of the petition by the Administrator of the respondent-corporate debtor. The petition is dismissed being barred by the period of limitation.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016 based on unpaid operational debt; Jurisdiction of the Tribunal; Validity of demand notices; Dispute regarding unpaid invoices and returned goods; Appointment of Administrator and its impact on insolvency proceedings; Limitation period for filing the petition.

Analysis:
1. Initiation of Corporate Insolvency Resolution Process: The petition was filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor due to unpaid operational debt amounting to ?42,04,186.08. The Operational Creditor had issued invoices and granted a credit period to the Corporate Debtor for payment.

2. Jurisdiction of the Tribunal: The Corporate Debtor's registered office being within the jurisdiction of the Tribunal was established, granting the Tribunal the authority to adjudicate on the matter regarding the unpaid operational debt and initiation of CIRP.

3. Validity of Demand Notices: The Operational Creditor had issued demand notices in Form No. 3 to the Corporate Debtor, followed by a fresh demand notice after rectifying a defect in the initial notice. The notices were served through Registered AD and Speed Post, providing a legal basis for the initiation of insolvency proceedings.

4. Dispute Regarding Invoices and Returned Goods: The Corporate Debtor raised concerns about the details and support for the claimed goods and grocery supplies by the Operational Creditor. However, the Corporate Debtor did not deny the liability due, nor challenge the validity of the invoices issued by the Operational Creditor.

5. Appointment of Administrator and Impact on Insolvency Proceedings: The Corporate Debtor had an Administrator appointed by the Company Law Board, which was argued to hinder the insolvency process. The Tribunal ruled that the appointment of the Administrator did not impede the initiation of insolvency proceedings against the Corporate Debtor.

6. Limitation Period for Filing the Petition: The Tribunal considered the limitation period for filing the petition, noting that the petition was time-barred as it was based on invoices from September 2014, and no payment or acknowledgment extended the limitation period. The Tribunal dismissed the petition on grounds of being barred by limitation, citing relevant legal precedents.

This detailed analysis covers the key issues addressed in the judgment, providing a comprehensive understanding of the legal proceedings and the Tribunal's decision regarding the initiation of the Corporate Insolvency Resolution Process.