2019 (11) TMI 1402 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - debt due and payable or not - time limitation - HELD THAT - It is worthwhile to note that writ petition filed by the corporate debtor has been dismissed. Thus, at the first instance no merits have been found by the Honble High Court in the claims made by the corporate debtor in such petition though such decision has been challenged in appeal. Be that as it may, we have to see the nature of facilities and terms and conditions related thereto to ascertain whether debt is due or payable or not. Original term loan had been repaid. Thereafter, fund based and non fund based credit facilities have been obtained. The fund based credit facilities comprises of cash credit against hypothecation of stocks and book debts and working capital term loan. Debt due and payable or not - HELD THAT - There is no merit in the claim of the corporate debtor that debt is not due and payable. As regard to validity of deed of assignment on account of multiple parties being involved, insufficient stamp duty, consent of corporate debtor, we note that these issues have been raised earlier in different cases before us and after considering the scheme and objects of Insolvency Bankruptcy Code, 2016 along with specific provisions of Sec.3(6) containing definition of term claim and Sec.238 of Insolvency Bankruptcy Code, 2016, these aspects have not found favour - Accordingly, these aspects are not relevant for petition filed under Sec. 7 of the Insolvency Bankruptcy Code, 2016. Accordingly, this contention of the corporate debtor is also rejected. Time Limitation - HELD THAT - If averment made before a court of law or any statutory authority cannot be constituted as an acknowledgment of debt then that would render such averment meaningless. Legally such averment bind party making them. Doctrine of estoppel applies without any restriction in commercially and legally. Accordingly, such statement constitute acknowledgment - if such promise is made after expiry of original limitation period also, the limitation period gets extended as condition of acknowledgment before expiration exists only under Sec. 18 of the Limitation Act, 1963. The petition is otherwise complete in all respects and defect free. Application admitted - moratorium declared.

Summary

Issues:
1. Application under Sec.7 of Insolvency & Bankruptcy Code, 2016 for corporate insolvency resolution process initiation.
2. Validity of debt acknowledgment by the corporate debtor.
3. Challenge on the debt's due and payable status.
4. Validity of deed of assignment.
5. Limitation period for debt acknowledgment.
6. Appointment of Interim Resolution Professional (IRP) and fee payment.

Issue 1: Application under Sec.7 of Insolvency & Bankruptcy Code, 2016 for corporate insolvency resolution process initiation:
The financial creditor, Asset Reconstruction Company (India) Ltd., filed an application under Sec.7 of the Insolvency & Bankruptcy Code, 2016 against Dagcon (India) Private Limited for default amounting to &8377; 74,62,39,740, seeking to initiate the corporate insolvency resolution process.

Issue 2: Validity of debt acknowledgment by the corporate debtor:
The financial creditor contended that the corporate debtor's actions, including filing a writ petition acknowledging the debt, constituted acknowledgment of debt within the meaning of Sec. 18 of the Limitation Act, 1963. The corporate debtor challenged this assertion, claiming that no valid acknowledgment of debt existed beyond the initial writ petition.

Issue 3: Challenge on the debt's due and payable status:
The corporate debtor argued that no debt was due and payable as the NPA classification and subsequent actions by the bank were under legal challenge. However, the tribunal found that the debts were due and payable based on the terms of the credit facilities, including cash credit, working capital term loan, and bank guarantees.

Issue 4: Validity of deed of assignment:
The corporate debtor raised concerns about the validity of the deed of assignment due to stamp duty issues and lack of corporate debtor consent. The tribunal ruled that these issues were not relevant for the insolvency petition under Sec.7 of the Insolvency & Bankruptcy Code, 2016.

Issue 5: Limitation period for debt acknowledgment:
The tribunal held that the statements made by the corporate debtor before the court constituted acknowledgment of debt, extending the limitation period under Sec.18 of the Limitation Act, 1963. The tribunal emphasized the legal significance of such acknowledgments in commercial and legal contexts.

Issue 6: Appointment of Interim Resolution Professional (IRP) and fee payment:
The tribunal approved the appointment of Shri Bimal Agarwal as the Interim Resolution Professional and directed the financial creditor to pay an advance fee of &8377; 2,00,000 to the IRP. The resolution professional was tasked with conducting the Corporate Insolvency Resolution Process in a time-bound manner.

Overall, the tribunal admitted the application, declared a moratorium, and ordered the appointment of an IRP for further proceedings, ensuring compliance with the Insolvency & Bankruptcy Code, 2016.