2019 (10) TMI 1271 - Tri - IBC

Maintainability of petition - corporate debtor failed to make repayment of its debt - existence of debt and dispute or not - time limitation - HELD THAT - From the perusal of Section 18(1), it is apparent that acknowledgment of liability must be made before expiry of limitation period for filing the suit. If limitation has already expired, it would not revive under Section 18. In the present case case, last payment has been made in July, 2015 and e-mail has been sent in April, 2016, which is well before the expiry period of three years. Hence, first hurdle is crossed - thus, it is clear that the claim of the Corporate Debtor is not valid because such explanation clearly states that a communication may be addressed to a person other than a person related to the property or right. The Corporate Debtor has also not been able to produce any record to show that such person was not authorized to send such e-mail. Though such claim has been made, the e-mail ID contains particulars of the Corporate Debtor, hence, it cannot be said that e-mail has not been sent for and on behalf of the Corporate Debtor. Whether decision of the Hon ble Calcutta High Court in the case of Tata Steel Limited Versus Puja Ferro Alloys Limited' 2010 (9) TMI 1230 - CALCUTTA HIGH COURT relied on by the Corporate Debtor is applicable or not? - HELD THAT - In view of the provisions of Section 238 and Section 3 (6) of IBC, 2016, we are of the considered view that Section 5 of the Information Technology Act, 2002 will not be applicable, hence, for this reason also the said decision cannot be said to be applicable here. Although Limitation Act, 1963 is applicable to the proceedings / appeals before the adjudicating authority but the provisions of Limitation Act have to be applied to the extent such provisions are consistent with IBC, 2016 because in Section 238 the words as far as may be have been used. This proposition of law is well settled by Catena of decisions. Thus, the said e-mail constitutes an acknowledgment of debt and limitation would be counted from this date. When it is so the petition is maintainable as debt is not barred by limitation - Since, compliance to the provision of Section 8 and 9 have been made hence, this Petition is maintainable on that count as well. Application admitted - moratorium declared.

Summary

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Limitation period and acknowledgment of debt
3. Pre-existing disputes and validity of claims
4. Compliance with procedural requirements under the Insolvency and Bankruptcy Code (IBC)

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The petition was filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code (IBC) 2016, read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, to initiate CIRP against the Corporate Debtor. The amount of default was stated at ?30,82,772/- with interest of ?12,60,812/-, totaling ?43,43,584/-. The period of default was from 10.07.2015 to 05.12.2018.

2. Limitation Period and Acknowledgment of Debt:
The Operational Creditor contended that the debt was acknowledged through an email dated 19.04.2016, which included a statement of account for the Financial Year 2014-15 showing the outstanding sum. The Corporate Debtor argued that the email did not constitute a proper acknowledgment under Section 18 of the Limitation Act, 1963, as it was not addressed to the Operational Creditor and lacked digital signatures as required under Section 5 of the Information Technology Act, 2000. The tribunal found that the email was sent before the expiration of the limitation period and constituted an acknowledgment of debt, thus the debt was not barred by limitation.

3. Pre-existing Disputes and Validity of Claims:
The Corporate Debtor claimed pre-existing disputes regarding the shortfall in the quantity of iron ore fines and transit losses, and quality issues. They also contended that substantial payments had been made, including a sum of ?10,00,000/- as full and final payment. The tribunal noted that the Corporate Debtor failed to produce any record to substantiate that the person who sent the email was unauthorized. The tribunal held that the email constituted an acknowledgment of debt, and the claim was not barred by limitation.

4. Compliance with Procedural Requirements under IBC:
The tribunal confirmed that compliance with Sections 8 and 9 of the IBC had been made. The tribunal admitted the application for initiating CIRP against the Corporate Debtor and declared a moratorium in accordance with Sections 13 and 15 of the IBC. An Interim Resolution Professional (IRP) was appointed from the panel approved by IBBI, and the Operational Creditor was directed to pay an advance fee to the IRP. The tribunal ordered the CIRP to be conducted in a time-bound manner as per Regulation 40A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

Conclusion:
The tribunal admitted the application for initiating CIRP against the Corporate Debtor, declared a moratorium, and appointed an IRP. The tribunal held that the email dated 19.04.2016 constituted an acknowledgment of debt, thus the claim was not barred by limitation. The tribunal directed the Operational Creditor to pay an advance fee to the IRP and ordered the CIRP to be conducted in a time-bound manner.