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2019 (10) TMI 1272 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - time limitation - HELD THAT - In sum and substance, the authority appears to have been vested in the person who has acted in bonafide manner then such technical reasons should not be given an overriding effect on the merits of case. It is noted that the Board Resolutions authorizing the applicant is also attached - no merits in the contention of Corporate Debtor. Time Limitation - HELD THAT - It is not in dispute that provisions of Limitation Act, 1963 are applicable to the proceedings under IBC,2016. In various cases, the Hon'ble Supreme Court has held that in case of delay, the limitation could be extended Under Section 18 of Limitation Act, 1963 by the act of parties as prescribed thereunder and the application can be filed after getting condonation of delay under Section 5 of Limitation Act, 1963. In the present case, it is not in dispute that in the balance-sheet for the financial year ended on 31.03.2016, the Corporate Debtor has categorically admitted the amount outstanding, amount of instalment payable and default in payment of interest. Copy of the relevant pages have been placed on pages 930 and 931 of Paper Book. It is also not in dispute that Corporate Debtor submitted a proposal for revival on 16.02.2015 in which the amount of loan has been admitted - As held in catena of decisions that presentation of debt in the balance-sheet amounts to acknowledgement of debt. Thus, taking into consideration of provisions of Section 18 of Limitation Act, 1963 and this legal proposition together, the presentation of outstanding loan and fact of default in the balance-sheet as on 31 st March, 2016 of the Corporate Debtor amounts to valid acknowledgement of the loan, hence, limitation has to be counted from this date - in this view of the matter there is no need to seek condonation of delay under Section 5 of Limitation Act, 1963 in filing of application as canvassed by the Corporate Debtor. As per Regulation 8(2) of IBBI ( Insolvency Resolution Process for Corporate person) Regulation, 2016, the existence of debt due to the Financial Creditor may be proved on the basis of record available in information utility or other relevant documents or financial statements showing that the debt has not been paid. Thus, on this basis also existence of debt due and payable in alive mode stands proved. The application filed under Section 7 of IBC is complete in all respects - Application admitted - moratorium declared.
Issues Involved:
1. Competency of the person who signed and filed the application under Section 7 of the IBC, 2016. 2. Whether the debt is barred by limitation. Issue-wise Detailed Analysis: 1. Competency of the Person Who Signed and Filed the Application: The Corporate Debtor contended that the petition was not filed by a competent person, asserting that the individual lacked the requisite letter of authority. They argued that the principle "delegatee cannot delegate" was violated, and no Board resolution was attached to authorize the filing. They relied on the decision in Palogix Infrastructure Private Limited Vs ICICI Bank Limited to support their claim. In response, the Financial Creditor's counsel argued that Mr. Arvind Kumar Gupta was competent to act on behalf of the Punjab National Bank and had the authority to institute legal proceedings. They referred to the decision in Palogix Infrastructure Private Limited, which held that an authorized person, not necessarily a Power of Attorney holder, could file the application. The tribunal reviewed the relevant documents and concluded that the signatory had the authority to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The tribunal found the Board Resolutions authorizing the applicant were attached and rejected the Corporate Debtor's contention, stating that technical reasons should not override the merits of the case. 2. Whether the Debt is Barred by Limitation: The Corporate Debtor argued that the debt was barred by limitation, as the first default occurred in March 2015 and the account was classified as NPA in June 2015. They contended that the application under Section 7, filed on 11.09.2018, was beyond the three-year limitation period. They cited decisions from the Hon'ble Supreme Court in B.K. Educational Services Pvt. Ltd., Gaurav Hargovindbhai Dave, and Jignesh Shah & another to support their claim. The Financial Creditor countered that the debt was acknowledged in the balance-sheet for the financial year ending 31.03.2016, which extended the limitation period as per Section 18 of the Limitation Act, 1963. The tribunal noted that the Corporate Debtor had admitted the outstanding amount and default in payment of interest in the balance-sheet. The tribunal held that this acknowledgment extended the limitation period, making the application timely. The tribunal also referenced the decision in Jignesh Shah & another, which supported the view that acknowledgment in the balance-sheet extends the limitation period. The tribunal further stated that as per Regulation 8(2) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulation, 2016, the existence of debt due to the Financial Creditor could be proved through financial statements showing that the debt had not been paid. The tribunal dismissed the Corporate Debtor's reliance on the decision in M/S Prowess International (P) Limited Vs M/S Shyam Steel Industries Limited, noting that subsequent judicial decisions had held that the presentation of debt in financial statements amounts to acknowledgment. Conclusion: The tribunal found the application under Section 7 of IBC complete in all respects, approved the name of the Interim Resolution Professional (IRP), and declared a moratorium in accordance with Sections 13 and 15 of the IBC, 2016. The tribunal ordered the initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor and directed the necessary public announcements and actions as per the IBC, 2016. The case was listed for a progress report on 04.12.2019.
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