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2019 (1) TMI 1769 - 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 - The given petition is to enforce the payment of money secured by a mortgage of immovable property. Hence, as per article 62 of the Limitation Act, 1963, the limitation period is twelve years from the date when the money sued for becomes due. Here, the Date of Default is 11.03.2015 as per Form I annexed to the petition and the petition is filed on 29.09.2017. In the absence of any specific denial or evidence from the side of the Debtor, it is unreasonable and unjustifiable not to believe the date of default as 11-3-2015. Hence, this Bench is of the view that in either case, i.e. three years or twelve years, this petition is well within limitation and the contention of the respondent that the debt is time barred is rejected. Filing of false and incomplete statements of accounts by the Petitioner - HELD THAT - Since the Corporate Debtor's case is that these entries in Bankers Book are not in accordance with the Bankers' Book Evidence Act, it is essential to look into Part V of Form I in respect to Entry 7 of this Part V. In Entry 7, two things are requisite, one is, it must be a copy of entry in a Bankers Book, two, that copy shall be attached with Form No. 1. If we see the definition of Bankers' Books , statement of account being a record used in the ordinary business of the Bank, it will fall within the definition of Bankers' Book. In Entry No. 7, what is asked to attach is the copy of the Bankers' Book, it has not been asked to file a certified copy as certified under Bankers Book Evidence Act. Therefore, it can't be said that unless a certified copy is filed, it should not be looked into. Existence of debt and default or not - HELD THAT - The Financial Creditor has established that the loan was duly sanctioned and duly disbursed to the Corporate Debtor but there has been default in payment of Debt on the part of the Corporate Debtor - the nature of Debt is a Financial Debt as defined under section 5 (8) of the Code. It has also been established that admittedly there is a Default as defined under section 3 (12) of the Code on the part of the Debtor. The Petitioner has not received the outstanding Debt from the Respondent and that the formalities as prescribed under the Code have been completed by the Petitioner, this Petition deserves 'Admission' - petition admitted - moratorium declared.
Issues Involved:
1. Whether the debt is time-barred and hit by limitation. 2. Whether the petition is defective due to false and incomplete statements of accounts. 3. The relevance of the Joint Lenders' Forum (JLF) in the context of the petition. 4. The validity of the assignment of Term Loan II and Term Loan III. 5. The existence of debt and default. Detailed Analysis: 1. Whether the debt is time-barred and hit by limitation: The primary question regarding the maintainability of the petition is whether the debt is time-barred. The Tribunal referred to the precedent set in B.K. Educational Services (P.) Ltd. v. Parag Gupta & Associates, which clarified that the Limitation Act applies to applications filed under sections 7 and 9 of the Insolvency and Bankruptcy Code (IBC) from its inception. The Tribunal concluded that the provisions of the Limitation Act do apply to the IBC, and the limitation period for enforcing payment of money secured by a mortgage of immovable property is twelve years as per Article 62 of the Limitation Act, 1963. The date of default being 11.03.2015 and the petition filed on 29.09.2017, the Tribunal held that the petition is well within the limitation period. 2. Whether the petition is defective due to false and incomplete statements of accounts: The Corporate Debtor argued that the statements of accounts annexed to the petition were false and not certified under the Bankers' Books Evidence Act, 1891. The Tribunal, however, referred to the case of Standard Chartered Bank v. Ruchi Soya Industries Ltd., stating that the requirement is to attach a copy of the Bankers' Book, not necessarily a certified copy. The Tribunal found that the petitioner's submission of account statements was adequate and did not render the petition defective. 3. The relevance of the Joint Lenders' Forum (JLF) in the context of the petition: The Corporate Debtor contended that the petitioner obstructed the formation of a JLF and did not abide by its decisions. The Tribunal, referencing Innoventive Industries Ltd. v. ICICI Bank, held that the adjudicating authority is not required to consider whether permission or consent has been obtained from the JLF for proceedings under section 7 of the IBC. The Tribunal emphasized that the lender's decision to form or join a lending forum is a prerogative that cannot be intervened by the borrower. 4. The validity of the assignment of Term Loan II and Term Loan III: The Corporate Debtor questioned the assignment of Term Loan II to the petitioner, arguing that part payment had already been made. The Tribunal found that the assignment of Term Loan III to the petitioner by IDFC was valid and legal. The Tribunal also rejected the contention that Term Loan II had been fully repaid, noting that the outstanding debt remained unpaid. 5. The existence of debt and default: The Tribunal concluded that the Financial Creditor had established the existence of a "Financial Debt" as defined under section 5(8) of the IBC and a "Default" as defined under section 3(12) of the IBC. The Tribunal found that the petitioner had not received the outstanding debt from the respondent and that the formalities prescribed under the Code had been completed. Consequently, the petition deserved admission. Conclusion: The Tribunal admitted the petition and appointed an Interim Resolution Professional (IRP) to conduct the Insolvency Resolution Process. The Tribunal also declared a moratorium prohibiting the institution of any suit before a court of law and the transfer or encumbrance of the debtor's assets. The IRP was directed to perform duties as assigned under sections 18 and 15 of the IBC and inform the Tribunal of the progress within 30 days. The commencement of the Corporate Insolvency Resolution Process was effective from the date of the order.
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