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2019 (6) TMI 1495 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - clarificatory amendment - retrospective or prospective effect - Time Limitation - HELD THAT - It is a matter of record as well as by own assertion of the petitioner that the date of default is reflected as 04.07.2014 for all the 33 invoices. Material available on the record shows that the invoices against which the claim is made by the applicant company are dated 12.12.2013 to 13.05.14. The demand notice issued by the applicant company is dated 31.05.2018 and received by the respondent on 02.06.2018 which clearly indicates that the demand notice is sent after three years. That itself shows that the amount was due much prior to three years i.e. 13.05.2017 whereas the present application is filed on 31st July, 2018. Therefore, the claim made by the applicant/operational creditor is barred by limitation as it is being made after expiry of a period of three years. Implementation of Section 238A of Insolvency Bankruptcy Code, 2016, which has come into force on 06.06.2018 - HELD THAT - In view of the judgment of the Hon'ble Supreme Court, in STATE BANK OF INDIA VERSUS V. RAMAKRISHNAN AND ANR. 2018 (8) TMI 837 - SUPREME COURT , a clarificatory amendment has retrospective effect. That apart, it is also a matter on record that there was pre-existing dispute on account of cancellation of work order by the respondent. That, letter dated 26.06.2014, addressed to the operational creditor by the corporate debtor goes on to show that due to delay in completion of the supply, installation and commissioning of Solar Photovoltaic Power Plant, the corporate debtor cancelled some orders and against such action the operational creditor had made a representation-cum-demand for justice petition on 05.08.2014. The Adjudicating Authority is of the considered view that the petition is not maintainable - Petition dismissed.
Issues Involved:
1. Application under Section 9 of the Insolvency and Bankruptcy Code, 2016. 2. Limitation period for filing the application. 3. Pre-existing disputes between the parties. 4. Acknowledgment of debt by deduction of TDS. Detailed Analysis: 1. Application under Section 9 of the Insolvency and Bankruptcy Code, 2016: The application was filed by the operational creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016, to initiate the Insolvency Resolution Process against the corporate debtor. The operational creditor, engaged in the business of manufacturing and installing Solar Photovoltaic Power Plants, entered into a contract with the corporate debtor following a successful bid under a Request for Proposal (RFP). Despite completing the work and raising 33 invoices totaling ?2,42,60,362/-, the corporate debtor withheld the payment, leading the operational creditor to invoke arbitration and subsequently file for insolvency resolution. 2. Limitation period for filing the application: The respondent argued that the application was barred by limitation, citing the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018, which inserted Section 238A, making the Limitation Act, 1963 applicable to proceedings under the Code. The Supreme Court's judgment in B.K. Educational Services v. Parag Gupta & Associates established that the Limitation Act applies retrospectively from the Code's commencement on 01.12.2016. The Tribunal found that the invoices dated from 12.12.2013 to 13.05.2014, with the default date being 04.07.2014, meant the claim was time-barred as the application was filed on 31st July, 2018, beyond the three-year limitation period. 3. Pre-existing disputes between the parties: The respondent contended that there were pre-existing disputes, as evidenced by the cancellation of some work orders due to delays and subsequent arbitration proceedings. The Tribunal noted that the operational creditor had made a representation against the cancellation and that arbitration was ongoing, with an appeal against the arbitration award pending before the District Court, Bhopal. The Supreme Court in Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd. emphasized that the Insolvency and Bankruptcy Code is not a substitute for a recovery forum and should not be invoked where real disputes exist. 4. Acknowledgment of debt by deduction of TDS: The operational creditor argued that the corporate debtor acknowledged its liability by deducting TDS on the outstanding amount and issuing a TDS certificate. However, the respondent clarified that mere deduction of TDS does not constitute an admission of liability or acknowledgment of dues. The Tribunal agreed, noting that the acknowledgment must be within the limitation period to extend it, which was not the case here. Findings and Conclusion: The Tribunal concluded that the application was barred by limitation, as it was filed after the three-year period from the date of default. Additionally, there were pre-existing disputes between the parties, which further rendered the application non-maintainable. The Tribunal dismissed the petition, reiterating that the Insolvency and Bankruptcy Code is not intended to be a substitute for a recovery forum where genuine disputes exist. Consequently, Company Petition No. CP (IB) 373 of 2018 was dismissed with no order as to costs.
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