2019 (9) TMI 1386 - AT - Insolvency and Bankruptcy

Maintainability of application - Corporate Debtor failed to make repayment of its debt - mortgage of property - applicability of time limitation for mortgage - HELD THAT - It is evident that even if a debt is disputed, if the amount is more than Rupees One Lakh, the application under Section 7 is maintainable. What is the exact amount of claim, that is only considered at the stage of the 'Corporate Insolvency Resolution Process', when the 'Interim Resolution Professional' after collating the claims, including the claim of the Respondent, may ascertain what amount is payable to the Respondent. While condoning the delay of 12 days in preferring the appeal, the appeal is hereby disposed of

Summary

Issues:
1. Admittance of application under Section 7 of the I&B Code by the Adjudicating Authority.
2. Claim of limitation by the Appellant.
3. Dispute regarding the amount claimed by the Financial Creditor.
4. Interpretation of the provisions under Section 7 of the I&B Code regarding the admission of applications.

Analysis:
1. The appeal was filed by the Appellant, a shareholder of a company, against the order passed by the Adjudicating Authority admitting an application under Section 7 of the Insolvency and Bankruptcy Code. The Appellant argued that the claim was barred by limitation. It was noted that there was a mortgage of property by the Corporate Debtor, and a 12-year limitation period was prescribed under the Limitation Act, 1963 for such mortgages. The record showed that the aggrieved person had approached the Debt Recovery Tribunal, and the Appellant accepted the existence of the mortgage, establishing the limitation period for the claim.

2. The Appellant contended that there was a dispute regarding the amount claimed by the Financial Creditor. However, the Appellate Tribunal held that the existence of a dispute about the claimed amount was not sufficient grounds to set aside the impugned order admitting the application under Section 7 of the I&B Code. The Tribunal referred to the case of 'Innoventive Industries Ltd. v. ICICI Bank' where the Supreme Court clarified the provisions of the Code related to defaults, debts, and claims. The Court emphasized that even if a debt is disputed, as long as it exceeds one lakh rupees, the application under Section 7 remains maintainable. The exact amount of the claim would be determined during the Corporate Insolvency Resolution Process by the Interim Resolution Professional.

3. The Tribunal, based on the above observations, condoned the delay in filing the appeal and disposed of the matter, highlighting the importance of following the procedures outlined in the I&B Code. The judgment emphasized that the admission of an application under Section 7 is not contingent upon the absence of a dispute regarding the claimed amount, as the resolution process would address such disputes at a later stage. The Tribunal's decision underscored the significance of adhering to the statutory framework and procedures outlined in the insolvency laws for resolving corporate insolvency matters effectively.