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2019 (9) TMI 1388 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Loan declared as NPA - financial creditor or not - applicability of time limitation. Whether the applicant can be said to be financial creditor on the basis of the deed of assignment dated March 19 2017? - HELD THAT - The law requires that there must be legally assignment of debt. The deed of assignment is produced as annexure P3. It is prepared on stamp paper of 100. It has been registered duly before the Registrar of Assurance Kolkata. Prima facie we hold that it is legal and valid deed of assignment of debt. If at all it is on insufficient stamp paper then law requires that the deficiency of paying stamp can be recovered with penalty. The deed cannot be said to be illegal thereby - the applicant herein is the financial creditor within the meaning of section 5(7) of the IBC - answered in affirmative. Whether the debt is time-barred? - HELD THAT - It was expected from the financial creditor and earlier to that by the bank to file proceeding against the corporate debtor within three years from the date on which the account of the corporate debtor became a NPA. In this case the account declared to be a NPA on March 31 2014 proceeding is filed on October 31 2018 - From the perusal of those financial papers of the corporate debtor it is seen that corporate debtor noted that they have to pay the debt of United Bank of India. Their account is declared as a NPA. In short in the year 2016 the corporate debtor in its balance-sheet acknowledged the debt to be payable by them which is claimed herein by the financial creditor. This acknowledgment of debt in its balance-sheet by the corporate debtor in the year 2016 has brought the claim of financial creditor within period of limitation. It is filed well within period of limitation. The debt is not time-barred - Answered in negative. There is no dispute that the corporate debtor is liable to pay debt more than 21 crores. It is also not in dispute that the corporate debtor has committed default in paying the debt. By virtue of corporate debtor s admission about the debt in its balance-sheet for the year 2016 this proceeding appears to have been filed within period of limitation - the application is defect-free - application admitted - moratorium declared.
Issues Involved:
1. Whether the applicant can be said to be a financial creditor on the basis of the deed of assignment dated March 19, 2017. 2. Whether the debt is time-barred. Issue-wise Detailed Analysis: 1. Whether the applicant can be said to be a financial creditor on the basis of the deed of assignment dated March 19, 2017: The applicant, UV Asset Reconstruction Co. Ltd., filed an application under section 7 of the Insolvency and Bankruptcy Code, 2016 (I and B Code) against the corporate debtor, Kalpataru Cold Storage P. Ltd., for initiating the corporate insolvency resolution process (CIRP) due to a default in paying a financial debt of ?21,61,12,013. The corporate debtor argued that the deed of assignment, on which the application was based, was not legal and valid, and thus, the applicant could not be considered a financial creditor under section 5(7) of the IBC. The Tribunal examined the deed of assignment, which was prepared on stamp paper of ?100 and duly registered before the Registrar of Assurance, Kolkata. The Tribunal held that the deed was legal and valid, and any deficiency in stamp duty could be rectified with a penalty. The Tribunal referred to a precedent from the National Company Law Appellate Tribunal (NCLAT) in Lalan Kumar Singh v. Phoenix ARC P. Ltd., which stated that the legality of the deed of assignment could not be challenged during the admission of an application under section 7 of the I and B Code. Consequently, the Tribunal concluded that the applicant was a financial creditor within the meaning of section 5(7) of the IBC, answering the first issue in the affirmative. 2. Whether the debt is time-barred: The corporate debtor contended that the debt was time-barred as the loan account was declared a Non-Performing Asset (NPA) on March 31, 2014, and the application was filed beyond the three-year limitation period prescribed by Article 137 of the Limitation Act. The financial creditor argued that the limitation period stopped running when the bank filed a recovery proceeding in the Debts Recovery Tribunal, Kolkata. However, the Tribunal, referring to the Supreme Court's decision in Gaurav Hargovindbhai Dave v. Asset Reconstruction Co. (India) Ltd., held that Article 137 applied to applications under section 7 of the IBC, and the limitation period did not stop running due to the recovery proceeding. Despite this, the Tribunal noted that the corporate debtor's balance sheet for the year ending March 2016 acknowledged the debt, which brought the claim within the limitation period. Therefore, the Tribunal held that the debt was not time-barred, answering the second issue in the negative. Conclusion: The Tribunal found no dispute regarding the corporate debtor's liability to pay the debt and its default in payment. The acknowledgment of the debt in the corporate debtor's balance sheet for the year 2016 ensured that the application was filed within the limitation period. The Tribunal admitted the application under section 7 of the IBC, initiating the CIRP for the corporate debtor. The Tribunal also appointed an interim resolution professional (IRP) and issued a moratorium order as per sections 13 and 14 of the IBC. The IRP was directed to make a public announcement and conduct the CIRP in a time-bound manner. The financial creditor was instructed to pay an advance fee to the IRP, and the Registry was directed to communicate the order to the relevant parties. The matter was listed for a progress report on November 8, 2019.
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