2019 (1) TMI 1825 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - time limitation - pre existing dispute or not - Whether the petitioner made out a case to commence the Insolvency Resolution Process against the Respondent? Time Limitation - HELD THAT - It is a well settled principle of law that the Law of Limitation is applicable to the proceedings before the Adjudicating Authority under IBC 2016. It is also a fact on record that the petitioner has stated that the amount is due for the period from 14.06.2012 to 20.07.2013 therefore the corporate debtor contended that the limitation expired in the month of June 2016. However it is to be noted that on the continuous perusal of the petitioner the Corporate Debtor has issued a cheque for 2, 00, 000/- on 02.05.2017 which was bounced thereafter. Since the Corporate Debtors has issued a cheque on 02.05.2017 the fresh period limitation starts from the said date and therefore the contention of the Corporate Debtor has to fail - the petition is not barred by limitation. Pre-existing dispute or not - HELD THAT - It is on record that the petitioner has filed an application before MSEFC on 20.12.2017 and thereafter issued the demand notice on 15.02.2018. It is on record that the application was pending before MSEFC before issuing the demand notice and it could only be taken as pre-existing dispute - It is well settled principal of law that when there is pre-existing dispute the adjudication authority has no other option except reject the application filed under section 9 of the Code. The dispute pending before MSEFC not spurious hypothetical or illusory but it is an admitted fact on record. The Corporate Debtor substantiated that there is a pre-existing dispute. Whether the petitioner made out a case to commence the Insolvency Resolution Process against the Respondent? - HELD THAT - The petitioner has not made out any case for invoking the jurisdiction of this Tribunal to commence corporate insolvency process against the Respondent and this issue is also answered in favour of the corporate debtor. Petition dismissed.

Summary

Issues Involved:
1. Whether the petition is barred by limitation?
2. Whether there is a pre-existing dispute as claimed by the Corporate Debtor?
3. Whether the petitioner made out a case to commence the Insolvency Resolution Process against the Respondent?

Issue (a):
The Law of Limitation is applicable to proceedings under IBC, 2016. The Corporate Debtor argued that the limitation expired in June 2016, based on the period of due amount. However, a cheque issued by the Corporate Debtor on 02.05.2017 restarted the limitation period. Thus, the petition is not barred by limitation.

Issue (b):
The petitioner had filed an application with MSEFC before issuing a demand notice, indicating a pre-existing dispute. Citing the judgment in M/s. Mobilox Innovations Private Limited Vs Kirusa Software Private Limited, the Corporate Debtor claimed a genuine dispute based on faulty accessories discussed in email correspondences. The existence of a pre-existing dispute led to the rejection of the application under section 9 of the Code.

Issue (c):
Given the presence of a pre-existing dispute, the Tribunal found that the petitioner failed to establish grounds for initiating corporate insolvency proceedings against the Respondent. Consequently, the petition was dismissed.

In conclusion, the Tribunal dismissed the petition based on the absence of a valid case for invoking insolvency proceedings against the Corporate Debtor, as the pre-existing dispute and lack of merit in the petitioner's claims were established during the proceedings.