2020 (8) TMI 867 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - threshold limit of minimum default - petition filed within time limitation or not - HELD THAT - In the present case, it would be seen that the petition has been filed under Insolvency Bankruptcy Code on 23.09.2019 which is within 3 years from the due date with regard to only one invoice i.e. Invoice No. 16011613002088, dated 09.09.2016, after considering the grace period of 20 days as agreed between the parties in terms of clause 2.4 of the Agreement dated 03.03.2016 as the right to sue under this invoice accrues on 29.09.2016. For the other two invoices for which the due date is 14.08.2016 and 21.08.2016 are clearly barred by limitation as the present petition has been filed on 23.09.2019. The invoice dated 09.09.2016 is only for an amount of ₹ 36,074/- and even if the interest @ 24% is added, the total amount comes to ₹ 61,288/-. This is well below the threshold limit of minimum amount of default of ₹ 1,00,000/- for any petition under section 7 or 9 to be considered/ admitted by this Tribunal in terms of Section 4 of the Insolvency and Bankruptcy Code, 2016. Petition dismissed.

Summary

Issues:
1. Alleged default in payment by Corporate Debtor to Operational Creditor.
2. Validity of the petition filed under Section 9 of Insolvency and Bankruptcy Code, 2016.
3. Disputes raised by the Corporate Debtor regarding the alleged debt and invoices presented by the Operational Creditor.
4. Application of the Limitation Act to the petition filed under the Insolvency and Bankruptcy Code.

Issue 1: Alleged default in payment by Corporate Debtor to Operational Creditor:
The petition was filed by the Operational Creditor alleging that the Corporate Debtor defaulted on a payment of ?2,18,437, which included principal amount and interest. The Operational Creditor provided details of the invoices issued to the Corporate Debtor, the due dates, and the total amount due, seeking admission of the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016.

Issue 2: Validity of the petition filed under Section 9 of Insolvency and Bankruptcy Code, 2016:
The Operational Creditor detailed the contract between the parties, the issuance of invoices, and the failure of the Corporate Debtor to make payments within the stipulated time frame. The Operational Creditor also sent a demand notice to the Corporate Debtor under the Insolvency and Bankruptcy Code, 2016, after receiving no response to clear the outstanding payments. The Operational Creditor sought initiation of Corporate Insolvency Resolution Process and appointment of an Interim Resolution Professional.

Issue 3: Disputes raised by the Corporate Debtor regarding the alleged debt and invoices presented by the Operational Creditor:
The Corporate Debtor raised several disputes, including the lack of supporting documents for the alleged services provided, pre-existing disputes between the parties, and the contention that the Corporate Debtor and another entity were distinct. The Corporate Debtor argued that the Operational Creditor's actions were misleading and fraudulent, aiming to extract money illegally and unethically.

Issue 4: Application of the Limitation Act to the petition filed under the Insolvency and Bankruptcy Code:
The Corporate Debtor contended that the invoices presented by the Operational Creditor were barred by limitation, citing a Supreme Court judgment on the applicability of the Limitation Act to insolvency applications. The Tribunal analyzed the due dates of the invoices and found that one invoice fell within the limitation period, while the others were time-barred. As the total amount due did not meet the threshold for consideration under the Code, the petition was dismissed.

In conclusion, the Tribunal dismissed the petition based on the limitation period for two invoices and the insufficient total amount due. The judgment highlighted the importance of adherence to legal timelines and thresholds in insolvency proceedings, emphasizing the need for clear documentation and compliance with statutory requirements.