2019 (10) TMI 1457 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not. Whether the Respondent owes a Financial Debt to the Petitioners? - HELD THAT - The Respondent availed the credit facility upon execution of loan agreements and mortgage by deposit of title deeds. Financial Debt defined in section 5 (8) of the Code inter alia includes money borrowed against payment of interest. Admittedly credit facility carried an interest on money advanced. The credit was advanced against the consideration for time value of money. The plea raised by the Respondent that the project could not be completed due to the NOCL s inability to set up the refinery and the reasons for the Respondent s inability to repay the loan as defence would be irrelevant - Admittedly the Respondent has not repaid the loan - Answered in affirmative. Whether the Respondent has defaulted in repayment of the Debt? - HELD THAT - The present Application being barred by limitation cannot be admitted - answered in the negative. The Company Petition be and the same is rejected on contest. The rejection of this Application however shall not be a bar for the Financial Creditors to recover the debt under law in any other Forum - Application dismissed.

Summary

Issues:
I. Whether the Respondent owes a Financial Debt to the Petitioners?
II. Whether the Respondent has defaulted in repayment of the Debt?
III. Whether the Petition merits admission?

Issue Nos. 1 & I:
The Respondent entered into a Terminal Service Agreement (TSA) with another party for a storage facility project and availed credit from consortium banks. The Petitioners, as members of the consortium, sanctioned loans. The Respondent defaulted in repayment, leading to the Petition under section 7 of the Insolvency and Bankruptcy Code, 2016. The Respondent's defense citing the project's non-completion due to external factors was deemed irrelevant. The Respondent's failure to repay the loan was established, affirming both issues.

Issue No. II:
The Petitioners claimed the default date as 16.03.2015, with the Petition filed on 25.09.2018, over three years post-default. Citing a Supreme Court decision, it was ruled that the application was time-barred, falling under the residuary article 137. As the application was barred by limitation, it was rejected, leading to the denial of admission for the Petition. The rejection did not prevent the Financial Creditors from seeking debt recovery through other legal avenues.

The judgment concludes by rejecting the Company Petition on contest due to being time-barred, with no order as to costs. The rejection does not hinder the Financial Creditors from pursuing debt recovery through alternative legal channels.