2020 (1) TMI 1527 - Tri - Insolvency and Bankruptcy

Maintainability of application - Applicant has locus to file this Application or not - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT - It is true that the Applicant has not placed any material showing that this debt was acknowledged in between 2004 and 2008. When three years have been passed after loan acknowledgement, such claim is to be treated as time barred debt. Any acknowledgement after expiry of three years, date of acknowledgement cannot be called as acknowledgement as stated under Sec. 18 of the Limitation Act. We are of the view that no acknowledgement is present to say that this debt is not time barred, for this Applicant has filed Final Order of the DRT before admission of the case by putting it to the notice of the Corporate Debtor, this Bench can even admit this Insolvency and Bankruptcy Application based on the direction given the DRT against the Corporate Debtor by taking the Order passed by the DRT for initiation of CIRP into consideration. For the Debt Recovery Tribunal having passed the order for payment, it is safely inferred that this debt is not time barred, therefore, we hereby admit this Insolvency Bankruptcy Application. In Section 7 cases, if debt and default are proved as in existence, even if any difference to the quantum of the claim mentioned in the application and the quantum of claim due and outstanding against the Corporate Debtor, for the Applicant having proved the existence debt and default, merely by seeing the difference in the quantum, the Petition shall not be dismissed against the Corporate Debtor - Moreover IRP/RP, as the case may be, is entitled to verify the claim and modify the same, therefore the difference in quantum cannot militate against the purpose and object of admission u/s. 7 of the Code. Application admitted - moratorium declared.

Summary

Issues:
1. Maintainability of the Insolvency and Bankruptcy Application by the Applicant.
2. Whether the claim is barred by limitation.

Analysis:

Issue 1: Maintainability of the Insolvency and Bankruptcy Application
The Tribunal considered the locus standi of the Applicant, a Trust constituted by the Central Government of India, to file the Insolvency and Bankruptcy Application. It was argued by the Corporate Debtor that the Trust was not a valid entity to file the application as it was established after the Industrial Development Bank of India ceased to exist. However, the Tribunal held that the Trust, as a financial institution notified by the Central Government, had the authority to file the application. The Tribunal emphasized that the signatory of the application was validly authorized, dismissing the Corporate Debtor's defense regarding the competence of the person who signed the application.

The Tribunal noted that the Trust had previously filed cases against various borrowers and that the transfer of stressed assets from IDBI Bank to the Trust was legally valid. Therefore, the Tribunal concluded that the Trust had the legal standing to initiate the Insolvency and Bankruptcy Application.

Issue 2: Claim Barred by Limitation
The Corporate Debtor argued that the claim was time-barred due to the lack of acknowledgment of the debt between 2004 and 2008. However, the Tribunal considered the Debt Recovery Tribunal (DRT) order issued before the adjudication of the matter. The DRT order determined the claim amount, and based on this, the Tribunal admitted the Insolvency and Bankruptcy Application. The Tribunal acknowledged that there was no explicit acknowledgment of the debt within the limitation period but accepted the DRT's order as evidence that the debt was not time-barred.

Despite the absence of direct acknowledgment, the Tribunal admitted the application based on the DRT's final order, which stated that the claimant was entitled to the decreetal amount along with interest. The Tribunal concluded that the debt was not time-barred and proceeded to appoint an Interim Resolution Professional, declaring a moratorium on certain actions against the Corporate Debtor.

In conclusion, the Tribunal admitted the Insolvency and Bankruptcy Application, appointing an Interim Resolution Professional and imposing a moratorium on specified actions against the Corporate Debtor. The decision was based on the legal standing of the Applicant Trust and the acceptance of the DRT's order as evidence regarding the claim's limitation status.