2019 (4) TMI 2032 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - time limitation - existence of debt and dispute - HELD THAT - From the record we find that invoices were also issued on 1st April, 2017, which shows the total amount payable including service tax for the year 2017-18, Swachh Bharat Cess and Krishi Kalyan Cess, totalling ₹ 5,57,959/-. It appears that the Adjudicating Authority failed to consider the aforesaid documents attached with Form-5 and came to a wrong conclusion that the application under Section 9 is barred by limitation - It is true that Limitation Act, 1963 is applicable in terms of Section 238A of the I B Code. Part I of the Schedule relates to filing of suits, money suits, etc. If the claim is barred by limitation then a person can take plea that there is no debt payable in law . In the present case, as we find that the invoice raised on 1st April, 2017 is more than Rupees One Lakh and a suit if filed will not be barred by limitation, the Corporate Debtor cannot take plea that the amount is barred by limitation - The Adjudicating Authority before passing the impugned order dated 26th June, 2018 had issued notice to the Corporate Debtor but the Corporate Debtor failed to appear. In the present case also, the notice on Corporate Debtor having returned undelivered, we directed the Appellant to take publication of notice in the Newspapers intimating the Corporate Debtor the next date of hearing. Matter remanded to the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench to admit the application under Section 9 after notice to the Corporate Debtor to enable the Corporate Debtor to settle the matter in the meantime - appeal allowed by way of remand.

Summary

Issues: Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 rejected on the ground of limitation.

Analysis:
1. The Appellant, 'Bombay Stock Exchange Limited,' filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, against 'Neo Corp International Ltd.' The National Company Law Tribunal rejected the application on the basis that the Corporate Debtor defaulted in payment of ?5,37,939 towards annual listing fee as of April 1, 2014, and deemed the application barred by limitation.

2. The Appellant argued that the operational debt of ?5,57,959 was due since April 1, 2014, as per Form-5 filed under the I & B Code.

3. The Tribunal noted that invoices were issued on April 1, 2017, showing the total amount payable, including service tax for the year 2017-18. It found that the Adjudicating Authority failed to consider the documents attached with Form-5, leading to an incorrect conclusion that the application was time-barred.

4. The Tribunal acknowledged the applicability of the Limitation Act, 1963, under Section 238A of the I & B Code. It clarified that Part II of the Schedule of the Limitation Act applies to applications under Section 9.

5. Since the right to apply accrued on April 1, 2017, the Tribunal held that the application under Section 9 was not time-barred.

6. The Tribunal explained that if a claim is barred by limitation under Part I of the Schedule of the Limitation Act, a person can argue that "there is no debt payable in law." In this case, since the invoice amount exceeded ?1 lakh and would not be time-barred if a suit were filed, the Corporate Debtor could not claim the amount was time-barred.

7. Despite issuing notice to the Corporate Debtor and directing publication in newspapers for the hearing, the Corporate Debtor failed to appear or raise any objections. The Tribunal opined that the application under Section 9 was complete, and the Adjudicating Authority should have admitted it instead of rejecting it based on limitation.

8. Consequently, the Tribunal set aside the impugned order and remitted the matter to the Adjudicating Authority to admit the application under Section 9. If the Corporate Debtor fails to appear despite notice, the Adjudicating Authority is directed to initiate the Corporate Insolvency Resolution Process immediately. The appeal was allowed with the mentioned observations and directions, without costs.