2020 (12) TMI 1306 - 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 - service of demand notice - HELD THAT - On perusal of the record, it is found that the Demand Notice was issued by the applicant on 15.03.2019, under Section 8 of the I B Code, through registered post on 19.03.2019. However, the same was returned with a postal remark Not Delivered Addressee Left without instructions . The applicant has also issued Demand Notice through email on the same date demanding the arrears of the Annual Listing Fee. However, no dispute is raised by the corporate debtor - Admittedly, the petitioner received the last payment on 31.05.2013 amounting to ₹ 44,944/- for the Financial Year 2013-2014. However, the petitioner in Form-S has stated that debt fell due on 01.04.2015. Further, on perusal of page no. 12, at para-2.10 of the petition, it is found that the respondent has made payment of annual listing fee to the applicant till Financial Year 2013-2014 only. The last payment being received on 31.05.2013 for an amount of ₹ 44,944/-. Thereafter, the corporate debtor did not pay any amount in respect of Annual Listing Fee to the petitioner. Since the debt fell due on 01.04.2015 as admitted by the petitioner, that itself is barred by Law of Limitation. In view of the judgment of the Hon ble Supreme Court in B.K. Educational Services 2018 (10) TMI 777 - SUPREME COURT , the limitation period is three years, which is to be counted from the date of default. As such, the instant application is hit by the law of limitation. On perusal of the application, it is found that the applicant has annexed one affidavit along with a Form-5 in support of initiation of Corporate Insolvency Resolution Process. Admittedly, in para-2.2 (page no. 8), it is stated that the respondent company was earlier known as Kosha Cubidor Containers Ltd. and the same came to be replaced by KCCL Plastic Ltd. on 29.02.2012. In support of the said contention, the applicant annexed master data received from the MCA website. However, even after the change of name of the corporate debtor, the applicant has not entered into a fresh agreement with KCCL Plastic Ltd. (corporate debtor). The application so filed, under Section 9 of the Insolvency and Bankruptcy Code, 2016, is bad in the eye of law and is not maintainable, hence, it does not deserve for admission - Petition dismissed.

Summary

Issues Involved:
Initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016 based on non-payment of Annual Listing Fees by the Corporate Debtor.

Detailed Analysis:
1. Filing of Company Petition: The Operational Creditor, a recognized stock exchange, filed a Company Petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for non-payment of Annual Listing Fees.

2. Background of Parties: The Operational Creditor and the Corporate Debtor were parties to a Listing Agreement dated 10.09.1993, where the Corporate Debtor agreed to pay Annual Listing Fees to the Operational Creditor. The Corporate Debtor made payments till 2013-2014 but defaulted thereafter, leading to an operational debt of ?10,66,886.

3. Non-Payment and Demand Notice: Despite repeated reminders and demand notices, the Corporate Debtor failed to pay the outstanding debt. The Operational Creditor sent a Demand Notice via registered post and email, but the Corporate Debtor did not respond, leading to the initiation of the insolvency process.

4. Legal Findings: The Tribunal found that the Company Petition was served to the Corporate Debtor, who failed to appear or respond. However, upon detailed scrutiny, it was revealed that the application was barred by the law of limitation as the debt fell due on 01.04.2015, and the application was filed in 2019, exceeding the three-year limitation period.

5. Validity of Agreement and Documentation: The Tribunal noted discrepancies in the agreement between the parties, including missing signatures, incomplete information, and lack of a fresh agreement after the Corporate Debtor's name change. The absence of proper documentation and proof of invoicing further weakened the Operational Creditor's case.

6. Dismissal of the Petition: Due to the legal deficiencies and lack of valid documentation, the Tribunal dismissed the Company Petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, ruling it as not maintainable and not deserving admission. The Operational Creditor was directed to seek alternative legal avenues for claim recovery.

7. Conclusion: The Tribunal's order dismissed the Company Petition, emphasizing the importance of adherence to legal requirements, proper documentation, and timely initiation of insolvency proceedings within the statutory limitation period. The decision highlighted the significance of valid agreements and documentation in insolvency cases, underscoring the need for strict compliance with legal provisions.