2018 (7) TMI 2245 - 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 - time limitation - HELD THAT - Bare in mind the proposition laid down in the MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED 2017 (9) TMI 1270 - SUPREME COURT , there are no doubt to hold that the respondent/corporate debtor herein proved existence of a bona fide dispute, in respect of its liability to pay the amount claimed by the operational creditor. The respondent has succeeded in establishing that there is pre-existing dispute in respect of the amount allegedly due to the operational creditor from the corporate debtor. Admittedly the last bill on completion of the work contract by the operational creditor has been issued in the month of March, 2014. Admittedly the amount claimed by the operational creditor allegedly due arising out of work orders issued between September 30, 2013 and September 30, 2014. The application in the case in hand has been filed on February 9, 2018. Therefore, the claim of the amount due on the basis of above referred work orders is time barred - the application of question of law of limitation has to be dealt with the facts of the case in hand. Moreover as per the Amendment Ordinance 2018 the provisions of the Limitation Act, 1963 made applicable to the proceedings before the National Company Law Tribunal. Therefore no doubt the law of limitation is applicable and applying the law of limitation it appears to me the claim of the applicant is also barred by limitation. Accordingly the existence of a bona fide dispute established in the case in hand and the claim, if any, is found barred by limitation. This application is therefore, liable to rejected under section 9(5)(ii)(d) of the I and B Code. Application dismissed.

Summary

Issues Involved:
1. Existence of a dispute regarding the claim.
2. Limitation period for the claim.

Issue-wise Detailed Analysis:

1. Existence of a Dispute Regarding the Claim:

The operational creditor, Mr. Kumar Dutta, filed an application under section 9 of the Insolvency and Bankruptcy Code, 2016, to initiate the corporate insolvency resolution process against the corporate debtor, Simplex Infrastructure Ltd., alleging default in repayment of ?17,51,781 towards the principal amount and ?17,82,760.60 towards interest up to November 2017. The operational creditor completed the work as per work orders issued by the corporate debtor and raised bills, but the corporate debtor failed to pay the outstanding amounts.

The corporate debtor contested the claim, arguing that the application was mala fide and that the operational creditor had raised unlawful demands. The corporate debtor asserted that the operational creditor failed to disclose its sales turnover correctly, resulting in a significant tax liability for the corporate debtor. The corporate debtor also indicated that it intended to initiate arbitration proceedings for damages due to the operational creditor's breach of contract.

The operational creditor denied these allegations and provided tax returns to substantiate its claim. However, the corporate debtor reiterated its contentions, stating that the operational creditor's failure to disclose accurate turnover led to the corporate debtor's financial liability to the tax authorities.

The tribunal noted that the corporate debtor had raised a genuine dispute regarding the amount retained due to the operational creditor's alleged non-compliance with tax obligations. The tribunal referred to previous demand notices and replies, which indicated a pre-existing dispute. The tribunal concluded that the corporate debtor successfully established the existence of a bona fide dispute, thereby rendering the application under section 9 of the I and B Code not maintainable.

2. Limitation Period for the Claim:

The corporate debtor also argued that the claim was barred by limitation. The last bill issued by the operational creditor was in March 2014, and the amounts claimed were due from work orders dated between September 30, 2013, and September 30, 2014. The application was filed on February 9, 2018, which the corporate debtor argued was beyond the limitation period.

The operational creditor contended that the limitation period should run from the date of the corporate debtor's admission of the amount retained, which was September 24, 2016. However, the tribunal found that the reply notice did not constitute a clear admission of liability, as it included a specific denial and a claim for damages by the corporate debtor.

The tribunal also referenced the applicability of the Limitation Act, 1963, to proceedings under the I and B Code, as affirmed by the Supreme Court and the Amendment Ordinance 2018. Applying the law of limitation, the tribunal determined that the claim was indeed time-barred.

Conclusion:

The tribunal concluded that the corporate debtor successfully proved the existence of a bona fide dispute regarding the claim and that the claim was barred by limitation. Consequently, the application was rejected under section 9(5)(ii)(d) of the I and B Code. The order emphasized that no costs were awarded, and certified copies of the order would be issued to concerned parties upon compliance with requisite formalities.