2019 (11) TMI 1725 - 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 - time limitation - HELD THAT - The limitation in the present case shall start running when the right to apply accrued which is the date of default e. 01.01.2015 therefore, the Petition should have been filed before 01.01.2018 however, it was filed on 25.01.2019 rendering the Petition time barred. The Petitioner however drew my attention towards acknowledgement by the Respondent in various letters written by the Respondent to the Petitioner for settlement of dues that saves the limitation in the present case by virtue of section 18 of the Limitation Act. On 18.12.2016, i.e. within the limitation period, admittedly, an OTS proposal was sent by the Respondent, it appears from the record that even after this date several proposals were sent. From the letters, it is dear that the debt and liabilities have been acknowledged by the Respondent which falls under the purview of section 18 of the Limitation Act, thus are an acknowledgment of debt. Also, in view of the statements made in the letters, there are no strength in the argument of Respondent that admission was not dear and unequivocal - it is held that the Petition was filed within limitation period. The present Petition has been filed in proper form. The Petitioner has produced several documents including loan sanction letter, final recall notice, CIBIL report, etc. The Petitioner has also proposed the name of interim resolution professional and filed the original written communication by the said professional. It seems that all the compliance under section 7 of the I B Code has been made - Also, Mr. M.K. Zama working as Assistant General Manager with the Petitioner Bank has been properly authorised by the General Manager (Recovery, Legal, Credit Monitoring, RTI, DRT SAMV) to initiate CIRP against the Respondent Company on behalf of the Bank. Petition admitted - moratorium declared.

Summary

Issues:
1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 filed by a Financial Creditor against a Corporate Debtor.
2. Dispute over the default date and time-barred nature of the Petition.
3. Acknowledgment of debt by the Respondent through settlement proposals.
4. Authorization of the Petitioner's representative to initiate Corporate Insolvency Resolution Process.
5. Admission of the Petition and directions for further proceedings.

Issue 1: Application under Section 7 of the Insolvency and Bankruptcy Code, 2016
The Petitioner, a Financial Creditor, filed a Petition under Section 7 of the I&B Code against the Respondent, a Corporate Debtor, seeking to initiate Corporate Insolvency Resolution Process due to default on a loan amount. The Petitioner provided details of the loan sanction, default date, and the total amount claimed to be in default.

Issue 2: Dispute over the default date and time-barred nature of the Petition
The Respondent contested the Petition, claiming that no debt was due or payable and that the claim was time-barred. The Respondent admitted to availing a loan but disputed the default date, arguing that certain settlement proposals were pending. The Petitioner argued that the Petition was not time-barred, citing previous legal judgments and the Respondent's acknowledgment through settlement proposals.

Issue 3: Acknowledgment of debt by the Respondent through settlement proposals
The Tribunal analyzed the settlement proposals and letters exchanged between the parties. It noted that the Respondent acknowledged the debt and liabilities in various communications, falling under the purview of section 18 of the Limitation Act. The Tribunal referred to legal interpretations emphasizing that an acknowledgment need not be explicit and that any statement implying an admission of liability qualifies.

Issue 4: Authorization of the Petitioner's representative to initiate Corporate Insolvency Resolution Process
The Tribunal addressed the Respondent's concern regarding the authorization of the Petitioner's representative to initiate the CIRP. It confirmed that the representative was properly authorized by the General Manager, meeting the necessary requirements for initiating the process.

Issue 5: Admission of the Petition and directions for further proceedings
After considering the arguments, the Tribunal admitted the Petition under Section 7 of the I&B Code. It declared a Moratorium, public announcement, and appointed an Interim Resolution Professional. The Tribunal outlined specific directions for the resolution process, including convening a meeting of the Committee of Creditors and submitting a resolution plan within a specified timeline.

Overall, the Tribunal's detailed analysis of the issues surrounding the Petition under the I&B Code highlighted the importance of acknowledgment of debt, adherence to limitation periods, and proper authorization in initiating insolvency proceedings. The judgment provided clarity on the legal interpretations and procedural steps required for the resolution process to proceed effectively.