2020 (5) TMI 724 - 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 - application of time limitation - HELD THAT - Section 19 of the Limitation Act, 1963 provides that where a party, on account of an outstanding debt, makes payment prior to the expiration of the prescribed period of limitation, a fresh period of limitation shall be computed from the time when the payment was made - In the light of the position of section 19 of the Limitation Act, the limitation period for filing the present claim, as calculated from the date of last payment, that is, 04.01.2016, will end on, 03.01.2019, whereas the present Petition was filed before this Bench on 06.11.2018. Therefore, the claim made in the Petition is not barred by the limitation. The IBC is a complete Code in its itself, and sec 60(1) thereof is not subject to contract between parties so as to dispossess this Bench of its territorial jurisdiction. Therefore, the objections raised in this behalf by the Corporate Debtor in oral submission are untenable and therefore rejected. The judgments cited by the Ld. Counsel for the Corporate Debtor pertain to the period prior to commencement of the IBC and involve situations where more than one court has jurisdiction. In such cases, any agreement between parties that only one of them shall have jurisdiction, shall have to be given due cognisance. However, such is not the case here, and sec 60(1) of the Code is unambiguous that it is the situs of the Registered Office of the Corporate Debtor alone that would confer jurisdiction on the NCLT - No defence has been raised by the Corporate Debtor vis- -vis the merits of the case, in spite of many opportunities given in this regard. The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees that was the limit stipulated under section 4(1) of the IBC at the relevant point of time. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Petition admitted - moratorium declared.

Summary

Issues Involved:
1. Jurisdiction of the Tribunal.
2. Applicability of the Limitation Act, 1963.
3. Admission of liability by the Corporate Debtor.
4. Jurisdiction clause in the contract.
5. Initiation of Corporate Insolvency Resolution Process (CIRP).

Issue-wise Detailed Analysis:

1. Jurisdiction of the Tribunal:
The Corporate Debtor is an unlisted public company incorporated under the Companies Act, 1956, with its registered office in Maharashtra. The Tribunal noted that it has jurisdiction to deal with the petition as the registered office of the Corporate Debtor falls within its territorial jurisdiction.

2. Applicability of the Limitation Act, 1963:
The Tribunal examined the applicability of the Limitation Act, 1963. Section 19 of the Limitation Act was considered, which states that a fresh period of limitation starts from the date of part payment of the outstanding debt. The Tribunal relied on judgments from the National Company Law Tribunal (NCLT) Chandigarh Bench and Hyderabad Bench, which held that part payments reset the limitation period. The Tribunal observed that the last payment was made on 04.01.2016, and the petition was filed on 06.11.2018, thus within the limitation period.

3. Admission of Liability by the Corporate Debtor:
The Tribunal noted that the Corporate Debtor had acknowledged its debt towards the Operational Creditor in a letter dated 15.06.2013. The Corporate Debtor also made part payments, which were reflected in the bank statements. The Tribunal found that there was an unequivocal admission of liability by the Corporate Debtor.

4. Jurisdiction Clause in the Contract:
The Corporate Debtor's counsel argued that the contract specified Swiss law and arbitration in Switzerland for dispute resolution. However, the Tribunal held that the jurisdiction under the Insolvency and Bankruptcy Code (IBC) is determined by the location of the Corporate Debtor's registered office as per section 60(1) of the IBC. The Tribunal rejected the Corporate Debtor's objection based on the jurisdiction clause, stating that the IBC is a complete code and its jurisdiction is not subject to contractual agreements between parties.

5. Initiation of Corporate Insolvency Resolution Process (CIRP):
The Tribunal found that the application by the Operational Creditor was complete and demonstrated that the Corporate Debtor was in default of a debt exceeding the minimum threshold under section 4(1) of the IBC. The Tribunal admitted the petition and ordered the initiation of CIRP against the Corporate Debtor. A moratorium under section 14 of the IBC was declared, prohibiting actions against the Corporate Debtor's assets and legal proceedings. The Tribunal appointed an Interim Resolution Professional (IRP) and directed the Operational Creditor to deposit funds for CIRP expenses.

Order:
The petition filed by the Operational Creditor was admitted, and the CIRP was initiated against the Corporate Debtor. A moratorium was declared, and an IRP was appointed to manage the Corporate Debtor's affairs during the CIRP period. The Tribunal directed the Operational Creditor to deposit a sum for CIRP expenses and ordered the Registry to communicate the order to relevant parties and authorities.