2019 (10) TMI 1531 - 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 - On perusal of the judgement in the case of B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES 2018 (10) TMI 777 - SUPREME COURT it is clear that limitation period triggers from the date of default and period of limitation for filing Applications under I B Code is three years. Therefore in absence of any substantial evidence to prove to the contrary present Application filed on 26.11.2018 is clearly barred by limitation as the dates of default as mentioned in the Application are 28.02.2014 09.04.2014 18.07.2014 23.12.2014 02.02.2015 and 09.04.2015 and period of three years has been elapsed from the said dates of default. Therefore the Application is barred by limitation and debt of Applicant is time barred. This Application filed under Section 9 of I B Code 2016 by Sarda Agro Oils Limited Operational Creditor/Applicant against Sakuma Exports Limited Corporate Debtor for initiating Corporate Insolvency Resolution Process is rejected.

Summary

Issues:
- Application under section 9 of Insolvency & Bankruptcy Code, 2016 (I&B Code) for initiating Corporate Insolvency Resolution Process (CIRP).
- Claim of default amounting to (`) 10,89,13,983/-
- Bar of limitation as raised by the Corporate Debtor.
- Maintainability of the application under section 9 based on the advance payment for goods not supplied.

Analysis:
1. The Application was filed by the Operational Creditor/Applicant under section 9 of the I&B Code against the Corporate Debtor for initiating CIRP due to default amounting to (`) 10,89,13,983/-. The Applicant had entered into sale agreements with the Corporate Debtor for the import and purchase of "Palmolein Oil" but the goods were not delivered as per the agreements, leading to the claim for repayment of the advance amount paid.

2. The Corporate Debtor opposed the Application on the ground of limitation, arguing that the application was time-barred. The Corporate Debtor contended that the Application, filed on 26.11.2018, was barred by limitation as the dates of default mentioned in the Application were prior to the three-year limitation period as per the I&B Code. The Tribunal referred to a Supreme Court judgment highlighting that the limitation period for filing applications under the I&B Code is three years from the date of default.

3. The Tribunal also considered the nature of the claim amount, which was an advance payment made by the Applicant for goods that were never supplied by the Corporate Debtor. Citing a judgment by the National Company Law Appellate Tribunal, it was noted that when money is paid as an advance for goods that were not supplied, the application under section 9 may not be maintainable. The Tribunal held that in such cases, where goods were not supplied despite advance payment, the application may not be considered as an 'Operational Debt'.

4. Based on the above considerations, the Tribunal concluded that the Application filed under section 9 of the I&B Code was not maintainable due to the bar of limitation and the nature of the claim amount. The Application was rejected, emphasizing that the rejection was not a decision on the merit of the Applicant's claim, and the Applicant was free to pursue the matter before the appropriate authority as per the law.