2019 (11) TMI 1767 - AT - Insolvency and Bankruptcy

Maintainability of petition - 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 - Taking into consideration the fact that the appeal has been preferred by the Appellant within 30 days from the date of knowledge, the appeal is not barred by limitation. However, as the default took place in the year 2012, the Adjudicating Authority (National Company Law Tribunal), Bench-III, New Delhi rightly held that the application under Section 9 of the I B Code was barred by limitation and mere issuance of raising the bill after long delay, the Operational Creditor cannot take advantage of the claim. If the application under Section 9 was time barred, while dismissing the application, the Adjudicating Authority should not have held that the appeal preferred was frivolous or vexatious which otherwise affect the right of the Appellant to move before the Appropriate Forum. The observation as made at the impugned order by the Adjudicating Authority that the petition was frivolous and vexatious claim and imposed a cost of Rupees One Lakh is set aside. However, the application filed by the Appellant under Section 9 is treated to be dismissed. Appeal disposed off.

Summary

Issues: Appeal not barred by limitation, imposition of cost, application under Section 9 dismissed

The judgment by the National Company Law Appellate Tribunal, New Delhi, involved several key issues. Firstly, the Appellant argued that the free copy of the impugned order was not provided to them, and there was no delay in filing the appeal if counted from the date of knowledge. Secondly, the Appellant contested the Adjudicating Authority's decision to impose a cost of Rupees One Lakh on them despite the appeal being filed within 30 days from the date of knowledge. Lastly, the Tribunal had to determine whether the application under Section 9 of the 'I&B Code' was time-barred, leading to the dismissal of the application.

Regarding the first issue, the Appellate Tribunal acknowledged the Appellant's submission that the appeal was not barred by limitation as it was filed within 30 days from the date of knowledge. The Tribunal found that the Adjudicating Authority's decision that the application was time-barred due to a default in 2012 was correct. However, the Tribunal noted that the Adjudicating Authority should not have imposed a cost of Rupees One Lakh on the Appellant in this scenario.

On the second issue of the imposition of cost, the Tribunal held that while the application under Section 9 may have been time-barred, the Adjudicating Authority erred in deeming the appeal as frivolous or vexatious. The Tribunal set aside the observation that the petition was frivolous and vexatious, thereby removing the imposed cost of Rupees One Lakh. The Tribunal emphasized that such a characterization could impact the Appellant's right to seek relief before the appropriate forum.

Lastly, concerning the dismissal of the application under Section 9, the Tribunal clarified that while the application was treated as dismissed, the observation regarding the frivolous and vexatious nature of the claim and the associated cost imposition were overturned. The Tribunal concluded the judgment by disposing of the appeal with the aforementioned observations, ensuring that the Appellant's right to move before the appropriate forum was not unjustly affected.

In summary, the National Company Law Appellate Tribunal, New Delhi, ruled in favor of the Appellant by determining that the appeal was not time-barred, overturning the imposition of cost, and setting aside the characterization of the appeal as frivolous or vexatious. The Tribunal clarified the dismissal of the application under Section 9 while ensuring that the Appellant's right to seek relief before the appropriate forum remained unaffected.