2019 (12) TMI 1658 - AT - 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 - As the application under Section 9 is barred by limitation and there is a pre-existence of dispute, it is held that application under Section 9 was rightly rejected by the Adjudicating Authority. The appeal is dismissed

Summary

Issues:
Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 rejected by the Adjudicating Authority on grounds of incomplete petition, non-compliance of Section 9, absence of default record, pre-existence of dispute, and limitation period.

Analysis:
The Appellant, 'Sabarmati Gas Limited,' filed an application under Section 9 of the Insolvency and Bankruptcy Code against 'Shah Alloys Limited.' The Adjudicating Authority rejected the application citing various grounds, including incomplete invoices for the year 2012, a petition deemed incomplete, non-compliance with Section 9, absence of default record, and the presence of a pre-existing dispute. The Appellant argued that the debt and default records were enclosed with the application, and any alleged incompleteness should have warranted a time extension rather than outright rejection.

The Appellant contended that there was no pre-existing dispute, citing instances where the Respondent acknowledged financial difficulties and admitted to the debt in previous correspondences. The Appellant highlighted that the Gas Sale Agreement between the parties specified a minimum NCV of 8350, implying no dispute regarding gas quality. Moreover, the Respondent agreed to pay bills and requested patience for restructuring without raising a formal dispute.

The Appellant claimed that the application was not time-barred, as the claim was made before 2011-12. However, the Respondent's letter from January 2013 indicated a pre-existing dispute where the Respondent held the Appellant responsible for losses and registered with the Board for Industrial and Financial Reconstruction. Despite the Respondent's agreement to pay bills, the application under Section 9 was considered time-barred as it was filed in August 2018.

Considering the pre-existing dispute and the limitation period, the Tribunal upheld the rejection of the application under Section 9 by the Adjudicating Authority. The appeal was dismissed, emphasizing the observations made. No costs were awarded in this matter.