2018 (6) TMI 849 - AT - Insolvency and Bankruptcy

Corporate insolvency process - application rejected on the ground that the application is barred by limitation - Held that - Principle for triggering an application under Section 10 of the I&B Code cannot be made applicable as the Corporate Applicant does not claim money but prays for initiation of Corporate Insolvency Resolution Process against itself, having defaulted to pay the dues of creditors. In so far it relates to filing of claim before the Insolvency Resolution Professional , in case of stale claim, long delay and in absence of any continuous cause of action, it is open to resolution applicant to decide whether such claim is to be accepted or not, and on submission of resolution plan, the Committee of Creditors may decide such question. If any adverse decision is taken in regard to any creditor disputing the claim on ground of delay and laches, it will be open to the aggrieved creditor to file objection before the Adjudicating Authority against resolution plan and for its necessary correction who may decide the same in accordance with the observations as made above - case is remitted to the Adjudicating Authority, Mumbai Bench to consider the application under Section 9 of the I&B Code preferred by the Appellant after notice to the Corporate Debtor .

Summary

Issues:
1. Rejection of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 on the ground of limitation.
2. Non-appearance of the Respondent despite service of notice.
3. Comparison of the impugned order with a previous judgment by the Appellate Tribunal regarding the Doctrine of Limitation and Prescription in the context of Corporate Insolvency Resolution Process.

Issue 1: The Appellate Tribunal analyzed the rejection of the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 based on the ground of limitation. The Tribunal referred to the Limitation Act, 1963, noting that proceedings instituted on a time-barred claim should be dismissed even if limitation is not set up as a defense. The Tribunal highlighted the applicability of the Limitation Act to the Code in the absence of specific limitation prescribed under any enactment. The Respondent's absence was noted, and the Tribunal decided to dismiss the Company Petition with liberty for the petitioner to proceed within limitation by invoking section 14 of the Limitation Act, 1963.

Issue 2: Despite the service of notice and publication in newspapers, the Respondent did not appear, which was duly noted by the Tribunal.

Issue 3: A comparison was made with a previous judgment by the Appellate Tribunal regarding the Doctrine of Limitation and Prescription in the context of Corporate Insolvency Resolution Process. The Tribunal emphasized the necessity of considering laches and delay in determining whether an application under Section 7 or Section 9 can be entertained after a long delay. The Tribunal outlined that stale claims without explaining the delay should not trigger the Corporate Insolvency Resolution Process under Section 7 and 9 of the Insolvency and Bankruptcy Code. However, different principles were applicable for applications under Section 10 of the Code. The Tribunal set aside the impugned order and remitted the case to the Adjudicating Authority for reconsideration, providing directions for further proceedings. The appeal was allowed with specific observations and directions, without imposing any costs.