2020 (1) TMI 345 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate debtor defaulted in making repayment - existence of debt and default or not - time limitation - HELD THAT - The present application has been filed Under Sec 7 of the IB code, the applicant has entered into an agreement with the Corporate Debtor for purchase of the flat and accordingly, as per the Schedule shown in Column No. 1 of Part IV, the applicant made payment to the Corporate Debtor and the total amount as per the Schedule shown is ₹ 3,61,512. Time Limitation - the applicant claims that his debt is within time prescribed under the law - HELD THAT - Mere plain reading of the provisions shows that it is related to the possession of immovable property or any interest therein based on title , whereas the case in hand, is the case, where the applicant has paid money for the purchase of flat and on her request the agreement to purchase the flat was cancelled and that was communicated to the applicant on 10th July, 2013, by the Corporate Debtor. And subsequently on 25th July, 2013, the corporate debtor a)so sent the applicant the Xerox copy of the cheque of ₹ 3,61,512 and from column 2 of Part IV this adjudicating authority find that the total amount of default is of ₹ 26,84,277 - Therefore, the applicant is not claiming the possession or title over the immovable property rather she is claiming the amount, which she has paid along with the interest and compensation. Hence, the case of the applicant comes under Article 137 of the Limitation Act ,1963 and not under Article 65 of the aforesaid mentioned Act as claimed by the applicant in his application. Although the application filed by the applicant is within 3 years from 01.12.2016, but the claim of the applicant is barred under Article 137 of the Limitation Act, because date of default is on 10th July, 2013 or 25th July, 2013, when the default occurred and right to apply accrued. Therefore, this Adjudicating Authority is of the considered view that since the right to apply accrues on 10th July, 2013 or 25th July 2013, from that date, applicant was required to claim the debt within three years i.e. on or before 9th July, 2016 or 24th July, 2016, but the present application is filed on 21st July, 2019, hence the claim of the applicant is barred by limitation. This Adjudicating Authority find and hold, claim of applicant is barred by limitation - application not maintainable and is dismissed.

Summary

Issues:
- Initiation of Corporate Insolvency Resolution Process under Section 7 of Insolvency and Bankruptcy Code, 2016 against a Corporate Debtor.
- Existence of Financial Debt and default by the Corporate Debtor.
- Application of Limitation Act, 1963 to the claim.

Analysis:

1. Initiation of Corporate Insolvency Resolution Process:
- The petitioner filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor, a real estate company, for breaching agreed terms and conditions related to a flat booking project.
- Details of the petitioner, respondent, project location, and payment history were provided in the petition.

2. Existence of Financial Debt and Default:
- The petitioner claimed that the Corporate Debtor breached the agreement by delaying construction, not delivering the flat, and demanding additional payments.
- The petitioner made payments totaling &8377; 3,61,512 for the flat and demanded a refund after failed discussions with the company.
- Various documents including allotment letter, bank statements, cancellation notice, and correspondence were submitted to prove the financial debt and default.

3. Application of Limitation Act, 1963:
- The petitioner claimed the debt was within the limitation period based on Article 65 of the Limitation Act, 1963, allowing a 12-year limitation for possession of immovable property.
- However, the Adjudicating Authority found the claim fell under Article 137 of the Limitation Act, which has a 3-year limitation period from the date of default.
- Despite the application being filed within 3 years of the Insolvency and Bankruptcy Code coming into force, the claim was deemed barred by limitation as the default occurred in 2013, and the application was filed in 2019.

4. Judgment:
- The Adjudicating Authority dismissed the application as the claim was found to be barred by limitation under Article 137 of the Limitation Act, 1963, despite being filed within 3 years of the Code coming into force.
- The decision was based on the specific facts of the case, where the right to apply accrued in 2013, making the 2019 application time-barred.

This detailed analysis outlines the key legal issues, arguments, evidence, and the final judgment of the Tribunal regarding the initiation of Corporate Insolvency Resolution Process and the application of the Limitation Act to the financial claim against the Corporate Debtor.