2020 (5) TMI 275 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - application dismissed on the ground that there is no debt payable in fact as the account balance shows that Nil amount is payable by the operational creditor - time limitation - HELD THAT - The communication made by the corporate debtor on August 5, 2013 shows that there is no amount payable to the operational creditor , which was not disputed by the operational creditor - In the present case, before issuance of the demand notice under section 8(1) on December 26, 2017 the corporate debtor has disputed the claim and taken plea that it was barred by limitation. Such plea having been taken by the corporate debtor prior to December 26, 2017 we hold that there was a pre-existence of dispute. Appeal dismissed.

Summary

Issues:
1. Dismissal of application under section 9 of the Insolvency and Bankruptcy Code, 2016 due to no debt payable and limitation.
2. Submission regarding the claim not being barred by limitation.
3. Legal notices issued by the appellant and respondent.
4. Communication from the corporate debtor regarding the balance being "Nil."
5. Dispute over the claim and plea of limitation by the corporate debtor.
6. Existence of a pre-existing dispute before the demand notice under section 8(1) was issued.

The judgment by the National Company Law Appellate Tribunal - New Delhi Bench involved an appeal by "M/s. Lasa Engineers P. Ltd." as the operational creditor against "M/s. Devas Engineering Systems P. Ltd." the corporate debtor, under section 9 of the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority had dismissed the application citing no debt payable and limitation as grounds, based on a communication from the corporate debtor stating the balance as "Nil" and a claim being barred by limitation. The appellant argued that the claim was not time-barred, highlighting legal notices issued and subsequent disputes raised by the respondent. The respondent referred to a communication from 2013 indicating a "Nil" balance, which was not contested by the operational creditor. The tribunal noted the corporate debtor's specific plea of limitation after legal notices in 2016 and 2017. The judgment emphasized that the corporate debtor had disputed the claim and raised the limitation plea before a demand notice under section 8(1) was issued in December 2017, establishing a pre-existing dispute. Consequently, the tribunal upheld the impugned order, dismissing the appeal due to lack of merit, with no costs awarded.

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