2020 (7) TMI 235 - Tri - 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 - time limitation - HELD THAT - The application is filed three years beyond the date of last Invoice as well as from the date of last payment. There was lot of E-mail correspondence with the Corporate Debtor. Of course, the Operational Creditor filed E-mail correspondence done by it with the Corporate Debtor at pages 46-66 of the Paper Booklet. Such E-mail correspondence is one-sided, viz. it emanates from the Operational Creditor without any acknowledgement in the form of reply from the Corporate Debtor. To constitute an acknowledgement, there must be E-mail reply from the Corporate Debtor to the Operational Creditor. Surprisingly, there is no reply by the Corporate Debtor through E-mail acknowledging the balance payable, to E-mail correspondence. Even otherwise, E-mail correspondence ended in February 2015. However, the application is filed on 16-11-2018. Thus, the application is beyond three years from the date of last E-mail correspondence with the Corporate Debtor. Thus, the application is barred by limitation. No balance sheet of the Corporate Debtor is filed by the Operational Creditor. Burden lies on the Operational Creditor to prove the debt alleged is appearing in the Books of Account of the Corporate Debtor. No such material is placed for the Tribunal to come to conclusion that the alleged debt is appearing in the Books of Account of the Corporate Debtor. In absence of any such evidence, conclusion cannot be arrived at basing on the material available before the Tribunal. It is very clear that the application is barred by limitation under Article 137 of the Limitation Act. Even otherwise, there was no reply to the Demand Notice by the Corporate Debtor. Had it been true that pending works were yet to be attended to by the Operational Creditor, then the Corporate Debtor would have given appropriate reply to the Demand Notice issued under section 8 of the I B Code. Surprisingly, there was no reply alleging that pending work is yet to be completed. Therefore, it cannot be said that there was any pre-existing dispute and work was incomplete. Even though there was no prior dispute, yet the application is patently barred by limitation and as such the application cannot be admitted and is liable to be rejected - Application dismissed.

Issues Involved:
1. Existence of operational debt and default.
2. Limitation period for filing the insolvency petition.
3. Pre-existing disputes between the parties.
4. Completion of contractual obligations by the Operational Creditor.
5. Calculation of amounts due including taxes and interest.

Detailed Analysis:

1. Existence of Operational Debt and Default:
The Operational Creditor, M/s. Enexio Power Cooling Solutions India Private Limited, alleged that the Corporate Debtor, M/s. MSR Mega Bio Power Limited, defaulted on payments amounting to ?35,02,500/- along with interest @ 24% p.a., totaling ?88,36,537/-. The contract dated 18-12-2010 was for the design, engineering, manufacturing, procuring, testing, and supplying of an Air Cooled Condenser for a power project. Despite repeated reminders and a demand notice issued on 29-3-2018, the Corporate Debtor failed to make the payment.

2. Limitation Period for Filing the Insolvency Petition:
The Corporate Debtor contended that the claim is time-barred as the invoices were raised in 2012, with the last invoice dated 20-7-2012. The Operational Creditor's demand notice was issued on 29-3-2018, beyond the three-year limitation period as per Article 137 of the Limitation Act. The Tribunal agreed, stating that the application should have been filed within three years from the date of the last invoice or the last payment made on 16-6-2012. The Tribunal found the application barred by limitation.

3. Pre-existing Disputes Between the Parties:
The Corporate Debtor argued that there was a pre-existing dispute regarding the completion of the contractual work. A letter dated 3-6-2014 from the Corporate Debtor requested the Operational Creditor to complete the pending works before making further payments. The Tribunal noted that this letter indicated an ongoing dispute about the completion of the work, which constituted a pre-existing dispute.

4. Completion of Contractual Obligations by the Operational Creditor:
The Operational Creditor claimed to have completed the supply and erection work by 29-7-2012. However, the Corporate Debtor's letter dated 3-6-2014 suggested that the work was incomplete. The Tribunal found that the Operational Creditor did not refute the contents of the letter, indicating that the work was indeed pending. This supported the existence of a pre-existing dispute.

5. Calculation of Amounts Due Including Taxes and Interest:
The Operational Creditor argued that the total amount due, including taxes and interest, was ?88,36,537/-. The Corporate Debtor countered that it had paid ?3,76,60,000/-, which was in excess of the contracted price of ?3,75,00,000/-. The Tribunal noted that the Operational Creditor failed to provide evidence that the debt was still appearing in the Corporate Debtor's books of account. Additionally, the Tribunal found no material to support the claim that the Corporate Debtor owed taxes as per the contract.

Conclusion:
The Tribunal concluded that the application was barred by limitation and that there was a pre-existing dispute regarding the completion of the work. The Operational Creditor failed to provide sufficient evidence to support its claims. Consequently, the application for initiating the Corporate Insolvency Resolution Process was rejected.

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