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2020 (9) TMI 1075 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - time limitation - HELD THAT - Reading Section 9 with Section 5(20) and 5(21) of the Code, application under Section 9 of the Code can be filed by a person who has a claim in respect of the provision of goods and services. The application is based on the operational creditor neither receiving payment from the corporate debtor nor notice of dispute under Section 8(2) of the Code. There is no provision in Section 9 of the Code read with Section 5(20) and Section 5(21) of the Code for an application being moved to the Tribunal on the basis of a decree. The decree may be evidence of non-payment or of default but by itself, a decree cannot give rise to and form the basis of an application under Section 9 of the Code. Section 3(10) of the Code gives the definition of creditor but it is only an operational creditor who has the right to file an application for initiating CIRP in the case of the corporate debtor. The submissions made by ISMT Limited cannot therefore, be accepted. Time Limitation - HELD THAT - The payment by HIM Teknoforge Limited was made conditionally and was subject to acceptance of the outstanding amount payable being only ₹ 7,31,813/-. This condition was not accepted by ISMT Limited which filed an application under Section 9 of the Code for the amount of ₹ 83,12,760.91 with interest. The conditional payment cannot therefore, have the effect of being an acknowledgment of the debt claimed of ₹ 83,12,760.91. Moreover, even if it is presumed to be an acknowledgment of debt, it is beyond the period of three years from the date on which the debt became due and therefore, a fresh period of limitation is not available - plea of the learned senior counsel for HIM Teknoforge Limited that the present petition is not filed within the limitation period is accepted. The application under Section 9 of the Code is therefore, rejected on the ground that it is barred by limitation and alternatively, on the ground that notice of dispute was received by the operational creditor - Application disposed off.
Issues Involved:
1. Jurisdiction and Authorization 2. Principal Amount of Debt and Interest 3. Limitation Period 4. Name Change of the Creditor 5. Existence of Dispute 6. Acknowledgment of Debt Issue-wise Detailed Analysis: 1. Jurisdiction and Authorization: The application under Section 9 of the Insolvency and Bankruptcy Code, 2016, was filed by ISMT Limited for initiation of Corporate Insolvency Resolution Process (CIRP) against HIM Teknoforge Limited. The application was signed by Shri S.S. Puri, Assistant V.P. Legal of ISMT Limited, authorized by resolutions passed by ISMT Limited's Board of Directors on November 13, 2013, and October 01, 2018, and a Power of Attorney dated 01.06.2017. 2. Principal Amount of Debt and Interest: In Part IV of Form No. 5, the total principal amount of debt due from HIM Teknoforge Limited was stated as ?83,12,760.91, with interest amounting to ?1,44,90,167/- at 11% since August 2002, along with costs of ?1,68,068/-. The total debt aggregated to ?2,29,70,996. This was based on a judgment and decree dated 03.05.2012. 3. Limitation Period: The respondent argued that the petition was barred by time under Article 137 of the Limitation Act, as the cause of action arose from invoices issued between 19.09.1998 to 14.09.2000, making the application time-barred. ISMT Limited contended that the debt fell under Article 136 of the Limitation Act, which prescribes a 12-year period for the execution of any decree or order of a Civil Court. The Tribunal held that Article 137 applied, and the application was barred by limitation as the default occurred over three years prior to the filing of the application. 4. Name Change of the Creditor: The judgment and decree were in the name of 'Indian Seamless Steels and Alloys Ltd.', which later changed its name to ISMT Limited. The Tribunal noted that the change in name does not affect the substantive rights of parties and that there was no requirement to produce a decree in the amended name of the operational creditor. However, it was also noted that the decree in the name of 'Indian Seamless Steels and Alloys Ltd.' could not be used to continue proceedings under Section 9 of the Code in the name of ISMT Ltd. 5. Existence of Dispute: The respondent claimed disputes regarding the quality and quantum of the products supplied. The Tribunal referenced the Supreme Court's judgment in Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited, which states that if a plausible contention of dispute exists, the application must be rejected. The Tribunal found that there was a genuine dispute regarding the quality and quantity of the products, supported by contemporaneous correspondence and replies to legal notices. 6. Acknowledgment of Debt: ISMT Limited argued that the issuance of a cheque for ?7,31,813 by HIM Teknoforge Limited on 26.06.2018 was an acknowledgment of debt, making the claim within the limitation period. However, the Tribunal found that the payment was conditional and not accepted by ISMT Limited, thus not constituting an acknowledgment of the total debt claimed. Conclusion: The Tribunal concluded that the application was barred by limitation under Article 137 of the Limitation Act and that a genuine dispute existed regarding the debt. Consequently, the application under Section 9 of the Code was rejected on both grounds, and CP (IB) No. 367/Chd/HP/2018 was disposed of.
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