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2020 (10) TMI 482 - 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 - Section 14(2) of Law of Limitation saves period of limitation, if any application of civil nature is being filed in wrong Court with bona fide assumption that the Court having jurisdiction. In the present case, Operational Creditor immediately upon the debt become due and payable, had filed winding up proceeding before Hon'ble High Court. It was a proper forum but having no territorial jurisdiction. Later on, Hon'ble Karnataka High Court dismissed the Petition granting liberty to the Operational Creditor to file such Petition before Court/Forum. Thus, as soon as Operational Creditor filed a proceeding of recovery of operational debt against the Corporate Debtor before the then available Forum, the time stop running against the Operational Creditor for purpose of filing the proceeding relating to that debt for computing period of limitation. The proceeding of winding up filed against the Corporate Debtor is still pending. It was filed within period of limitation. In view of above facts, this application is not barred by limitation. In this case, it is not in dispute that the Corporate Debtor has committed default in paying the operational debt. Before filing this application, the Operational Creditor has served notice under Section 8 IBC to the Corporate Debtor. Operational Creditor has filed on record affidavit complying provisions of Section 9(3)(b) and 9(3)(c) of IBC - application admitted - moratorium declared.
Issues Involved:
1. Whether the demand draft dated 17.12.2015 given by the Corporate Debtor to the Operational Creditor was towards full and final settlement and now no debt is due and payable. 2. Whether there exists a dispute about the debt. 3. Whether the debt is time-barred. Issue-wise Detailed Analysis: 1. Full and Final Settlement: The Corporate Debtor contended that the demand draft of ?2,11,575/- dated 17.12.2015 was towards full and final settlement of the debt. However, it was established that this amount was paid as a settlement for a specific case (CC No. 3389/2011) before Lok Adalat and not for the entire claim. The tribunal found it illogical that the Operational Creditor would settle a claim exceeding ?29 Lakhs for merely ?2,11,575/-. Thus, the tribunal concluded that the demand draft was not towards full and final settlement of the entire claim. 2. Existence of Dispute: The Corporate Debtor argued that there was a pending dispute as a winding-up petition was filed by the Operational Creditor before the Calcutta High Court. The tribunal held that this did not constitute a pre-existing dispute related to the operational debt. The winding-up petition and the current application both stem from the Corporate Debtor's inability to pay the debt, and thus, the tribunal determined there was no pre-existing dispute. 3. Time-Barred Debt: The Corporate Debtor asserted that the debt was time-barred as it became due in 2010-2011, and the present application was filed in 2019. However, the tribunal noted that the Operational Creditor had initially filed a winding-up petition in the Karnataka High Court immediately after the debt became due, which was dismissed in 2015 due to lack of territorial jurisdiction. The Operational Creditor then filed a fresh petition in the Calcutta High Court in 2016. The tribunal applied Section 14 of the Limitation Act, which allows exclusion of time spent in bona fide litigation in a wrong forum. Consequently, the tribunal concluded that the application was not time-barred. Order: The tribunal admitted the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. A moratorium was declared as per Sections 13 and 15 of the IBC, 2016, prohibiting the institution or continuation of suits, transferring of assets, and other specified actions against the Corporate Debtor. The tribunal appointed an Interim Resolution Professional (IRP) and directed the Operational Creditor to deposit ?1,00,000/- for preliminary expenses. The IRP was instructed to conduct the CIRP in a time-bound manner, and the registry was directed to communicate the order to all concerned parties. The matter was listed for progress report filing on 30.04.2020.
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