2021 (3) TMI 869 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - alleged default on the part of the Corporate Debtor in settling the dues - existence of debt and dispute or not - Financial creditors - time limitation - HELD THAT - The claim of the applicant is not admitted by the respondent. In fact there are certain issues which should be adjudicated before ascertaining the claim of the applicant. At this stage it is immaterial to consider who will succeed. Besides this forum, in the present proceeding, is not supposed to examine the merit of the disputed claims made by the parties. Respondent has also filed criminal complaint in respect of the disputed acknowledgment. Without the said acknowledgement of account, the claim of applicant will be barred by limitation as the invoices were raised between April 2016 to August 2016 and the present petition was filed in November 2019. A person can file complaint of fraud or forgery only after knowing about the said fraudulent act. In the present matter the complaint has been filed after receiving the disputed acknowledgment of accounts. Therefore, till the outcome of the pending complaint, the claim of applicant remains disputed. A financial/operational creditor will have to be vigilant while initiating proceedings under the Code and ensure that application is within 3 years from the date of default. The creditor will be unable to take the benefit of the provisions of the Limitation Act, which provide for a fresh period of limitation to run/exclusion of time in computing limitation. The same rule shall apply for the operational creditor as well - That apart the respondent has placed copies of invoices for re-supply of materials in place of defective materials. The said invoices have been disputed by the applicant in its rejoinder. Therefore, there exist various questions which require a proper adjudication in order to ascertain the claim of applicant. The application fails and therefore the same is dismissed as barred by limitation.

Summary

Issues involved:
Petition for initiation of CIRP under Section 9 of IBC 2016 for alleged default by Corporate Debtor in settling outstanding dues. Objections raised by Corporate Debtor regarding the date of default, limitation period, acknowledgment of debt, and disputed invoices.

Analysis:
1. Default and Outstanding Dues:
The Operational Creditor filed a petition seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for non-payment of outstanding dues amounting to ?60,33,294 as on 31.12.2018, inclusive of principal and interest. The Operational Creditor alleged that the Corporate Debtor failed to pay the amounts under three invoices for Wheat Straws supplied, despite the agreed conditions of payment entitling the creditor to charge interest at 24% quarterly compounding.

2. Objections Raised by Respondent:
The Corporate Debtor raised objections, contending that the petition was time-barred as the date of default was not mentioned in Form V, rendering the proceeding void ab initio. The respondent also challenged the acknowledgment of debt, citing discrepancies in the company name and the signature of the acknowledging party. Moreover, the respondent argued that recent judgments by the Hon'ble Apex Court clarified that the acknowledgment of debt does not extend the limitation period for IBC applications.

3. Limitation and Acknowledgment of Debt:
The respondent emphasized that the application was filed after the expiry of the limitation period, and the acknowledgment of debt by a junior clerk was under dispute in a criminal case. Referring to relevant judgments, the respondent contended that the acknowledgment of debt does not extend the limitation period for IBC applications, and the application, being time-barred, was not maintainable.

4. Disputed Invoices and Material Supply:
The respondent submitted copies of invoices for re-supply of materials in place of defective materials, which were disputed by the applicant in the rejoinder. Issues regarding the identification of supplied materials, vehicle numbers, and the mixing of materials in the respondent's compound were raised, necessitating further adjudication to ascertain the validity of the applicant's claim.

5. Dismissal of Application:
After considering the arguments and case records, the Tribunal dismissed the application as barred by limitation. The Tribunal highlighted that the forum was not mandated to examine the merit of disputed claims at this stage, emphasizing the importance of adhering to the limitation period for initiating proceedings under the Insolvency and Bankruptcy Code.

6. Legal Precedents and Conclusion:
Citing legal precedents and recent rulings, the Tribunal underscored the significance of adhering to the limitation period for initiating insolvency proceedings. The judgment emphasized that the acknowledgment of liability does not extend the limitation period for IBC applications, reiterating the need for vigilance in ensuring applications are filed within the prescribed time frame. The dismissal of the application was clarified not to prejudice the applicant's rights before other forums.

In conclusion, the judgment delves into the intricacies of the dispute, emphasizing the importance of adherence to statutory timelines and legal principles governing insolvency proceedings, while also highlighting the need for a thorough adjudication of disputed claims to ascertain the validity of the applicant's contentions.