2021 (5) TMI 279 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Time limitation - service of notice - HELD THAT - The notice was not delivered to the Corporate Debtor. It has been mentioned in the track-report Out for delivery. In-short, there is not clear and convincing evidence produced on record by the Operational Creditor to prove the fact that before filing this application against the Corporate Debtor, the demand notice under Section 8 of the IB. Code was being served. For want of such evidence, it is held that this application is not maintainable. Time Limitation - HELD THAT - It is a time barred debt because, according the Operational Creditor himself, the debt was due on 23.01.2013 when default occurred. This application is filed three years beyond that period and hence, it is time barred. This application is not maintainable on two grounds that there is no evidence of service of demand notice under Section 8 of the IB. Code and the debt is time barred - petition dismissed.

Summary

Issues:
1. Jurisdiction of the Adjudicating Authority in entertaining the application under Section 9 of the Insolvency and Bankruptcy Code (IB. Code).
2. Compliance with the mandatory notice requirements under Section 8 and Section 9 of the IB. Code.
3. Determination of whether the debt claimed is time-barred.

Jurisdiction Issue:
The Tribunal rejected the Corporate Debtor's argument challenging the maintainability of the proceeding due to the debt amount being less than one crore rupees. The Tribunal clarified that the default occurred before the amendment increasing the threshold limit to one crore rupees, and as the amendment does not have retrospective effect, the application filed in 2019 was valid under the previous threshold of one lakh rupees.

Compliance with Notice Requirements:
The Tribunal emphasized the mandatory nature of serving a demand notice under Section 8 of the IB. Code before filing an application under Section 9. The Operational Creditor failed to provide clear evidence of serving the notice through recognized modes of service as prescribed by the law, such as speed post, registered post A.D., hand delivery, or electronic email service. The use of a private courier service was deemed invalid, leading to the conclusion that the application was not maintainable due to lack of proper notice delivery.

Time-Barred Debt Issue:
The Tribunal analyzed the date of default and the timeline of events to determine if the debt claimed was time-barred. Despite discrepancies in the Operational Creditor's statements regarding the date of default, the Tribunal established that the debt was indeed time-barred based on the evidence presented. Referring to relevant legal precedents, the Tribunal concluded that the debt was due in 2013, and the application filed in 2019 was beyond the limitation period, rendering it time-barred. The Tribunal dismissed the application on the grounds of lack of evidence of notice delivery and the debt being time-barred.

Conclusion:
The Tribunal dismissed the application under Section 9 of the IB. Code, noting that it was not maintainable due to the failure to comply with the mandatory notice requirements and the debt being time-barred. The order was passed to dismiss and dispose of the case, highlighting the importance of adhering to legal procedures and timelines in insolvency proceedings.