9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (9) TMI 467 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Financial Debt - Non-performing asset - existence of debt and dispute or not - time limitation - HELD THAT - A plea of limitation is a mixed question of law and fact. It cannot be decided as an abstract principle of law devoid from facts as in every case, the starting point of limitation is entirely a question of fact. Time Limitation - HELD THAT - In the instant case, the term loan was serviced till June 2017. The Application was filed on 21.12.2019. Further, an OTS Agreement was entered into by the parties and the promise to pay the amount within the time frame can safely be construed as the existence of a jural relationship between the parties constituting an acknowledgement of debt . Hence, Section 7 Application was not barred by Limitation as the facts substantiate that the period of limitation of three years as provided under Article 137 of the Limitation Act, 1963 is satisfied. In the interest of justice and taking into consideration the fact that in this pandemic, the travel dependent sector, which is the core business of the Corporate Debtor , has more than suffered the negative impact of the crisis, this opportunity is being given to settle which could help mitigate the blow - the Corporate Debtor has settled the matter with Dhanlaxmi Bank, the Applicant of Section 7 Application which was disposed of as withdrawn based on the settlement terms on 06.01.2020, during which period of pendency, this Section 7 Application was filed on 27.12.2019 against the same Corporate Debtor . The Admission of Section 7 Application is set aside - this Appeal is disposed off with a direction that if the Corporate Debtor fails to settle in 6 months time from the date of this Order, the Respondent Bank is at liberty to take appropriate steps.
Issues Involved:
1. Whether the application under Section 7 of the Insolvency and Bankruptcy Code (IBC) is barred by limitation. 2. Whether the debt in question qualifies as a "Financial Debt" under Section 5(8) of the IBC. 3. Whether the Corporate Debtor defaulted in repayment of the financial debt. 4. Whether the initiation of the Corporate Insolvency Resolution Process (CIRP) is justified. Detailed Analysis: Issue 1: Limitation Period for Section 7 Application The primary issue was whether the Section 7 application filed by Union Bank of India was barred by limitation. The Appellant argued that the application was time-barred as the date of NPA was 30.09.2015, and the application was filed on 27.12.2019, exceeding the three-year limitation period specified under Article 137 of the Limitation Act, 1963. The Respondent countered that the debt was acknowledged in various communications and payments, including a revival letter dated 01.06.2017, which extended the limitation period. The Tribunal noted that the limitation period is a mixed question of law and fact, and the starting point of limitation is a question of fact. It was observed that the Corporate Debtor had acknowledged the debt through various agreements and payments, including a One Time Settlement (OTS) agreement dated 27.11.2019. The Tribunal held that the application was not barred by limitation, as the period of limitation of three years was satisfied due to the continuous acknowledgment of debt. Issue 2: Nature of Debt as "Financial Debt" The Tribunal examined whether the debt in question qualifies as a "Financial Debt" under Section 5(8) of the IBC. The Adjudicating Authority had earlier established that the debt was a financial debt, as the Corporate Debtor did not deny the debt amount and had defaulted in repayment. The Tribunal upheld this finding, noting that the debt was indeed a financial debt as defined under the IBC. Issue 3: Default in Repayment The Tribunal also considered whether there was a default in repayment of the financial debt. The Adjudicating Authority had found that there was a default, as the Corporate Debtor had not adhered to the repayment schedule and had acknowledged the debt in various communications. The Tribunal agreed with this finding, noting that the Corporate Debtor had defaulted in repaying the financial debt. Issue 4: Justification for Initiation of CIRP The Tribunal assessed whether the initiation of the CIRP was justified. The Corporate Debtor argued that the initiation of CIRP would cause grave economic loss, as the project was at a threshold stage and ready to be rolled out. The Tribunal acknowledged the economic impact of the pandemic on the travel and tourism sector, the core business of the Corporate Debtor. It was noted that the Corporate Debtor had made efforts to settle the dues with other banks and had entered into OTS agreements. In the interest of justice, the Tribunal set aside the admission of the Section 7 application and provided the Corporate Debtor with a six-month period to settle the matter. If the Corporate Debtor fails to settle within this period, the Respondent Bank is at liberty to take appropriate steps. Conclusion: The Tribunal concluded that the Section 7 application was not barred by limitation, the debt qualified as a financial debt, and there was a default in repayment. However, considering the economic impact of the pandemic and the efforts made by the Corporate Debtor to settle the dues, the Tribunal provided a six-month period for settlement before allowing the initiation of CIRP.
|
