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2021 (9) TMI 1246 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - violation of Principles of Natural Justice - HELD THAT - Appellant is harping upon the fact that the reply was to the MA and not to the petition. This deserves to be rejected. If one peruses Annexure A-5, it shows that in para 1 of the Reply although the Corporate Debtor referred to Miscellaneous Application (which was already withdrawn), the Corporate Debtor in para 3 stated that the Appellant was filing this affidavit for the purpose of opposing the Company Petition. In said reply the contentions of the company petition are met for the purpose of opposing the company petition. The reply goes on to answer averments of the petition. The receipt of the loan is admitted. The debt outstanding is not disputed and the re-payments made till March, 2016 are pointed out. The fact that the Financial Creditor has obtained Recovery Certificate under Section 101 of the Maharashtra Co-operative Societies Act on 21.01.2015 is also not disputed - we discard the claim being made by the Corporate Debtor that he did not get opportunity to file reply to the petition. Violation of principles of natural justice - HELD THAT - Once the party has appeared in the proceeding in the original forum where the further dates are given in the proceedings, and pendency of the proceeding is known to a party, it is the responsibility of the party also to keep track of the proceedings and to participate in future developments in the matter. The Corporate Debtor sought time to amicably settle the matter. It was recorded that failing settlement the matter will be heard on merits on next date of hearing and the matter came to be adjourned to 07.04.2020. The matter could not be heard on 07.04.2020 and was taken up on 24.11.2020 and the order dated 24.11.2020 shows that the Adjudicating Authority referred to hearings that took place on earlier dates and that the Corporate Debtor had filed reply. The Adjudicating Authority by way of abundant caution directed the Registry to send a court notice to the Corporate Debtor as although the Counsel for Petitioner was present nobody was present for the Corporate Debtor. Time Limitation - HELD THAT - The Adjudicating Authority came to a right conclusion that there was a debt which was in default and the debt outstanding was within limitation - Hon ble Supreme Court referred to the judgment of Sesh Nath Singh Anr. vs. Bidyabati Sheoraphuli Co-operative Bank Ltd. Anr. , 2021 (3) TMI 1183 - SUPREME COURT to observe that IBC does not exclude the application of Section 14 or 18 or any other provision of the Limitation Act. It is quite clear that Certificate of Recovery issued would also give fresh right to recover the amounts for which the Recovery Certificate has been issued - In the present matter the Recovery Certificate was issued on 21.01.2015. Then there are undisputedly part-payments made. Thus Section 19 of Limitation Act is also helpful to Financial Creditors. The Application filed under Section 7 on 22.11.2019 cannot be said to be time barred. Appeal dismissed.
Issues Involved:
1. Admittance of the Application under Section 7 of the Insolvency and Bankruptcy Code, 2016. 2. Alleged procedural defects and withdrawal of amendment application. 3. Alleged violation of Principles of Natural Justice. 4. Limitation period for filing the Company Petition. Issue-wise Detailed Analysis: 1. Admittance of the Application under Section 7 of the Insolvency and Bankruptcy Code, 2016: The appeal was filed against the order dated 19th February 2021, where the Adjudicating Authority admitted the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) filed by the Financial Creditor. The Corporate Debtor had availed of credit facilities, including a Working Capital Term Loan of ?5 Crore, which was disbursed by multiple financial entities. The Corporate Debtor mortgaged properties and expected to receive grant-in-aid from the Government of Maharashtra, which was not released, leading to the default. 2. Alleged procedural defects and withdrawal of amendment application: The Appellant claimed that the Respondent had filed MA No. 452/2020 seeking amendment in the petition, which was withdrawn on 07.02.2020. Despite this, the petition was admitted. The Appellant argued that the petition had defects and should not have been admitted. The Adjudicating Authority allowed the Financial Creditor to file an amended Form 1 by way of an additional affidavit, which was filed on 18.02.2020. 3. Alleged violation of Principles of Natural Justice: The Appellant argued that the Corporate Debtor was not given a fair opportunity to represent itself, claiming that no court notice was issued after 24.11.2020, and the impugned order was passed based on the assumption that the Corporate Debtor had filed a reply. The Appellant also claimed that the notice of hearing dated 04.04.2020 was not possible due to the nationwide lockdown. However, the Adjudicating Authority noted that the Corporate Debtor had appeared in the proceedings, filed a reply, and sought time for an amicable settlement. The Corporate Debtor was informed of the dates through various communications, and the claim of violation of Principles of Natural Justice was dismissed. 4. Limitation period for filing the Company Petition: The Appellant contended that the date of default was 30.11.2013, and the Company Petition filed on 22.04.2019 was time-barred, citing the Supreme Court judgment in "Babulal Vardharji Gurjar Vs. Veer Gurjar Aluminum Industries Ltd. & Anr." The Respondent argued that the claim was within limitation, supported by the Customer Ledger Account and subsequent payments made by the Corporate Debtor. The Adjudicating Authority observed that the last payment was made on 08.06.2018, and under Section 19 of the Limitation Act, a fresh period of limitation commenced from the last payment date. The Recovery Certificate issued on 21.01.2015 also provided a fresh right to recover the amounts, making the application under Section 7 within the limitation period. Conclusion: The appeal was dismissed, and the interim orders were vacated. The Adjudicating Authority's decision to admit the application under Section 7 of IBC was upheld, and the claim of violation of Principles of Natural Justice and the argument regarding the limitation period were rejected. The Resolution Professional was granted liberty to move the Adjudicating Authority for appropriate reliefs.
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