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2021 (11) TMI 187 - Tri - 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 - HELD THAT - Admittedly, the first default in repayment of interest took place on 30.06.2015. As per the Limitation Act, 1963, the period of limitation commenced on 30.06.2015 and ended 3 years from that date. The Insolvency Application is filed beyond the stipulated period of 3 years and, it is ex-facie apparent that the underlying purported claim is not legally enforceable and the petition is barred by limitation. Further, it is settled position of law that the limitation would have to be counted from the date of first default i.e. 30.06.2015 in the present case, unless waiver is pleaded. Pertinently, no waiver is available to the applicant bank at this belated stage, as the same has not been pleaded in the Insolvency Application. On all counts therefore, the Corporate Debtor submits and reiterates that the Insolvency Application is barred by limitation. In the Corporate Debtor's respectful submission, limitation is an issue of jurisdiction which precludes this Tribunal from granting any relief to the Applicant Bank. This also renders the Insolvency Application as not maintainable. The Bench is of the clear view that there is a Financial Debt in terms of Section 5(8) and there is default in terms of Section 3(12). The limitation aspect raised by the Corporate Debtor does not hold good. Petition allowed - moratorium declared.
Issues Involved:
1. Limitation of the claim 2. Insufficient stamping of documents 3. Validity of the authority to file the application 4. Usurious interest and charges Detailed Analysis: Limitation of the Claim: The Corporate Debtor argued that the claim is barred by limitation, asserting that the limitation period began on 30.06.2015, the date of the first default in interest payment, and ended three years later. However, the Tribunal referred to Section 3(12) of the Insolvency and Bankruptcy Code (IBC), which defines "default" as non-payment of a debt when it becomes due and payable. The Tribunal noted that the Financial Creditor initiated the Corporate Insolvency Resolution Process (CIRP) based on the default date of 30.11.2015, when the first installment of principal and interest was due. The petition was filed on 29.11.2018, within the three-year limitation period. The Tribunal referenced the Supreme Court's ruling in BK Educational Services Private Limited v. Parag Gupta and Associates, which stated that the limitation period relates back to the last defaulted installment. Therefore, the claim was within the limitation period. Insufficient Stamping of Documents: The Corporate Debtor contended that the Facility Agreement and other security documents were insufficiently stamped and thus could not be acted upon by the Tribunal. The Tribunal, however, cited the NCLT judgment in Manglam Vanjiya Pvt. Ltd. v. Reward Business Solutions Pvt. Ltd., which held that a petition under Section 7 of the IBC cannot be stalled due to curable defects, including insufficient stamping of documents. Therefore, the insufficient stamping of documents was not a ground for rejecting the petition. Validity of the Authority to File the Application: The Corporate Debtor argued that the petition was filed without valid authority. The Tribunal noted that the Power of Attorney was executed by individuals duly authorized by a Board Resolution dated 14.03.2021. Therefore, the petition was filed with proper authority. Usurious Interest and Charges: The Corporate Debtor claimed that the interest and other charges levied by the Financial Creditor were unfair and usurious. It was argued that despite the suspension of the facility by the Financial Creditor, commitment charges, hedging charges, and interest were still imposed on the undisbursed amount. The Tribunal did not find merit in this argument, as the primary focus was on the default and the initiation of CIRP. Findings and Order: The Tribunal concluded that there was a financial debt and default as defined under the IBC. The limitation aspect raised by the Corporate Debtor was not upheld. The petition satisfied all necessary legal requirements for admission. Consequently, the Tribunal admitted the Company Petition No. 4468/2018 and initiated the CIRP against the Corporate Debtor. The Tribunal appointed an Interim Resolution Professional (IRP) and directed the Financial Creditor to deposit an amount towards the initial CIRP cost. The Tribunal also imposed a moratorium, prohibiting the institution or continuation of suits or proceedings against the Corporate Debtor and ensuring the supply of essential goods or services during the moratorium period. The M.A. bearing no. 613/2019 filed by the Corporate Debtor was dismissed.
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