2021 (12) TMI 1235 - 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 - maintainability of application filed without authorisation - application is barred by limitation or not? - HELD THAT - When the respondent itself admitted the fact that the amount of ₹ 63,25,464 was shown in the balance-sheets till July 19, 2018 and written-off on July 20, 2018. When the fact is admitted by the respondent there is no need to prove the said fact by the petitioner in view of section 58 of Indian Evidence Act, 1872. For the reasons discussed above it is concluded that the application is not barred by limitation. Whether genuine pre-existing dispute is there between the parties? - HELD THAT - It is not known how long the track report available on the public domine, further it is stated that the letters were sent by private courier so the presumption available under section 27 of the General Clauses Act, 1897 cannot be invoked. In this situation petitioner side not proved that the said letters were sent as averred in the petition. Thus, on the respondent side raised the acceptable dispute regarding the entitlement of petitioner for the amount claimed in the petition and the interest - The respondent in its reply notice dated September 6, 2019 denies its liability, the dispute raised by the respondent is substantial in nature it needs further investigation. Thus, this point is answered. Whether the application filed without authorisation of the applicant-company is maintainable? - HELD THAT - The operation creditor is a company registered under Companies Act, 1956. In the application there is no averments how the person who filed this application is competent to file the application on behalf of company. Even though he is designated as managing director would have no authority to file the application on behalf of company. There is no board resolution passed authorising the person who filed this application on behalf of the company. In form 5, Chapter II serial No. 6 specifically requires to enclose authorisation. The non-filing of board resolution goes to the root of the case. In this situation it is answered that the application filed on behalf of operational creditor without the authorisation is not maintainable. As per section 9(5)(ii)(a) if the petition is incomplete same shall be rejected, provided seven days' time shall be granted to rectify the defect - Petition dismissed.

Summary

Issues Involved:
1. Whether the application is barred by limitation?
2. Whether a genuine pre-existing dispute exists between the parties?
3. Whether the application filed without authorization of the applicant-company is maintainable?

Issue-wise Detailed Analysis:

Issue 1: Whether the application is barred by limitation?

The respondent argued that the application is barred by limitation since the last payment was made on July 15, 2015, and the application was filed on December 4, 2019, exceeding the limitation period of three years. The petitioner relied on the balance-sheets of the respondent from 2015 to 2018, filed with the Registrar of Companies, to claim acknowledgment of debt under Section 18 of the Limitation Act, 1963. The Supreme Court's judgment in Asset Reconstruction Co. (India) Ltd. v. Bishal Jaiswal was cited, stating that entries in balance-sheets must be unequivocal to constitute acknowledgment of debt. The Tribunal noted that the balance-sheets mentioned amounts under "trade payable current" but did not specifically indicate the debt of ?63,25,464. However, the respondent admitted in a reply notice dated September 6, 2019, that the amount was written off on July 20, 2018, confirming its presence in the balance-sheets until then. Therefore, the Tribunal concluded that the application was not barred by limitation.

Issue 2: Whether a genuine pre-existing dispute exists between the parties?

Under Section 9 of the IBC, the operational creditor must prove debt, due, and dispute-free status. The respondent claimed that the debt was settled on July 15, 2015, and raised disputes regarding the quality and delay of the supplied coal. The Tribunal referred to the Supreme Court's judgment in Mobilox Innovations P. Ltd. v. Kirusa Software P. Ltd., emphasizing that the Tribunal need only determine if there is a plausible contention requiring further investigation. The petitioner claimed an amount of ?63,25,464 towards principal and ?1,09,27,522 towards interest at 24%. The respondent argued that the coal was supplied at higher rates than agreed, resulting in a disputed amount of ?50,70,060. The Tribunal found that the petitioner did not satisfactorily explain the rate differences and that the interest claim lacked contractual basis and was exorbitant. Additionally, the petitioner failed to prove the dispatch of demand letters. The Tribunal concluded that the respondent raised substantial disputes requiring further investigation.

Issue 3: Whether the application filed without authorization of the applicant-company is maintainable?

The respondent objected that the application was filed without proper authorization from the applicant-company. The Tribunal noted that the application lacked averments on the competence of the person filing it and did not include a board resolution authorizing the filing. Form 5, Chapter II, Serial No. 6 requires such authorization to be enclosed. The Tribunal held that the non-filing of the board resolution goes to the root of the case, rendering the application not maintainable. Although the petitioner requested to return the petition for rectification, the Tribunal declined, citing the existence of genuine disputes and the advanced stage of the case.

Conclusion:

The Tribunal dismissed the petition, concluding that the application was not barred by limitation but found substantial pre-existing disputes and lack of proper authorization for filing the application. The registry was directed to send e-mail copies of the order to all parties and their counsel.