2022 (1) TMI 160 - 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 - petition is within the limitation or not - HELD THAT - It is very clear from the perusal of the relevant dates of invoices that none of the invoices are within 3 years prior to the date of filing the above Company Petition on 24.10.2019 and are all barred by limitation - Upon thorough verification from Tribunal records and inward stamp appearing on Company Petition it reveals that the petition was filed on 24.10.2019 and the two invoices admitted to have been within limitation by the Corporate Debtor were also barred by limitation. This Bench has no hesitation in holding that the Company Petition is hopelessly barred by the limitation - Since the Company Petition is dismissed on the ground of limitation, this Bench feels that there is no necessity to make any observations or give findings on the other pleas raised by the Corporate Debtor in their reply. Company Petition is dismissed.

Summary

Issues:
1. Alleged default in payment by Corporate Debtor leading to the filing of Company Petition for Corporate Insolvency Resolution Process (CIRP).
2. Dispute regarding the outstanding amount and invoices raised by the Petitioner.
3. Legal objections raised by the Corporate Debtor in response to the Company Petition, including maintainability, limitation, and authenticity of invoices.
4. Determination of whether the Company Petition is within the limitation period.

Analysis:
The Company Petition was filed by the Petitioner seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor due to an alleged default in payment amounting to ?76,04,050 with interest. The Petitioner, engaged in providing transport services, invoiced the Corporate Debtor for services rendered, which were acknowledged by the Corporate Debtor. Despite repeated requests for payment, the Corporate Debtor failed to settle the outstanding amount, leading to the initiation of insolvency proceedings under Sections 8 & 9 of the Insolvency and Bankruptcy Code, 2016.

The Counsel for the Corporate Debtor raised various objections in response to the Company Petition. Firstly, it was contended that the Petition was not maintainable as it was filed in the name of a sole proprietary firm, which is not recognized as a person capable of maintaining such a petition under the Insolvency and Bankruptcy Code. Secondly, the Corporate Debtor argued that the claim was time-barred, citing the range of invoices from 31.03.2015 to 10.10.2016, which exceeded the limitation period. Additionally, the Corporate Debtor alleged that a significant number of invoices were bogus or inflated, further disputing the authenticity of the debt claimed by the Petitioner.

Upon hearing both parties and examining the records, the Tribunal identified the key issue to be determined as whether the Company Petition was within the limitation period. The Petition sought to recover the outstanding amount based on 174 invoices covering a period from 31.03.2015 to 25.09.2016. The Tribunal observed that none of the invoices fell within the three-year limitation period preceding the filing of the Petition on 24.10.2019, rendering the claim time-barred.

The Tribunal clarified that even the two invoices acknowledged by the Corporate Debtor to be within the limitation period were, in fact, also barred by limitation based on the actual filing date of the Petition. Consequently, the Tribunal dismissed the Company Petition on the grounds of being hopelessly barred by limitation, thereby negating the need to address the other objections raised by the Corporate Debtor in their reply.

In conclusion, the Tribunal dismissed the Company Petition due to being time-barred, emphasizing the critical importance of adhering to the limitation period in insolvency proceedings.