2022 (2) TMI 797 - 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 - time limitation - HELD THAT - The respondent case that the petition is barred by limitation wherein the date of default is between 01.07.2017 to 02.03.2018 and thus, the limitation stands expired on 01.03.2021. Also, Supreme Court had excluded the period of limitation w.e.f. 15.03.2020 owing to the outbreak of COVID-19. Thus, the limitation period expiring on 30.06.2020 was extended by the order of Hon'ble Supreme Court. Hence the petition is not time barred. Further the respondent corporate debtor has admitted its liability to pay the operational debt via reply dated 24.02.2021. The corporate debtor in its reply dated 24.02.2021 admitted the default and further sought time till 01.12.2021 to pay the amount. Since the corporate debtor already admitted its liability to clear its debt which is evident from reply dated 24.02.2021, the present application deserves to be allowed - application allowed - moratorium declared.

Summary

Issues:
- Application under section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.
- Dispute regarding the nature of the claimed debt.
- Barred by limitation argument raised by the respondent.
- Admission of liability by the respondent.
- Appointment of Insolvency Resolution Professional.
- Deposit of funds for the IRP.
- Imposition of moratorium under Section 14 of the Code.

Analysis:
1. The application was filed under section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process against the respondent company. The applicant, an operational creditor, claimed unpaid operational debt, alleging repeated defaults by the respondent in payment. The applicant provided detailed transactional history leading to the petition, including invoicing and demand notices served to the respondent.

2. The respondent disputed the nature of the claimed debt, arguing that the lease of immovable property did not fall under the definition of operational debt as per the Code. Additionally, the respondent raised concerns about the limitation period, asserting that the petition was time-barred due to the date of default falling outside the limitation period. The respondent also claimed a settlement agreement post the demand notice, which the applicant contested.

3. The Tribunal deliberated on the limitation issue, considering the exclusion of the limitation period due to the COVID-19 outbreak as per a Supreme Court order. The respondent's admission of liability in a subsequent reply was noted, undermining the limitation argument. The Tribunal referenced a relevant NCLAT judgment to establish that lease rentals for commercial purposes qualified as operational debt, supporting the applicant's claim.

4. Consequently, the Tribunal found in favor of the applicant, emphasizing the respondent's admission of liability and the nature of the debt as operational. The Tribunal appointed an Insolvency Resolution Professional, directing the applicant to deposit funds for the IRP's expenses. A moratorium was imposed on the respondent, following the admission of the application, with specific instructions for communication and compliance with regulatory bodies.

5. The judgment highlighted the legal intricacies of operational debt under the Code, addressing disputes, limitation periods, and the admission of liability. The procedural aspects of appointing an IRP, fund deposition, and the implications of the moratorium were meticulously outlined, ensuring compliance with regulatory requirements and due process.