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2022 (3) TMI 236 - 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 - HELD THAT - From the perusal of the page 150, Vol.-I of the Appeal which is the Financial Statement of the Respondent ending on 31.03.2017 for amount of ₹ 54,71,783/- is shown under the heading of Long Term Borrowing - Further, page 165, Vol.-I of the Appeal which is the Financial Statement of the Respondent ending on 31.03.2016 for amount of ₹ 54,71,783/- is shown under the heading of Long Term Borrowing . Further, page 208, Vol.-I of the Appeal which is the Account Ledger Confirmation of the Appellant duly signed by the Respondent s authorized signatory starting from 01st April 2015 to 31st March 2016 shows that the amount of ₹ 54,71,783/- as a Long Term Borrowing . Similarly, certificate given by B.C. Patel Co., Chartered Accountants (at page 209, Vol.-I of the Appeal) after verified from the ledger account and other relevant documents shows that the Respondent had an outstanding of ₹ 89,24,630/- till 31st December 2019. - the Ld. Adjudicating Authority while passing the impugned order did not peruse the aforesaid documents. The matter is remitted back to the Ld. Adjudicating Authority (National Company Law Tribunal), Ahmedabad Bench, Ahmedabad with a request to hear the parties and after perusing the aforesaid documents whereby the Respondent categorically acknowledged the debt, pass fresh orders within twelve weeks from the date of receipt of this judgment - Appeal allowed by way of remand.
Issues:
1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 dismissed due to being time-barred. 2. Applicability of the Limitation Act 1963 to the Insolvency and Bankruptcy Code. 3. Consideration of essential elements for admission of Section 7 petition. 4. Default by the Respondent as a continuing default. 5. Failure of the Respondent to appear in the proceedings. Analysis: 1. The Appellant filed an Appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016, challenging the dismissal of the Application under Section 7 by the Ld. Adjudicating Authority. The Appellant, a Financial Creditor, provided an unsecured loan to the Corporate Debtor, who defaulted in repaying the loan. The Adjudicating Authority rejected the Application as time-barred. The Appellant argued that the debt was not time-barred and relied on the Limitation Act 1963, specifically Section 18. The Appellant contended that the default continued, justifying the admission of the Section 7 petition. 2. The Appellant emphasized that the Ld. NCLT should consider essential elements for admitting a Section 7 petition, including the occurrence of a default and furnishing records of default. The Appellant argued that both conditions were met, and the Adjudicating Authority's finding of the debt being time-barred was erroneous. The Appellant highlighted the continuing default by the Respondent and discrepancies in the Authority's consideration of the limitation period, urging the Appeal to be allowed. 3. Despite the Respondent's non-appearance, the Appellate Tribunal examined various financial statements and documents showing the debt acknowledgment and outstanding amounts. The Tribunal found that the Adjudicating Authority did not adequately review these documents, leading to the setting aside of the impugned order. The matter was remitted back to the Adjudicating Authority for fresh consideration based on the evidence presented, with a directive to pass new orders within twelve weeks. 4. Ultimately, the Appellate Tribunal concluded that the impugned order could not stand legally. The Tribunal set aside the order dated 22.03.2021 and instructed the Adjudicating Authority to reconsider the case in light of the documented acknowledgments of debt by the Respondent. The Appeal was disposed of with no costs, and the Registry was directed to publish the Judgment on the Tribunal's website and provide a copy to the Adjudicating Authority promptly.
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