2022 (3) TMI 811 - 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 - whether this application filed on 28.06.2021 claiming the default amount of ₹ 5,22,852.25/- as on 05.08.2020 is maintainable or not? - HELD THAT - In the Part IV of the application, it is stated that the defaults were occurred as on 14.07.2017 and 31.08.2017. If these dates are taken as the last invoice dates this application was filed on 28.06.2021 which is beyond three years from that dates is barred by limitation as the three-year period expired long back. Moreover, in view of the Notification No. 1205(E) dated 24.03.2020 issued by the Ministry of Corporate Affairs specifying Rupees One Crore as the minimum amount of default and that this application has been filed on 18.06.2021 claiming the due amount of ₹ 5,22,852.25/-, on that count also this application is not maintainable. The amount had fallen in default as on 14.07.2017 and 31.08.2017 and the demand notice served only on 06.12.2019. There was a huge delay in sending the demand notice to the Corporate Debtor and the Operational Creditor did not mention any valid reason for that delay, and this application has been filed claiming the due amount of ₹ 5,22,852.25/- which is below ₹ 1 Crore fixed vide Notification No. 1205(E) dated 24.03.2020 issued by the Ministry of Corporate Affairs. Hence, this application for initiation of CIRP against the Corporate Debtor cannot be entertained. Application dismissed.

Issues:
1. Maintainability of the application under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Barred by limitation as per Article 137 of the Limitation Act, 1963.
3. Compliance with the minimum default amount specified by the Ministry of Corporate Affairs.
4. Delay in serving the demand notice to the Corporate Debtor.

Analysis:
1. The application was filed by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Insolvency Resolution Process against the Corporate Debtor due to an alleged default amount. The Operational Creditor claimed that a significant sum was due from the Corporate Debtor, citing specific invoice dates and default occurrences.

2. The Tribunal examined the issue of limitation concerning the application. It was noted that the application was filed beyond three years from the last invoice dates mentioned, which raised concerns about the application being barred by limitation as per Article 137 of the Limitation Act, 1963. Article 137 provides a three-year limitation period from the date when the right to apply accrues.

3. Additionally, the Tribunal considered the minimum default amount specified by the Ministry of Corporate Affairs in a notification. The application claimed an amount below the specified threshold, which led to further doubts about the maintainability of the application based on the prescribed minimum default amount.

4. Another crucial aspect analyzed was the delay in serving the demand notice to the Corporate Debtor. The Tribunal observed a significant delay in sending the demand notice, with no valid reasons provided by the Operational Creditor for the delay. This delay, coupled with the application claiming an amount below the specified threshold, led to the dismissal of the application for initiating the Corporate Insolvency Resolution Process against the Corporate Debtor.

In conclusion, the Tribunal dismissed the application, emphasizing the issues of limitation, compliance with the minimum default amount, and the delay in serving the demand notice as key factors contributing to the decision. The judgment highlighted the importance of procedural compliance and adherence to statutory requirements in insolvency proceedings.

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