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2022 (4) TMI 430 - Tri - 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 - application is filed within the period of limitation or not - MoUs between the Financial Creditor and Corporate Debtor are executed under proper authorization or not? - HELD THAT - The present Application which is filed after three years from the date of the MoU or from the date on which the six months falls, which is also beyond three years, is based on a cheque dated 19.11.2020 which is issued by the authorized signatories of LEPL Ventures Private Limited. The date of MoU being 23.06.2016, six months from then would be ending by 23.12.2016. If three years is construed from 23.12.2016, the three years period would be completed by 23.12.2019. Hence, clearly the limitation for filing a suit, based on the MoUs, stands expired by the date of this application. It would be beneficial to refer to the Judgment of the Supreme Court in B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES 2018 (10) TMI 777 - SUPREME COURT , wherein it is held that the limitation act is applicable to applications filed under Section 7 and 9 of the IBC from the inception of the Code. Article 137 of the Limitation Act gets attracted. It was held that the right to sue therefore accrues when a default occurs and if the default has occurred over three years prior to the filing of the date of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases wherein Section 5 of Limitation Act may be applied to condone the delay in filing such application. Subject to the finding on the contentions of the Counsel for the Financial Creditor, by virtue of the above judgment, this application stands to have been filed after three years, when reckoned from the dates mentioned in the MoUs, as observed in the above paragraphs. Coming to the Judgment of the GUJARAT HIGH COURT in Hindustan Apparel Industries 2000 (5) TMI 1095 - GUJARAT HIGH COURT , the Patna High Court has already held that a post-dated cheque would amount to acknowledgement of liability irrespective of it being dishonoured subsequently - It is observed that when the drawer issues a cheque it is very much in his mind that it does show as part of his jural relationship with the person to whom he issues the cheque and there may be different state of his mind at the stage when the cheque is presented for payment. It was held that a cheque would prima facie amount to an admission of debt unless a contrary intention has been expressed by the person issuing the cheque. Such an admission of payment of debt is to be determined with reference to the point of time at which the purported admission was made i.e., when the cheque was issued - according to Section 18 the acknowledgement of liability should be made before the expiration of the prescribed period for a suit or application in respect of the debt. If the acknowledgement is beyond the said period it does not amount to acknowledgment in terms of Section 18 of the Limitation Act. There is no doubt that this Tribunal has jurisdiction to lift the corporate veil, to understand the genuineness of the transaction. But for the purpose of understanding the genuineness of the transaction, if evidence need to be taken, the Tribunal would not have jurisdiction. In this case, from the terms of the MoU itself, it can be concluded that there is no concluded contract between the parties and that the due date for the debt has not arrived and consequently no default has been committed. Hence viewed from the angle of limitation and the angle of debt becoming due and the angle of the commission of default, the Petition is liable to be dismissed. If the Financial Creditor is bent upon realizing the amounts he has to get the performance of the MoUs done by approaching the appropriate Forum, but not by way of an application under Section 7 of IBC, 2016.
Issues Involved:
1. Whether the application is filed within the period of limitation and whether the MoUs between the Financial Creditor and Corporate Debtor are executed under proper authorization. 2. Whether there is any debt which is due to be paid to the Financial Creditor and whether any default in terms of Section 3(12) has been committed by the Corporate Debtor. 3. To what result. Issue-Wise Detailed Analysis: I. Whether the application is filed within the period of limitation and whether the MoUs between the Financial Creditor and Corporate Debtor are executed under proper authorization. The claim is based on two Memorandums of Understanding (MoUs) dated 25.10.2015 and 23.06.2016. The first MoU was signed between Sri Boppana Satyanarayana Rao (Investor) and Sri Ramesh Lingamaneni (Company). The MoU recites that the investor advanced certain amounts to the Company and agreed to repay ?219 Crores along with ?32 Crores compensation by 31.01.2016. The second MoU dated 23.06.2016 structured the transaction, mentioning that Party-B (Lingamaneni) failed to pay the agreed amount and agreed to pay ?300 Crores plus interest @ 18% p.a. from 01.12.2015. The Corporate Debtor contended that the MoUs were not binding as there was no authorization for Sri Ramesh Lingamaneni to enter into MoUs on behalf of the Corporate Debtor. The Tribunal found that there was no evidence of due authorization and the MoUs did not bind the Corporate Debtor. II. Whether there is any debt which is due to be paid to the Financial Creditor and whether any default in terms of Section 3(12) has been committed by the Corporate Debtor. The Tribunal observed that the obligations under the MoUs were not fulfilled, making the contract a non-concluded one. The MoU dated 23.06.2016 stated that Party-B had to arrange a joint venture, failing which they had to sell the land and pay ?300 Crores. Since these obligations were not fulfilled, no default could be said to have been committed. The application was filed after the limitation period of three years from the date of the MoU or the date on which six months from the MoU ended. The Financial Creditor argued that the issuance of a cheque dated 19.11.2020 acknowledged the debt, thus starting a fresh limitation period. However, the Tribunal held that the cheque issued by LEPL Ventures Private Limited did not have any basis of a debt and was disjunctive from the MoUs executed by Ramesh Lingamaneni. The Tribunal referred to the Supreme Court judgment in B.K. Educational Services Private Limited Vs. Parag Gupta and Associates, which held that the limitation act is applicable to applications filed under Section 7 and 9 of IBC. The Tribunal concluded that the application was time-barred and the cheque did not constitute a valid acknowledgment of debt under Section 18 of the Limitation Act. III. To what result. The Tribunal found that the Financial Creditor's application was not maintainable due to the expiration of the limitation period, the non-concluded nature of the MoUs, and the lack of proper authorization for the MoUs. The petition was dismissed, and the Financial Creditor was advised to approach the appropriate forum for the performance of the MoUs. Conclusion: The Tribunal dismissed the application on grounds of limitation, lack of proper authorization for the MoUs, and the non-concluded nature of the contracts. The Financial Creditor was advised to seek remedy through appropriate forums rather than under Section 7 of IBC, 2016.
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