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2022 (4) TMI 652 - 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 - whether Ms. Anita Patole was duly authorised to depose on behalf of the applicants in the present application filed under Section 7 of the Code for initiation of CIRP against the Corporate Debtor? - applicability of time limitation - HELD THAT - As per the notification dated 15.01.2003 issued by the Ministry of Finance and Company Affairs (Department of Economic Affairs), the UTI Trustee Company Private Limited, in its capacity as trustee of UTI Mutual Fund was notified as the specified company for the purpose of the Unit Trust of India (Transfer of Undertaking and Repeal) Ac, 2002. Further as per the Extracts of the Minutes of the meeting of the Board of Directors of Applicant No. 2 held on 07.04.2003, the UTI Asset Management Company Private Limited was empowered to institute/defend Legal Actions (both Civil and Criminal)'either by itself or through Lead Institutions etc. Therefore, it is clear that Ms. Anita Patole was duly authorised by the concerned authority to file the affidavit in support of Application under Section 7 of the Code on behalf of Applicant No. 2. Whether the present application has been filed within limitation? - HELD THAT - The Respondent has also laid down three scenarios i.e. in case the default is considered from default of interest amount then the date of default is 31.12.1996, in case the default is considered from the default of principal amount then the date of default is 14.06.1996 and in case the date of default is considered as per the Restructuring Scheme then the date of default is 01.01.1999, therefore, the petition is time barred. The Financial Creditors have rebutted this contention of the Respondent/Corporate Debtor by contending that the Respondent has time and again defaulted in payment of the due amount therefore, there is a continuous default by the Corporate Debtor. It has also been contented that no proceedings could be taken due to BIFR Reference and as soon as the BIFR reference was abated, the legal bar ended and Financial Creditors filed the present petition enforcing their right. Section 238A of the Code came to be inserted vide the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018, with effect retrospectively from 06.06.2018. Combined reading of Section 238A of the Code and Article 137 of the Limitation Act, 1963 reveals that the period of limitation for computation under the code will be 3 years from when the right to initiate accrues i.e. in the present case the date of default. Furthermore, Section 18 and Section 19 state that a fresh period will be computed from the time when the acknowledgment was so signed and when the last payment was made before the expiration of the prescribed period respectively. It is settled proposition of law that provisions of the Limitation Act, 1963 are applicable during computing limitation under the Insolvency and Bankruptcy Code, 2016 - Admittedly, in the instant case the Corporate Debtor was referred to SICA on 08.12.2000. While SICA came to be repealed, Section 7 of the Code was enforced w.e.f. from 01.12.2016. It is therefore, clear that on account of statutory bar the period commencing from 08.12.2000 to 01.12.2016 stands excluded under the aforesaid provisions rendering the Financial Creditors ineligible to file for recovery of outstanding debt or take any other appropriate remedy in law through the ordinary mode i.e. by way of filing of suit etc. Therefore, for the purpose of limitation such period has to be excluded and the petition has been filed well within limitation. Upon a detailed consideration of the application and documents filed by the Applicant, it is apparent that the payment of the claim amount has been defaulted by the Corporate Debtor. Hence, this Adjudicating Authority is inclined to commence CIRP against the Corporate Debtor as envisaged under the provisions of IBC, 2016. Application admitted - moratorium declared.
Issues Involved:
1. Authorization of Ms. Anita Patole to file the petition. 2. Limitation period for filing the petition. 3. Default and continuous default by the Corporate Debtor. 4. Consideration of One Time Settlement (OTS) and settlement proposals. 5. Commencement of Corporate Insolvency Resolution Process (CIRP). 6. Interim Applications filed by the Corporate Debtor. Issue-Wise Analysis: 1. Authorization of Ms. Anita Patole: The tribunal examined whether Ms. Anita Patole was duly authorized to file the petition on behalf of the Financial Creditors. The affidavit in support of the application was filed by Ms. Anita Patole, and authority letters were annexed. The tribunal found that Ms. Anita Patole was duly authorized by both the applicants, as evidenced by the authority letters and resolutions from the respective boards of the applicants. 2. Limitation Period for Filing the Petition: The tribunal considered whether the application was filed within the limitation period. The Financial Creditors argued that the Corporate Debtor's reference to the Board for Industrial and Financial Reconstruction (BIFR) from 08.12.2000 to 01.12.2016 created a bar on legal proceedings, thus extending the limitation period. The tribunal referred to Section 238A of the Insolvency and Bankruptcy Code (IBC) and relevant judgments, concluding that the period during which the BIFR reference was pending should be excluded. Therefore, the petition was filed within the limitation period. 3. Default and Continuous Default by the Corporate Debtor: The tribunal examined the default by the Corporate Debtor in repaying the financial debt. The Financial Creditors provided evidence of multiple defaults and restructuring agreements. The tribunal found that the Corporate Debtor defaulted on several occasions, and the last payment was made on 25.10.2000. The tribunal also considered the acknowledgment of debt through the proposed One Time Settlement (OTS), which extended the limitation period. Thus, the tribunal concluded that there was a continuous default by the Corporate Debtor. 4. Consideration of One Time Settlement (OTS) and Settlement Proposals: The tribunal considered the settlement proposals put forth by the Corporate Debtor. The OTS sanctioned in 2008 was canceled in 2009, and no mutually acceptable settlement was reached. The tribunal referred to the Hon'ble High Court's order directing consideration of the settlement but noted that the Adjudicating Authority cannot compel a party to settle. Therefore, the tribunal decided to proceed with the main petition. 5. Commencement of Corporate Insolvency Resolution Process (CIRP): The tribunal, after detailed consideration of the application and documents, found that the Corporate Debtor had defaulted on the payment of the claim amount. Consequently, the tribunal commenced the CIRP against the Corporate Debtor. Mr. Partha Sarathy Sarkar was appointed as the Interim Resolution Professional (IRP), and a moratorium under Section 14 of the IBC was invoked. 6. Interim Applications Filed by the Corporate Debtor: - IA No. 256/JPR/2020: The Corporate Debtor alleged that the Financial Creditors furnished false information and concealed material particulars. The tribunal found these contentions to be mere technicalities and dismissed the application. - IA No. 334/JPR/2020: The Corporate Debtor sought directions in terms of the High Court's order to consider the settlement. The tribunal, referring to the Hon'ble Supreme Court's judgment, dismissed the application, stating that the settlement proposals were already considered. Conclusion: The tribunal admitted the petition for initiation of CIRP against the Corporate Debtor, appointed Mr. Partha Sarathy Sarkar as the IRP, and invoked a moratorium. The interim applications filed by the Corporate Debtor were dismissed.
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