2022 (4) TMI 781 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT - In view of settlement proposal of the Corporate Debtor, by its group companies dated 16.05.2019, the limitation stands extended in view of the acknowledgement in writing under Section 18 of the Limitation Act - the application which seeks condonation of delay of 1450 days is disposed of and that there is a clear acknowledgement of debt, which extends the limitation period from 16.05.2019 and therefore the contention that the Petition is barred by limitation is untenable. In view of the aforesaid, the petition is admitted. The nature of Debt is a Financial Debt as defined under section 5(8) of the Code. It has also been established that there is a Default as defined under section 3(12) of the Code on the part of the Debtor. The two essential qualifications, i.e., existence of 'debt' and 'default', for admission of a petition under section 7 of the I B Code, have been met in this case. Besides, the Company Petition is well within the period of limitation - it is found that the Petitioner has not received the outstanding Debt from the Corporate Debtor and that the formalities as prescribed under the Code have been completed by the Petitioner, we are of the conscientious view that this Petition deserves 'Admission'. Petition admitted - moratorium declared.

Summary

Issues:
1. Filing of Form No. 1 under the Insolvency and Bankruptcy Code against a Corporate Debtor.
2. Contention regarding delay in filing the application.
3. Settlement proposal by a group of companies extending the limitation period.
4. Admission of the petition under Section 7 of the Insolvency and Bankruptcy Code.
5. Appointment of an Interim Resolution Professional and initiation of the Corporate Insolvency Resolution Process.

Analysis:

1. The Petitioner, a Financial Creditor, filed Form No. 1 under Section 7 of the Insolvency and Bankruptcy Code against the Corporate Debtor, stating a debt of ?66.16 crores with a default date of 30.04.2013. Documents like mortgage creation confirmation, valuation reports, and legal notices were submitted to support the claim.

2. The Corporate Debtor argued a delay of 1450 days in filing the petition, claiming it was time-barred. The Petitioner cited legal precedents to support their stance that the application's limitation period is governed by Article 137 of the Limitation Act, not the date of default.

3. A settlement proposal by a group of companies in 2019 extended the limitation period, acknowledging the debt and preventing the petition from being time-barred under Section 18 of the Limitation Act.

4. The Tribunal found the debt to be a Financial Debt, meeting the criteria for admission under Section 7 of the Code. The petition was admitted within the limitation period, with all formalities completed, leading to the appointment of an Interim Resolution Professional.

5. The appointed Interim Resolution Professional was tasked with initiating the Corporate Insolvency Resolution Process, imposing a moratorium as per Section 14 of the Code. Essential services to the Corporate Debtor were to continue during the process, with public announcements and compliance updates required within specified timelines.

In conclusion, the Tribunal allowed the Company Petition, initiating the Corporate Insolvency Resolution Process against the Corporate Debtor, with the appointed Interim Resolution Professional overseeing the resolution process and compliance with the Code's provisions.