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2022 (7) TMI 146 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - time limitation - recovery of dues from the Corporate Debtor - Central Government has taken over the management or the control of the Demdima Tea Estates and six other tea gardens - separate juristic entity of Corporate Debtor - seeking exclusion of the period of 536 days in computation of the period of limitation under the Limitation Act, 1963, for the purpose of filing of the petition - whether taking over management of the said Tea Gardens has created an embargo in filing of appropriate insolvency proceeding under the Insolvency and Bankruptcy Code, 2016? HELD THAT - The Operational Creditor has based the instant interlocutory application on the Notification dated 28 January 2016 vide S.O.No.260(E) issued by Additional Secretary, Ministry of Commerce and Industries, Department of Commerce, New Delhi, whereby the Central Government has taken over the management or the control of the Demdima Tea Estates and six other tea gardens, in exercise of their powers conferred by sub-section (1) of the Section 16(E) of the Tea Act 1953 (29 of 1953) and under provisions of the Chapter-IIIA of the Tea Act 1953 (29 of 1953) - The Operational Creditor has claimed that pursuant to the provisions of Chapter IIIA of the Tea Act 1953, no proceedings for winding up or for the appointment of receiver is maintainable. As such the Operational Creditor could not take any steps or file any suit or application for winding up or under Section 9 of the Insolvency and Bankruptcy Code, 2016 before the appropriate forum and the recovery of the said outstanding dues was stalled. Section 16M of the Tea Act, 1953 which provides that no suit or other legal proceedings shall be instituted or continued against a tea undertaking or tea unit in respect of which an order has been made under Sections 16D or 16E, except with the previous permission of the Central Government or of any officer authorised by the Government in this purpose - under section 16G of the Tea Act, 1953, where management or a tea undertaking or tea unit owned by a company is taken over by any person or body of persons authorised by the Central Government under the said Act, then, notwithstanding anything contained in the said Act or in the memorandum or articles of such company, no proceedings for winding up of such company or for the appointment of Receiver in respect thereof shall lie in any Court except with the consent of the Central Government. The Operational Creditor could have filed a suit against the Corporate Debtor upon taking prior consent of the Central Government. While the notification dated 28th January 2016 places the tea estate owned by the Corporate Debtor under the control and management of the Tea Board authorized by the Central Government, the same cannot be said about the Corporate Debtor itself. The Corporate Debtor was very much under the control of its directors. As such, the Operational Creditor had ample opportunity to proceed against the Corporate Debtor for recovery of its dues or under section 9 of the Insolvency and Bankruptcy Code, 2016. This Adjudicating Authority is not satisfied that the Operational Creditor had sufficient cause for not preferring CP(IB) No. 2185/KB/2019 within the prescribed limitation period - Petition dismissed.
Issues Involved:
1. Validity of the power of attorney for initiating insolvency proceedings. 2. Bar of limitation on the petition. 3. Pre-existence of disputes between the parties. 4. Compliance with mandatory affidavits under sections 9(3)(b) and 9(3)(c) of the Insolvency and Bankruptcy Code, 2016. 5. Exclusion of the period of limitation due to the Notification dated 28 January 2016 under the Tea Act, 1953. Issue-wise Analysis: 1. Validity of the Power of Attorney for Initiating Insolvency Proceedings: The Corporate Debtor argued that the application was affirmed by an alleged constituted attorney of the Operational Creditor and that a power of attorney holder is not a proper authority to initiate insolvency proceedings. They also noted that the purported power of attorney was not annexed to the application, making it liable to be dismissed. 2. Bar of Limitation on the Petition: The Corporate Debtor contended that the petition was barred by laws of limitation, as the claims were due from 31 December 2015, and the petition should have been filed within three years, i.e., by 30 December 2018. The Operational Creditor admitted the last payment was made on 07 May 2015, indicating the proceedings should have been filed by 07 May 2018. The Operational Creditor sought condonation of delay due to the Notification dated 28 December 2016, which imposed an embargo till the Supreme Court's decision on 04 October 2019. 3. Pre-existence of Disputes Between the Parties: The Corporate Debtor raised the issue of pre-existing disputes, arguing that disputes were raised much before the demand notice and in various forums. They accused the Operational Creditor of misleading the Adjudicating Authority. 4. Compliance with Mandatory Affidavits Under Sections 9(3)(b) and 9(3)(c) of the Insolvency and Bankruptcy Code, 2016: The Corporate Debtor pointed out the absence of affidavits under sections 9(3)(b) and 9(3)(c), which are mandatory for such petitions. The affidavit annexed was in respect of another entity, Bengal Waterproof Ltd., and not the Corporate Debtor. 5. Exclusion of the Period of Limitation Due to the Notification Dated 28 January 2016 Under the Tea Act, 1953: The Operational Creditor sought exclusion of the period of limitation due to the Notification dated 28 January 2016, which took over the management of the tea estates and imposed an embargo on legal proceedings. They argued that this period should be excluded from the limitation period, making their petition timely. Findings and Judgment: On the Validity of the Power of Attorney: The tribunal did not specifically address the issue of the power of attorney's validity in detail in the judgment, focusing more on the limitation and embargo arguments. On the Bar of Limitation: The tribunal noted that the date of default was 31 December 2015, and the petition should have been filed within three years. The Operational Creditor's argument for condonation of delay due to the Notification was rejected. The tribunal held that the Operational Creditor could have proceeded against the Corporate Debtor upon taking prior consent from the Central Government, which they failed to do. On Pre-existence of Disputes: The tribunal did not delve deeply into the pre-existence of disputes, as the petition was primarily dismissed on the grounds of limitation. On Compliance with Mandatory Affidavits: The tribunal acknowledged the Corporate Debtor's argument regarding the absence of mandatory affidavits but did not base its final decision on this point. On Exclusion of the Period of Limitation: The tribunal referred to sections 16M and 16G of the Tea Act, 1953, stating that the Operational Creditor could have filed a suit against the Corporate Debtor with prior consent from the Central Government. The tribunal concluded that the Operational Creditor did not have sufficient cause for not filing the petition within the prescribed period. Consequently, the application for condonation of delay was rejected, and the main petition was dismissed as barred by limitation. Conclusion: The petition CP(IB) No. 2185/KB/2019 was dismissed as barred by limitation. The tribunal directed the registry to send e-mail copies of the order to all parties and their counsel and allowed for the issuance of a certified copy of the order upon compliance with requisite formalities. The file was consigned to the record.
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