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2022 (8) TMI 327 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Corporate Debtor owed a financial debt to the Appellant or not - applicability of principles of res-judicata - balance sheet for the years 2014-15, 2015-16, 2016-17, 2017-18 and 2018-19 contain acknowledgment of debt as per the meaning of Section 18 of the Limitation Act, 1963 so as to give benefit fresh limitation period to the Appellant - application filed under Section 7 of IBC by the Appellant was barred by time or not. HELD THAT - The Hon ble Apex Court, recently held that doctrine of resjudicata is applicable to proceedings under IBC also in EBIX SINGAPORE PRIVATE LIMITED VERSUS COMMITTEE OF CREDITORS OF EDUCOMP SOLUTIONS LIMITED ANR., KUNDAN CARE PRODUCTS LIMITED VERSUS MR AMIT GUPTA AND ORS. AND SEROCO LIGHTING INDUSTRIES PRIVATE LIMITED VERSUS RAVI KAPOOR RP FOR ARYA FILAMENTS PRIVATE LIMTIED ORS. 2021 (9) TMI 672 - SUPREME COURT held that the doctrine of resjudicata is applicable to the proceeding of IBC. Since the adjudication by this Tribunal is in effect right in rem, the Appellant, being shareholder, filed this appeal. The law declared by Hon ble Apex Court is not in dispute, but the Appellant herein is claiming interest through Corporate Debtor. When the Corporate Debtor challenged the same applying doctrine of resjudicata, in view of law declared by Apex Court in Ebix Singapore Pvt. Ltd. and the judgment has attained finality, the Appellant who is claiming interest through Corporate Debtor is debarred from re-agitating the same applying doctrine of resjudicata. In view of the principle of resjudicata, though a part of CPC, it would be applicable to the proceeding of this Tribunal and IBC. Only to prevent the abuse of process of law and give a finality to any proceeding, or orders, and to avoid an endless litigation to frustrate the very object of enacting IBC, the claim of appellants is liable to be rejected. There are no merit in the contention of the Appellants and we find no ground to warrant interference by this Tribunal, while exercising power under Section 61 of IBC - appeal dismissed.
Issues Involved:
1. Whether the Corporate Debtor owed a financial debt to the Appellant. 2. Whether the balance sheets contained acknowledgment of debt under Section 18 of the Limitation Act, 1963. 3. Whether the application filed under Section 7 of IBC by the Appellant was barred by time. 4. Competency of the Appellants to challenge the order passed by the Adjudicating Authority. 5. Legality or irregularity in the order passed by the Adjudicating Authority. Issue-wise Detailed Analysis: 1. Whether the Corporate Debtor owed a financial debt to the Appellant: The Tribunal examined whether the debt owed by the Corporate Debtor to the Financial Creditor qualified as a "financial debt" under Sections 3(11) and 5(8) of the Insolvency and Bankruptcy Code (IBC). The Tribunal concluded that the debt due to the Financial Creditor was indeed a financial debt within the meaning of Section 5(8) of IBC. This finding was affirmed by the Hon'ble Apex Court, thereby attaining finality. 2. Whether the balance sheets contained acknowledgment of debt under Section 18 of the Limitation Act, 1963: The Tribunal addressed whether the balance sheets for the years 2014-15 to 2018-19 contained an acknowledgment of debt as per Section 18 of the Limitation Act, 1963. It was concluded that the balance sheets did acknowledge the debt, thereby extending the limitation period. This finding was also affirmed by the Hon'ble Apex Court. 3. Whether the application filed under Section 7 of IBC by the Appellant was barred by time: The Tribunal examined the issue of limitation and concluded that the application under Section 7 of IBC was filed within the limitation period. This finding was upheld by the Hon'ble Apex Court. 4. Competency of the Appellants to challenge the order passed by the Adjudicating Authority: The Tribunal considered whether the Appellants, who had not challenged the earlier findings of the Tribunal, could raise the same issues again. It was held that the principle of res judicata applied, and the Appellants could not re-agitate issues that had already been decided and affirmed by the Hon'ble Apex Court. The Tribunal emphasized that allowing such challenges would amount to an abuse of the process of law. 5. Legality or irregularity in the order passed by the Adjudicating Authority: The Tribunal found no illegality or irregularity in the order passed by the Adjudicating Authority, which had complied with the directions issued by the Tribunal in the earlier round of litigation. The Tribunal noted that the Adjudicating Authority had correctly commenced the Corporate Insolvency Resolution Process (CIRP) and appointed an Interim Resolution Professional (IRP) as directed. Conclusion: The Tribunal dismissed both appeals, holding that the findings recorded in the earlier round of litigation had attained finality and could not be re-agitated. The principle of res judicata was applied to prevent abuse of the process of law and ensure finality in litigation. The Tribunal found no merit in the contentions of the Appellants and upheld the order of the Adjudicating Authority.
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