2022 (9) TMI 1127 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Time limitation - HELD THAT - It can be seen that the purported acknowledgment dated 09.03.2015 of the Corporate Debtor in a letter from the Operational Creditor addressed to the Corporate Debtor wherein, the Corporate Debtor has acknowledged the receipt of the said letter, and not the contents of the same. The stamp of the Corporate Debtor mentions Contents not verified . As such, the same cannot be considered as acknowledgement of debt under section 18 of the Limitation Act, 1963. However, even if the purported acknowledgment dated 09.03.2015 were to be considered, the resultant limitation period would still come to an end on 09.03.2018. Even if, under section 14 of the Limitation Act, 1963, the period of pendency of the winding up petition No. 161 of 2016 (from February 2016 to 29.03.2016) is excluded, the limitation period will still only extend till may 2018 - The limitation period in the instant case would resume from 29.03.2016 and would have been extinguished by May 2018. The proceedings under section 9 of the Code, however, were filed on 31.12.2019. The instant petition, therefore is barred by limitation. This Adjudicating authority is satisfied that the instant petition is both incomplete and barred by limitation and therefore is liable to be dismissed.

Summary

Issues:
1. Ambiguity regarding the date of default in the petition.
2. Failure to provide evidence confirming non-payment by the Corporate Debtor.
3. Whether the petition is barred by limitation under sections 14 and 18 of the Limitation Act, 1963.

Analysis:

Ambiguity regarding the date of default:
The Operational Creditor initiated a Company Petition under section 9 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor. However, the petition lacked clarity on the exact date of default by the Corporate Debtor, creating ambiguity in the case.

Failure to provide evidence of non-payment:
The Operational Creditor failed to produce the required certificate under section 9(3)(c) of the Code or relevant bank statements to substantiate the claim of non-payment by the Corporate Debtor. This lack of evidence rendered the petition incomplete and weakened the Operational Creditor's case.

Barred by limitation under sections 14 and 18 of the Limitation Act:
The Corporate Debtor contended that the petition was time-barred due to limitation. The Operational Creditor argued that the limitation period should be extended under sections 14 and 18 of the Limitation Act, 1963. The Operational Creditor cited acknowledgments, winding up proceedings, and Supreme Court decisions to support the extension of the limitation period. However, the Adjudicating Authority found that even considering these factors, the petition was filed beyond the extended limitation period, making it barred by limitation.

Conclusion:
The Adjudicating Authority dismissed the petition, stating it was incomplete and barred by limitation. The Operational Creditor was advised to explore alternative legal remedies. The judgment highlighted the importance of clarity in legal petitions, the necessity of providing substantial evidence, and the strict adherence to limitation periods in insolvency proceedings.

Judgment Outcome:
The Company Petition was rejected, emphasizing the necessity for complete and timely submissions in legal proceedings to ensure the validity and success of the petition.