2022 (11) TMI 56 - Tri - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - date of default for each invoice is 10 days after the date of respective invoice - time limitation - HELD THAT - It is noted that the applicant supplied CNG to the respondent against which the invoices were issued and the last invoice issued was in the year 2012-13. The applicant charged interest on delay payments @ SBI PLR 2% i.e., 16.50% 16.45%. In the year 2017 the respondent through letter requested the applicant to waive off the interest amount - The issue of the limitation, being very relevant for maintainability of application under Section 9 assumes its importance; and even if there exists a debt which is defaulted and not paid, the application filed under Section 9 of the IBC, 2016 for initiating CIRP proceedings against the defaulting corporate debtor would not be maintainable if the debt itself is barred by the limitation under Article 137 of the Limitation Act, at the time of filing of the petition. Admittedly in the present case, the invoices under reference were raised in the year 2012-13 and the last invoice by the corporate debtor was made on 16.02.2013. The date of default is ten days after the date on which invoices were raised on from 10.12.2012 to 26.02.2013 (upto 10.02.2013). Therefore, considering the date of last invoice, the period of limitation has expired after three years in the year 2016. The letter by the respondent for excluding the interest amount from the total outstanding amount along with the cheque of Rs. 5,00,000/- was sent in the year 2017, i.e. much beyond the period of limitation, therefore, the said letter cannot be said to have extended the period of limitation - the application filed on 11.09.2019 under Section 9 of the IBC, 2016 is beyond the period of limitation and accordingly, the said application is not maintainable under the IBC. Application disposed off.

Summary

Issues:
Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process against a state-owned Government Entity for outstanding debt. Defense raised by the respondent regarding interest charges, financial issues, and limitation period for filing the application.

Detailed Analysis:

1. The applicant, a City Gas Distribution Company, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, claiming to be an Operational Creditor for initiation of Corporate Insolvency Resolution Process against the state-owned Government Entity, the Corporate Debtor, for an outstanding debt of Rs. 68,58,428/-.

2. The applicant had a commercial relationship with the respondent, supplying CNG, with the last invoice issued in 2013, leading to the claimed debt. The respondent, engaged in running city buses, admitted the outstanding debt but failed to make payments despite assurances and a demand notice under the Code.

3. The respondent's defense included challenges to the interest charges levied post-2012, financial mismanagement issues, and a request to exclude interest amount from the outstanding principal. The respondent also argued that the application was time-barred under the Limitation Act, as the last invoice was in 2013, and the application was filed in 2019.

4. The Tribunal analyzed the limitation issue crucial for the application's maintainability under Section 9 of the IBC. It noted that the debt was time-barred as per Article 137 of the Limitation Act, as the last invoice was in 2013, and the application filed in 2019, beyond the three-year limitation period.

5. Consequently, the Tribunal held that the application was not maintainable due to being filed beyond the limitation period, rejecting and disposing of the application with no cost. The Registry was directed to serve a copy of the order to both parties, concluding the judgment.

This detailed analysis covers the issues involved in the legal judgment, focusing on the application under the Insolvency and Bankruptcy Code, the defense raised by the respondent, and the Tribunal's decision based on the limitation period for filing the application.