2022 (11) TMI 166 - AT - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - execution of the MOU - genuineness of MOU - time limitation - HELD THAT - From the bare reading of MOU, it is apparent that the alleged past dues of the Appellant were ultimately settled to the tune of Rs. 4.50 Crores as on 31.07.2013 and it was agreed that the said sum shall carry an interest at the Bank deposit rate w.e.f. 01.08.2013 till it is actually paid. It was also agreed that the Appellant shall keep on providing the services to the Respondent and shall be entitled to 20% of the income earned from the business after 31.07.2013 - Even for the sake of arguments, if it is presumed that MOU has been duly executed between the parties yet the application under Section 9 of the Code filed by the Appellant on 13.04.2019 in respect of Rs. 4.50 Crores is beyond the period of limitation because right to apply accrued from 31.07.2013 and the period three years would be over by 31.08.2016. The argument of the Appellant that the subsequent payment made in the year 2018 by the Respondent would attract Section 19 of the Limitation Act, 1963 is totally fallacious. The petition filed under Section 9 of the Code to claim of Rs. 4.50 Crores on the basis of the MoU dated 24.08.2013 is clearly barred by limitation as the residuary Article 137 of the Limitation Act, 1963 would apply which provides a limitation of three years from the date when the right to apply accrues. Genuineness of the MOU - HELD THAT - Nothing has been brought on record as evidence by the Appellant that the executant, namely, Shantilal Ratanchand Lunkad was duly authorized by the Respondent. Moreover, he is neither a director nor a key managerial personnel to bind the company by executing the MOU on its behalf without having any authority much less the resolution of the board passed in his favour. There are no error in the impugned order, which requires any interference by this Tribunal - appeal dismissed.

Summary

Issues Involved:
1. Dismissal of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 by the Adjudicating Authority.
2. Whether the claim of the Appellant is barred by limitation.
3. Execution of the Memorandum of Understanding (MOU) by the Corporate Debtor.

Analysis:
1. The appeal was filed against the order dismissing the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 by the Adjudicating Authority. The Appellant, an Operational Creditor, sought initiation of the Corporate Insolvency Resolution Process against the Respondent, a Corporate Debtor, for nonpayment of Rs. 7,50,77,317/- as principal as per an MOU dated 24.08.2013. The Adjudicating Authority found two key issues: limitation of the claim and execution of the MOU by the Corporate Debtor, ruling against the Appellant and dismissing the application.

2. The Appellant argued that the MOU was validly executed and payment made in 2018 kept the claim within the limitation period. However, the Tribunal disagreed, stating that the right to apply accrued on 31.07.2013, making the 2019 application time-barred under Article 137 of the Limitation Act, 1963. The Tribunal highlighted that subsequent payments in 2018 were not part of the settled amount in the MOU, emphasizing that the claim was indeed barred by limitation.

3. Regarding the execution of the MOU, the Tribunal noted that there was no evidence of authorization for the signatory by the Respondent. The signatory was not a director or key managerial personnel, lacking the authority to bind the company. The Tribunal concluded that the MOU execution lacked validity, and the Appellant failed to establish the signatory's authority. Ultimately, the Tribunal found no error in the Adjudicating Authority's decision, dismissing the appeal without costs.

In summary, the Tribunal upheld the dismissal of the application under Section 9, ruling that the claim was time-barred due to limitation and the MOU execution lacked validity without proper authorization.