2019 (1) TMI 840 - AT - Insolvency and Bankruptcy

Corporate insolvency resolution process - period of limitation for filing an application - Held that - In the present case, the right to apply under Section 9 of the I&B Code accrued to the respondent since 1st December, 2016 when the I&B Code came into force. Therefore, we find that for triggering the application under Section 9, the application is within the time limit. So far as the claim is concerned, it is for the Interim Resolution Professional / Resolution Professional to decide the claim, which may be corrected by the Adjudicating Authority if so required, and in appropriate case, he may decide whether the claim is time barred or not. In the present case, it is not the case of the appellant that there is no debt payable in the eyes of the law. In this case an amount of ₹ 1,99,27,145/- was payable together with interest @ 18% per annum as claimed by the respondent. This claim was made initially in the year 2014 when the company petition was filed, which was disposed of due to certain defects in the earlier application on 1st August, 2017. Therefore, the present application cannot be stated to be barred by limitation and on the other hand we find there is continuous cause of action.

Summary

Issues:
1. Appeal against the initiation of corporate insolvency resolution process under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Applicability of the Limitation Act to insolvency proceedings.
3. Determination of the time limit for triggering an application under Section 9 of the I&B Code.
4. Assessment of the claim's validity and timeliness.

Analysis:
1. The appeal was filed against the initiation of the corporate insolvency resolution process under Section 9 of the Insolvency and Bankruptcy Code, 2016. The appellant contended that the respondent's claim was time-barred as it was related to projects dating back to 2014. Reference was made to a Supreme Court decision emphasizing the application of the Limitation Act to insolvency proceedings from the inception of the Code.

2. Section 238A of the I&B Code mandates the application of the Limitation Act to proceedings before the Adjudicating Authority and other tribunals. The relevant provision, Article 137 of the Limitation Act, prescribes a three-year limitation period for applications where no specific period is provided elsewhere. This provision is crucial in determining the timeliness of initiating the insolvency resolution process.

3. The right to apply under Section 9 of the I&B Code accrues when a default occurs. In this case, the right to apply arose on 1st December 2016, the date when the I&B Code came into force. Therefore, the application under Section 9 was within the prescribed time limit, as per the provisions of the Limitation Act.

4. The claim amount and its validity were also scrutinized. The responsibility to decide the claim lies with the Interim Resolution Professional or Resolution Professional, subject to correction by the Adjudicating Authority if necessary. In this instance, the claim made in 2014, amounting to ?1,99,27,145/- with interest, was found to be valid and not time-barred. The continuous cause of action was acknowledged, leading to the dismissal of the appeal against the initiation of the corporate insolvency resolution process.

Therefore, the Tribunal upheld the order passed by the Adjudicating Authority, dismissing the appeal and affirming the initiation of the corporate insolvency resolution process against the Corporate Debtor.