2019 (6) TMI 847 - AT - Insolvency and Bankruptcy

Maintainability of application - time limitation - Section 7 of the Insolvency and Bankruptcy Code, 2016 - Section 238A of the I B Code - HELD THAT - The provisions of the Limitation Act shall apply as far as may be . Although the Adjudicating Authority has observed that admission in the written statement will not amount to acknowledgement, we need not deliberate to settle that issue looking to the Term 1 of the MOU which we have reproduced above. In the transaction, the term clearly shows liability of ₹ 8,10,000/- getting created every 6 months for the Respondent to pay the Appellant till the entire booking amount has not been repaid . When the entire booking amount has not been paid, this component keeps getting attracted and liability invoked and when Section 7 Application was filed, the amount due and outstanding was clearly more than ₹ 1 Lakh and thus, in our view, the Application under Section 7 could not have been rejected as time barred. There was a debt which was due and the default was of more than ₹ 1 Lakh and therefore, it was sufficient to trigger Section 7 proceeding. Neither the parties nor the Impugned Order shows that there was any other defect in the Section 7 Application which had been moved so as to say that the Application was not complete. In that view of the matter, the Application filed before NCLT deserves to be admitted. Matter remanded back to the Adjudicating Authority - appeal allowed by way of remand.

Summary

Issues involved:
- Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 rejected on the ground of limitation.
- Interpretation of terms and conditions of Memorandum of Understanding (MOU) between the parties.
- Consideration of acknowledgment of debt in written statement for resetting limitation period.
- Applicability of Section 238A of the I&B Code regarding limitation.
- Admissibility of the Section 7 Application before the National Company Law Tribunal.

Analysis:
1. The Appellant filed an Application under Section 7 of the Insolvency and Bankruptcy Code against the Respondent, which was rejected by the Adjudicating Authority on the basis of limitation. The Appellant claimed to have booked a flat and paid an amount of ?60 Lakhs, with the Respondent agreeing to pay back the amount within a specified period. However, disputes arose regarding the repayment, leading to the filing of the Section 7 Application.

2. The terms of the MOU between the parties outlined the conditions for cancellation of the booking and repayment of the amount. The Appellant argued that the Respondent failed to fulfill the repayment obligations as per the MOU, leading to the invocation of the third condition for allotment of the flat. The Respondent, in its defense, claimed the transaction was a loan and not subject to the MOU terms.

3. The Adjudicating Authority considered the date of default based on the written statement filed by the Respondent in a civil suit and concluded that it did not amount to acknowledgment of debt for resetting the limitation period. The rejection of the Section 7 Application was primarily based on this ground.

4. Section 238A of the I&B Code deals with the application of the Limitation Act to proceedings before the Adjudicating Authority. The Appellate Tribunal emphasized that the liability created under the MOU terms, where recurring payments were due until the entire booking amount was repaid, constituted a debt triggering the Section 7 proceeding.

5. The Appellate Tribunal found that there were no other defects in the Section 7 Application, warranting its rejection. Consequently, the Tribunal allowed the appeal, directing the Adjudicating Authority to admit the Section 7 proceeding and proceed with necessary orders as per the law, providing the Corporate Debtor with an opportunity to settle the claim.

This comprehensive analysis of the judgment highlights the key issues, legal interpretations, and the final decision rendered by the Appellate Tribunal in the matter.