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2019 (7) TMI 1252 - Tri - Insolvency and BankruptcyAdmissibility of petition - Initiation of Corporate Insolvency Resolution Process -Corporate debtor - default in repayment - Section 9 of the IBC, 2016 read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudication Authority) Rules, 2016 - HELD THAT - The debt and default is not only in dispute and it is also barred by latches and limitation. Moreover, the instant main Company Petition is filed to recover the alleged outstanding amount, which is in dispute. It is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount. Therefore, the Company Petition is liable to be dismissed. Petition dismissed.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016. 2. Application under Section 8 of the Arbitration and Conciliation Act, 1996 to refer the matter to arbitration. 3. Validity of the debt claim and its dispute status. 4. Applicability of the Limitation Act to the proceedings under the IBC, 2016. Detailed Analysis: 1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016: The Petitioner, M/s. Simplex Infrastructures Limited, filed C.P. (IB) No.02/BB/2018 under Section 9 of the IBC, 2016, seeking to initiate CIRP against the Respondent, M/s. Nitesh Estates Limited, for a default amount of ?6,03,55,646/- along with interest at 18% per annum from 26.12.2014. The claim was based on the Final Payment Certificate dated 31.10.2014, which indicated the amount due after considering all debit notes and payments made. 2. Application under Section 8 of the Arbitration and Conciliation Act, 1996 to refer the matter to arbitration: The Respondent filed I.A. No.72 of 2018 under Section 8 of the Arbitration and Conciliation Act, 1996, seeking to refer the matter to arbitration as per Clause 5 of the Letter of Acceptance dated 19.03.2008. The Tribunal initially allowed this application, but it was set aside by the Hon'ble High Court of Karnataka, directing the Tribunal to decide both the application and the main petition expeditiously. 3. Validity of the debt claim and its dispute status: The Respondent opposed the main petition by arguing that the debt was disputed and the matter should be referred to arbitration. The Respondent contended that the Operational Creditor failed to rectify construction defects and that the debt claim was not bona fide but a tactic to evade liability. The Tribunal noted that the Respondent had raised disputes regarding the debt and had nominated an arbitrator to adjudicate these disputes. The Tribunal also observed that the debt was disputed and fell under the definition of 'dispute' as per the IBC provisions. 4. Applicability of the Limitation Act to the proceedings under the IBC, 2016: The Tribunal highlighted that the provisions of the Limitation Act apply to proceedings under the IBC, as affirmed by the Supreme Court in B.K. Educational Services (P.) Ltd. V/s. Parag Gupta and Associates. The Tribunal found that the debt and default occurred in 2014, making the petition time-barred under the Limitation Act. The Tribunal emphasized that the existence of an undisputed debt is a prerequisite for initiating CIRP, as per the Supreme Court's ruling in Transmission Corpn. of A.P. Ltd. V/s. Equipment Conductors and Cables Ltd. Conclusion: The Tribunal dismissed C.P. (IB) No.02/BB/2018, concluding that the debt was disputed and the petition was time-barred. Consequently, I.A. No.72 of 2018 was also dismissed as infructuous. The Tribunal reiterated that the IBC is not a substitute for a recovery forum and cannot be invoked for recovering disputed outstanding amounts.
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