2019 (10) TMI 372 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - time limitation - impugned order has been assailed on the grounds that claim in the application filed by the Financial Creditor was grossly exaggerated and barred by limitation - HELD THAT - Admittedly, the debt in respect of default allegedly exceeded the prescribed amount of Rupees One Lakh. Admission of a claim pursuant to collation and verification of claims by the Resolution Professional is a matter to be dealt with when the Corporate Insolvency Resolution Process is underway. Same is irrelevant at the stage of admission of application under Section 7 of the I B Code. The challenge on this score is also without substance. The impugned order does not suffer from any legal infirmity - Appeal dismissed.

Summary

Issues:
1. Legality and correctness of the order of admission of the application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Grounds of the appeal: Exaggerated claim and limitation.
3. Dismissal of plea of limitation and objection regarding inflation of claim by the Corporate Debtor.
4. Challenge against the Resolution Professional.

Issue 1: Legality and correctness of the order of admission under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The appeal challenges the order of admission of the application filed by the Financial Creditor under Section 7 of the I&B Code. The appeal was filed by the majority shareholder and former Managing Director of the Corporate Debtor. The Adjudicating Authority admitted the application on the grounds that the claim by the Financial Creditor was not time-barred and was within the period of limitation. The appeal contests this decision, alleging that the claim was exaggerated and barred by limitation.

Issue 2: Grounds of the appeal - Exaggerated claim and limitation:
The appeal raised objections regarding the claim made by the Financial Creditor, stating that it was grossly exaggerated and beyond the period of limitation. The Adjudicating Authority dismissed these objections after considering documents such as the revival letter and balance confirmation executed by the Corporate Debtor, along with the last payment made by the Corporate Debtor. The Adjudicating Authority found the claim to be within the limitation period based on the evidence presented.

Issue 3: Dismissal of plea of limitation and objection regarding inflation of claim by the Corporate Debtor:
The Adjudicating Authority dismissed the plea of limitation raised by the Corporate Debtor and upheld the claim made by the Financial Creditor. The Authority considered the revival letter, balance confirmation, and last payment made by the Corporate Debtor in reaching its decision. The Corporate Debtor's argument that the claim was time-barred was rejected based on the documentary evidence and acknowledgments made by the Corporate Debtor regarding the outstanding debt.

Issue 4: Challenge against the Resolution Professional:
The appeal also raised concerns regarding the Resolution Professional appointed in the process. The Appellate Tribunal directed the Adjudicating Authority to address any grievances against the Resolution Professional and ensure a fair and transparent handling of the Resolution Process. The Tribunal found no merit in the appeal and dismissed it, emphasizing the need for a proper resolution process.

In conclusion, the appeal challenging the order of admission of the application under the I&B Code was dismissed by the Appellate Tribunal. The Tribunal found the claim by the Financial Creditor to be within the limitation period and rejected the objections raised by the Corporate Debtor. The Tribunal also highlighted the importance of fair handling of the Resolution Process by the Resolution Professional and directed the Adjudicating Authority to address any grievances in this regard.