2019 (10) TMI 501 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Application rejected on the ground that the claim is barred by limitation - HELD THAT - By Demand Drafts of February, 2018, Respondent paid certain amount. In such case, we are of the view that the amount having last paid in February, 2018 the application is not barred by limitation. The claim is disputed, we find that the ground of delay wrongly shown by the Adjudicating Authority. Further no ground has to be given as to why the claim of the Appellant has not Operational Debt . Appeal allowed.

Summary

Issues involved:
- Application for initiation of corporate insolvency resolution process rejected on the ground of limitation
- Contradictory observations by the Adjudicating Authority regarding payment and limitation
- Interpretation of the Insolvency and Bankruptcy Code, 2016 regarding default and debt
- Disputed claim and the role of the Adjudicating Authority

Analysis:
The judgment revolves around an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 for the initiation of corporate insolvency resolution process against a Corporate Debtor. The Adjudicating Authority rejected the application citing limitation as the primary reason. It was noted that a significant portion of the outstanding amount had been paid by the Respondent, leading to a dispute over the remaining principal and interest amount. The Adjudicating Authority observed a contradiction in its findings, mentioning both full payment and limitation concerns in its order.

The Appellate Tribunal analyzed the situation and emphasized the importance of timely payments and the definition of default under the Code. Referring to the Supreme Court decision in "Innoventive Industries Ltd. v. ICICI Bank," the Tribunal highlighted the triggers for the insolvency resolution process, including the definition of debt, claim, financial creditor, and operational creditor. The Tribunal also noted the distinction between debts owed to financial creditors and operational creditors, emphasizing the need for a clear understanding of the debt and default scenarios.

Regarding the disputed claim and the Adjudicating Authority's role, the Tribunal found that the claim was indeed disputed, indicating that the issue of delay was incorrectly attributed by the Adjudicating Authority. The Respondent claimed that the total amount due had been paid, but the dispute over the remaining amount was not conclusively resolved. The Tribunal concluded that the matter should have been brought to the notice of the Adjudicating Authority for a proper determination.

In light of the above analysis, the Appellate Tribunal set aside the Adjudicating Authority's order and remitted the case for further consideration. The Tribunal directed the Adjudicating Authority to issue a new order after hearing both parties. The appeal was allowed with the mentioned observations, and no costs were imposed in this matter.