2020 (7) TMI 452 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - time limitation - HELD THAT - Admittedly, even as per learned counsel for the petitioner, the date of default for the alleged claim was July 8, 2013. The petitioner also failed to show any subsequent acknowledgment of debt by the respondent-corporate debtor, therefore, the starting point for the period of limitation is the date of default, i. e., July 8, 2013. Since, admittedly, the date of default of the debt due to the petitioner was July 8, 2013 and that no acknowledgment of debt or any other circumstances are shown to extend the period of limitation beyond the period of 3 years expiring on July 8, 2016 and the CP having been filed on July 16, 2018 is clearly barred by the period of limitation - the instant CP is barred by the period of limitation and accordingly, the same is dismissed.

Issues Involved:

1. Application of Limitation Act to Insolvency and Bankruptcy Code (IBC) proceedings.
2. Determination of the date of default and its impact on the limitation period.
3. Validity of invoices and acknowledgment of debt.
4. Impact of pending criminal proceedings on the limitation period.

Issue-wise Detailed Analysis:

1. Application of Limitation Act to Insolvency and Bankruptcy Code (IBC) proceedings:

The petition was filed under section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) read with rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The respondent argued that the claim was barred by limitation, as the transactions were from 2013, and the petition was filed in 2018. The Tribunal referred to several Supreme Court judgments, including *Vashdeo R. Bhojwani v. Abhyudaya Co-operative Bank Ltd.*, *Gaurav Hargovindbhai Dave v. Asset Reconstruction Co. (India) Ltd.*, and *Jignesh Shah v. Union of India*, which established that article 137 of the Limitation Act applies to applications under the IBC, and the limitation period is three years from the date of default.

2. Determination of the date of default and its impact on the limitation period:

The petitioner stated that the date of default was July 8, 2013. The Tribunal noted that the petitioner failed to show any subsequent acknowledgment of debt by the respondent. Therefore, the starting point for the period of limitation was the date of default, i.e., July 8, 2013. As the petition was filed on July 16, 2018, it was clearly barred by the period of limitation, which expired on July 8, 2016.

3. Validity of invoices and acknowledgment of debt:

The respondent contested the validity of the invoices dated July 8, 2013, claiming they were bogus and that no goods were supplied. The petitioner countered by stating that the invoices were genuine and supported by evidence. However, the Tribunal did not delve into the validity of the invoices, as the petition was already barred by limitation.

4. Impact of pending criminal proceedings on the limitation period:

The petitioner argued that the criminal proceedings under section 138 of the Negotiable Instruments Act, 1881, initiated on February 30, 2016, were within the limitation period. However, the Tribunal held that the pendency of a separate and independent remedy, such as a criminal case, does not impact the limitation period for filing an application under the IBC.

Conclusion:

The Tribunal dismissed the petition on the ground that it was barred by the period of limitation. Since the date of default was July 8, 2013, and the petition was filed on July 16, 2018, it was beyond the three-year limitation period prescribed under article 137 of the Limitation Act. Consequently, the Tribunal did not address other issues raised in the petition. A copy of the order was directed to be communicated to both parties.

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