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2020 (8) TMI 538 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Alleged belated application - operational debt was dated back to 05.12.2002 - Service of demand notice - time limitation - HELD THAT - The Notices were served on the Corporate Debtor prior to the change of Registered Office i.e., on 16.04.2019. Further the learned Adjudicating Authority after filing of the Application ordered notice to be served to the new address of the Corporate Debtor and its Directors. As per the Direction of the learned Adjudicating Authority, Respondent No. 1 herein had taken steps in serving the Notice on Respondent No. 2 - the statutory Demand Notice under Section 8 and courier receipt and the delivery report evidencing proper service has already been filed. Thus, there is ample proof that the Notice had been served on Respondent No. 2 by the Respondent No. 1. Time limitation for admitting of petition - HELD THAT - The claim is not time barred for the following reasons as stated here at. It is an admitted fact that Respondent No. 2 owe a debt to the Respondent No. 1 and failed to pay the debt to Respondent No. 1. Respondent No. 1 invoked the jurisdiction of arbitration. The Respondent No. 2 participated in the Arbitral proceeding before the Sole Arbitrator through their Counsel and it is evident from the Award of the Sole Arbitrator that the Respondent No. 2 contested the matter. The learned Sole Arbitrator had passed the Award and the same is binding on Respondent No. 2 - by passing Award by the learned Sole Arbitrator, the amount has been crystalized and by default in payment and by not honouring the Award, the amount became due and payable. The Respondent No. 1 had rightly invoked jurisdiction of the Adjudicating Authority under Section 9 of the IBC after issuance of Demand Notice as prescribed under Section 8 of IBC. As per Article 116 of the Limitation Act 1963, which is under the Second Division Appeal, the period prescribed is 90 days to file Appeal before the High Court from any Decree/Order. Against the order passed under Section 34 of the Arbitration and Conciliation Act, 1996, the only Appeal lies under Section 37 of the Arbitration and Conciliation Act 1996 before the Hon ble High Court and the limitation for the said period is covered under Article 116 of the Limitation Act which is under the caption of Second Division appeal - In the present case, the learned XXIV Additional Chief Judge, City Court, Hyderabad, dismissed the petition on 27.01.2016 and the statutory period for filing Appeal under Section 37 of Arbitration and Conciliation Act is 90 days in case of Decree. The Appeal under Section 37 of the Arbitration and Conciliation Act excludes the limitation from 27.04.2016 i.e. 90 days from 27.1.2016 as per Article 116 of the Limitation Act and if three years is taken from 27.01.2016, and as per Article 137 of the Limitation Act, three years period would expire on 27.04.2019. Whilst, the Application under Section 9 of IBC filed on 03.04.2019. Accordingly, it is well within the period of limitation. The Application filed by the Applicant before the Adjudicating Authority is within the period of limitation - Appeal dismissed.
Issues Involved:
1. Timeliness of the Section 9 Application. 2. Service of Statutory Demand Notice. 3. Attachment of Invoice to Demand Notice. 4. Service of Notice of Company Petition. 5. Limitation Period for Filing the Claim. 6. Execution of Arbitral Award through IBC. Issue-wise Detailed Analysis: 1. Timeliness of the Section 9 Application The Appellant contended that the Section 9 Application was filed belatedly as the operational debt dated back to 05.12.2002. However, the Tribunal noted that the debt was crystallized by an Arbitral Award dated 30.05.2013, which was contested by the Respondent No. 2 and subsequently dismissed by the XXIV Additional Chief Judge, City Court, Hyderabad on 27.01.2016. The Tribunal held that the three-year limitation period as per Article 137 of the Limitation Act, 1963, would commence from 27.04.2016 (90 days post-dismissal), making the Section 9 Application filed on 03.04.2019 within the limitation period. 2. Service of Statutory Demand Notice The Appellant argued that the statutory Demand Notice was not delivered to the Corporate Debtor. The Respondent No. 1 provided proof of service, including postal receipts and tracking information. The Tribunal found that the notice was served to the Corporate Debtor's registered office and subsequently to the updated address as per MCA records, fulfilling the requirement under Section 8(1) of IBC. 3. Attachment of Invoice to Demand Notice The Appellant claimed that the Operational Creditor did not attach a copy of the invoice to the Demand Notice. The Tribunal observed that the Operational Creditor filed Form-5, including the Arbitral Award and other documentary proofs supporting the claim. The Tribunal found that the Operational Creditor had provided sufficient evidence to establish the debt and default by the Corporate Debtor. 4. Service of Notice of Company Petition The Appellant contended that the notice of the Company Petition was not served, including via email. The Tribunal reviewed the order sheets and found that multiple attempts were made to serve the notice, including to the new address and email. The Tribunal noted that despite these efforts, the Corporate Debtor did not appear or contest the claim, leading to the conclusion that the service was sufficient. 5. Limitation Period for Filing the Claim The Appellant argued that the claim was time-barred. The Tribunal referenced the Supreme Court judgment in "B.K. Educational Services Pvt. Ltd. Vs. Parag Gupta & Associates," which stated that the limitation period for filing applications under Sections 7 and 9 of IBC is three years from the date of default. The Tribunal concluded that the claim was within the limitation period, considering the timeline of the Arbitral Award and subsequent legal proceedings. 6. Execution of Arbitral Award through IBC The Appellant argued that IBC cannot be invoked for executing an Arbitral Award. The Tribunal referred to the definition of "creditor" under Section 3(10) of IBC, which includes a decree-holder. The Tribunal held that the Operational Creditor, as a decree-holder, was entitled to invoke IBC for the unpaid debt crystallized by the Arbitral Award. The Tribunal cited the Supreme Court judgment in "K. Kishan Vs. Vijay Nirman Company Private Limited," which supports the view that an operational debt remains disputed until the final adjudication under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996. Conclusion The Tribunal dismissed the Appeal, upholding the Adjudicating Authority's order admitting the Section 9 Application. The Tribunal found that the Application was filed within the limitation period, the statutory Demand Notice was duly served, and the Operational Creditor had provided sufficient evidence to establish the debt and default. The Tribunal also affirmed that the IBC could be invoked for executing an Arbitral Award.
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