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2020 (10) TMI 494 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Existence of debt and dispute or not - time limitation - HELD THAT - There is acknowledgment of debt in the balance sheet of the corporate debtor all along. It is well-settled through various judgments of the Hon'ble Supreme Court now that an acknowledgement in the balance sheet of the company satisfies the requirements of section 18 of the Limitation Act, 1963, leading to a fresh period of limitation commencing from each such acknowledgement. Further, the reply also makes it clear that there is a debt due and payable to the Financial Creditor, which remains unsatisfied. Therefore, the aspect of limitation raised as one of the defences by the Corporate Debtor does not hold water. As far as the other contentions are concerned, such as not being given Buyers Credit Facility on time, the fact that there was fluctuation in the exchange rate, the availability of raw materials, and initiation of proceedings in various other courts under other laws, outstanding amounts payable by the customers, security deposit realisable from various authorities, parties etc cannot be considered to be defences in a petition filed under section 7 of the IBC. Further, the fact that the Corporate Debtor has itself submitted various OTS proposals to the Bank, is ipso facto an admission of the fact that there is a debt due and payable to the Financial Creditor. The application made by the Financial Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC at the relevant time. Therefore, the default stands established and there is no reason to deny the admission of the Petition. Petition admitted - moratorium declared.
Issues Involved:
1. Validity of the claim filed by the Financial Creditor under section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). 2. Consideration of limitation in the claim. 3. Defenses raised by the Corporate Debtor against the claim. 4. Appointment of Interim Resolution Professional (IRP) and initiation of Corporate Insolvency Resolution Process (CIRP). Analysis: Issue 1: Validity of the claim filed by the Financial Creditor The Tribunal considered a Company Petition filed by Syndicate Bank as the Financial Creditor under section 7 of the IBC against Bothra Metals and Alloys Limited, the Corporate Debtor. The Financial Creditor claimed that the Corporate Debtor failed to make payments amounting to a significant sum, leading to the initiation of Corporate Insolvency Resolution Process (CIRP). Issue 2: Consideration of limitation in the claim The Corporate Debtor contended that the claim was barred by limitation, citing the date of default and the declaration as Non-Performing Asset (NPA). The Tribunal analyzed the acknowledgment of debt in the balance sheet of the Corporate Debtor, stating that it satisfies the requirements of the Limitation Act, 1963. The Tribunal dismissed the limitation defense raised by the Corporate Debtor. Issue 3: Defenses raised by the Corporate Debtor against the claim The Corporate Debtor raised various defenses, including the non-availability of Buyers Credit Facility, exchange rate fluctuations, and other operational challenges. However, the Tribunal ruled that such contentions cannot be considered as defenses in a petition under section 7 of the IBC. The Corporate Debtor's submission of One Time Settlement (OTS) proposals to the Financial Creditor was considered as an admission of the debt. Issue 4: Appointment of Interim Resolution Professional (IRP) and initiation of CIRP The Tribunal admitted the Petition filed by the Financial Creditor, ordering the initiation of CIRP against the Corporate Debtor. Mr. Harish Kant Kaushik was appointed as the Interim Resolution Professional (IRP) to oversee the resolution process. The Tribunal issued specific directions regarding the moratorium, management during CIRP, submission of reports, and financial deposits by the Financial Creditor for expenses related to the resolution process. This comprehensive analysis covers the key issues addressed in the judgment delivered by the National Company Law Tribunal, Mumbai Bench.
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