2020 (10) TMI 540 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - allegation that Corporate Debtor has also not made any payment after the receipt of the Demand Notice dated 18th December, 2018 and the last part-payment made by the Corporate Debtor was on 18th January, 2017 - HELD THAT - Section 8 and 9 cast a duty upon the operational-creditor as well as Corporate Debtor to act as per Section 8 and if they fail to fulfil the conditions of Section 8 and 9 then in that case neither the application filed by the operational-creditor is maintainable nor the plea of existing of disputes or the payment of debt subsequently taken by the Corporate Debtor can be taken into consideration. When we shall consider the case in hand then we are of the considered view that since it is specifically mentioned in Section 8(2) of the Code that within ten days from the date of the receipt of the demand notice, the corporate-debtor is required to bring to the notice of the operational-creditor, the existence of dispute or the documents regarding the payment of debt, therefore, we have no option, but to hold that since the corporate-debtor fails to give the reply of the demand notice and raised the disputes, hence after his appearance in response to the notice, he cannot raise it by filing the reply to the application filed on behalf of the operational-creditor Mere plain reading of the provision shows that when the payment of account of debt or of interest is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorized in this behalf, a fresh period of limitation shall be computed on the time when the payment was made. Here in the case in hand, all the invoices are in between 3rd September, 2015 to 30th November, 2015, whereas the last payment was made on 18th January, 2017 which is within 3 years from the date of issuance of the invoices as required under article 137 of the Limitation Act, therefore, the last payment was within 3 years from the date of the issuance of the invoice - limitation runs from the last date of payment and when we shall count the date of limitation from 18th January, 2017 then we find that the present application is filed on 11th September, 2019, therefore, it is within 3 years from the date of last payment made by the Corporate Debtor. From the date of last payment that is from 18 January, 2017, the present application is within time - Application admitted - moratorium declared.

Summary

Issues Involved:
1. Maintainability of the petition.
2. Compliance with Section 9(3)(c) of the Insolvency and Bankruptcy Code (IBC).
3. Existence of a debt and non-payment.
4. Validity of invoices and proof of delivery.
5. Alleged ulterior motives and bypassing arbitration.
6. Limitation period for filing the application.

Issue-wise Detailed Analysis:

1. Maintainability of the petition:
The Corporate Debtor argued that the petition was not maintainable, claiming it was filed with ulterior motives to bypass civil remedies and recover the alleged amount without establishing the dues. The Tribunal, however, found that the Operational Creditor had complied with the procedural requirements, including issuing a demand notice under Section 8 of the IBC, which the Corporate Debtor failed to respond to within the stipulated time frame. The Tribunal held that the petition was maintainable as the Corporate Debtor did not raise any dispute or make any payment after receiving the demand notice.

2. Compliance with Section 9(3)(c) of the IBC:
The Corporate Debtor contended that the petition did not comply with Section 9(3)(c) as the Operational Creditor failed to file a certificate from its financial institution confirming no payment of debt. The Tribunal noted that the Operational Creditor had submitted account statements and an affidavit under Section 9(3)(b) affirming no notice of dispute was received. The Tribunal found the compliance adequate, as the Corporate Debtor did not raise any dispute within the ten-day period after receiving the demand notice.

3. Existence of a debt and non-payment:
The Corporate Debtor argued that the Operational Creditor did not provide sufficient evidence to prove the existence of a debt or its non-payment. The Tribunal observed that the Operational Creditor had submitted invoices and account statements showing the outstanding dues. The Tribunal held that the existence of a debt was established, and the Corporate Debtor's failure to raise any dispute or make payment after receiving the demand notice confirmed the non-payment.

4. Validity of invoices and proof of delivery:
The Corporate Debtor claimed that the invoices were invalid as they were not supported by proof of delivery. The Tribunal noted that the Corporate Debtor did not provide any evidence to show that the goods were not delivered. The Tribunal also observed that the Operational Creditor had deducted amounts for alleged deficiencies in quality and claimed only the remaining amount. The Tribunal held that the invoices were valid and the issue of proof of delivery was not a bona fide dispute.

5. Alleged ulterior motives and bypassing arbitration:
The Corporate Debtor alleged that the Operational Creditor filed the petition to defeat the arbitration clause and extort money. The Tribunal found that the Operational Creditor had invoked arbitration after filing the petition to avoid limitation issues. The Tribunal held that the existence of an arbitration clause did not bar the initiation of insolvency proceedings, as the Corporate Debtor did not raise any dispute within the ten-day period after receiving the demand notice.

6. Limitation period for filing the application:
The Corporate Debtor argued that the application was time-barred as the invoices were raised in 2015 and the petition was filed in 2019. The Tribunal noted that the last payment was made on 18th January 2017, and under Section 19 of the Limitation Act, the limitation period starts from the last date of payment. The Tribunal held that the application filed on 11th September 2019 was within the three-year limitation period from the last payment date.

Conclusion:
The Tribunal admitted the petition, finding it complete and within the limitation period. A moratorium under Section 14 of the IBC was imposed, and an Interim Resolution Professional (IRP) was appointed to take necessary steps under the Code. The Operational Creditor was directed to deposit a sum of ?2 lakhs for the immediate expenses of the IRP, which would be reimbursed by the Committee of Creditors (CoC) as Corporate Insolvency Resolution Process (CIRP) costs.