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2020 (10) TMI 551 - 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 - HELD THAT - It is evident that the Petitioners in these three I.B. Petitions have issued some cheques towards unsecured loan to the Corporate Debtor Company between the period of 13.12.2006 to 24.01.2007 (in respect of CP(IB) No. 36 of 2018) and further, between 29.01.2007 to 18.05.2010 (in respect of CP(IB) No. 37 of 2018) while the Petitioner in CP(IB) No. 35 of 2018 has contended that he made payment of rupees three (03) lakh towards investment to the company during the year 2006 - 2007. Thus, all the petitioners in these petitions have contended that they are entitled to receive their money back along with 2% interest per month (i.e. 24% per annum) which was deposited with Corporate Debtor. However, it is found that the petitioners have issued notice for repayment of money deposited (given as unsecured loan) only on 28.07.2017 and 11.10.2017 which is apparently beyond three (03) years of date of disbursement of loan or issuance of cheque. Hence, their such claim/debt is barred by the Limitation. It is now the well settled legal position by the Hon'ble Supreme Court in respect of the I.B. proceedings that the limitation prescribed for filing an I.B. Petition is three (03) years from the date when default has occurred. The present petitioners have filed these petition with some mala fide intention only to create pressure on the Corporate Debtor for recovery of its amount invested or unsecure loan given to the Corporate Debtor without having a formal and written contract and that is too with an exorbitant rate of interest of 24% per annum, which cannot be treated as fair and legally sustainable. Moreover, it appears that the present petition is result of some family dispute arose among them and merely to harass the Respondent/Corporate Debtor - The Corporate Debtor is showing a positive net-worth as per its last balance sheet, hence, it cannot be termed that the company is unable to pay its debts but there may be some dispute with regard to oppression and mismanagement in the company, which is not the subject matter of the present I.B. Petition. There seems bonifiedy on the part of the Corporate Debtor for making payment of debts and by offering the demand draft in the open court, which was refused to be received by the Petitioner for the reason best known to them. It gives such impression that the petitioner is not having any bona fide intention to seek revival or resolution of the debt stressed company and want to use this forum as a court of recovery of its disputed debts - there is no proof of default of the debt on the part of the Corporate Debtor because it earlier has tendered a cheque in favour of the petitioner. Petition dismissed.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016. 2. Alleged default in repayment of unsecured loans with interest. 3. Dispute regarding the rate of interest on the unsecured loans. 4. Applicability of the Limitation Act, 1963. 5. Alleged misuse of the Insolvency and Bankruptcy Code for debt recovery. Issue-wise Detailed Analysis: 1. Initiation of CIRP under Section 7 of the Insolvency and Bankruptcy Code, 2016 The petitioners, as financial creditors, filed separate petitions under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking the initiation of CIRP against the corporate debtor, M/s. Cosmos Technocast Private Limited. The petitions were combined for adjudication due to the similarity in facts and issues. 2. Alleged Default in Repayment of Unsecured Loans with Interest The financial creditors claimed that they had provided unsecured loans to the corporate debtor, which were not repaid along with the agreed interest. The corporate debtor issued cheques for partial repayment, which were either not encashed by the creditors or were disputed due to disagreements over the interest rate. 3. Dispute Regarding the Rate of Interest on the Unsecured Loans The financial creditors claimed an interest rate of 2% per month (24% per annum) on the unsecured loans. The corporate debtor contended that the agreed interest rate was 12% per annum and provided evidence of interest payments at this rate. The tribunal noted the absence of a formal written agreement specifying the interest rate. 4. Applicability of the Limitation Act, 1963 The tribunal highlighted that the petitions were barred by limitation, as they were filed beyond the three-year period prescribed for initiating insolvency proceedings. The financial creditors issued notices for repayment in 2017, while the loans were disbursed between 2006 and 2010. The tribunal cited precedents from the Supreme Court and NCLAT to support the application of the Limitation Act to insolvency proceedings. 5. Alleged Misuse of the Insolvency and Bankruptcy Code for Debt Recovery The tribunal observed that the financial creditors appeared to be using the insolvency process as a debt recovery mechanism rather than for the resolution of the corporate debtor's insolvency. The tribunal emphasized that the Insolvency and Bankruptcy Code is intended for the revival and resolution of debt-ridden companies, not for the recovery of dues. The tribunal noted that the petitions seemed to stem from a family dispute and were an attempt to harass the corporate debtor. Conclusion: The tribunal dismissed the petitions, stating that the claims were barred by limitation and that the financial creditors were using the insolvency process for debt recovery. The tribunal also noted the corporate debtor's bona fide efforts to repay the loans and the absence of a formal agreement on the interest rate. The tribunal imposed an exemplary cost of ?30,000 in each matter, payable to the Prime Minister's Relief Fund for COVID-19 relief.
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