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2020 (10) TMI 959 - Tri - IBCMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - scope of Financial Credit - Competent person or not - disputed debt of debt due - time limitation - legally recoverable debt or not. Whether Application filed by the Financial Creditor is not filed by a competent person? - HELD THAT - The Financial Creditor has the proper authority to file the present application, and the objection raised by the counsel for the Corporate Debtor is merely incongruous, and therefore, holds no water. Moreover, the Financial Creditor has annexed the Board Resolution dated 05.08.2019 authorising Deputy Manager (Legal) to represent the Financial Creditor before various forums from time to time - there are no merit in the argument made by the Corporate Debtor in this connection. Whether the alleged debt in the application is a disputed debt and it is not 'due'? - HELD THAT - It is settled law as decided by the Hon'ble NCLAT in its order in Vinayaka Exports and Anr Vs M/s Colorhome Developers Pvt. Ltd 2019 (9) TMI 968 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI the existence of dispute is not relevant for Financial Creditor. Therefore, there are no merit in the contention raised by the Corporate Debtor. Whether application filed by the Financial Creditor under Section 7 of Insolvency and Bankruptcy Code, 2016 is barred by limitation? - HELD THAT - It is now a settled case law that the acknowledgement of debt in the balance sheet of the Corporate Debtor extends the period of limitation - From the records it is observed that the Corporate Debtor from 2012 to 2019 made entries in the Balance Sheet about the amount due to the Financial Creditor - this amounts to acknowledgement of debt and, therefore, the application is not barred by the limitation. Whether the respondent Corporate Debtor is not a Corporate Debtor as there is no legally recoverable debt? - HELD THAT - It is evident that the Corporate Debtor defaulted in repaying the loan, Revenue Recovery notice and requisition was initiated by the Financial Creditor against the Corporate Debtor and its guarantors in the year 2012. Against the said action, several Writ Petitions were filed by the Corporate Debtor and its guarantors to obtain stay against the RR action initiated by the Financial Creditor. Even otherwise, it is trite and a well settled law that pendency of proceedings before other forums is not a bar to initiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016 - the Financial Creditor is trying to recover his dues through various legal actions which was being contested by the Corporate Debtor at every stage. In the absence of any adverse order in the above proceedings and after thoroughly perusing the documents executed by the Corporate Debtor with the Financial Creditor, the debt in question is legally recoverable debt and therefore reject the contention that respondent company is not a Corporate Debtor as there is no legally recoverable debt. Thus, the present application filed by the Financial Creditor is satisfying all the definitions of Financial Creditor , Default and Financial Debt and qualifies for filing an application under Insolvency and Bankruptcy Code - the Application under Sub-Section (4) of Section 7 of I B Code, 2016 is complete and deserves to be admitted for initiation of Corporate Insolvency Resolution Process against the Corporate Debtor. Application admitted - moratorium declared.
Issues Involved:
1. Competency of the person filing the application. 2. Dispute over the debt being due. 3. Application being barred by limitation. 4. Legal recoverability of the debt. Detailed Analysis: 1. Competency of the Person Filing the Application: The Corporate Debtor argued that the application was not filed by a competent person, raising concerns about the absence of a resolution authorizing the Deputy Manager to represent the Financial Creditor. However, the Tribunal found that the Financial Creditor had proper authority, supported by a Board Resolution dated 05.08.2019 authorizing the Deputy Manager (Legal) to represent the Financial Creditor. The Tribunal dismissed the objection as incongruous and without merit. 2. Dispute Over the Debt Being Due: The Corporate Debtor contended that the alleged debt was disputed and not due. The Tribunal referred to the Hon'ble NCLAT's decision in Vinayaka Exports and Anr Vs M/s Colorhome Developers Pvt. Ltd, which established that the existence of a dispute is not relevant for a Financial Creditor. Consequently, the Tribunal found no merit in the Corporate Debtor's contention. 3. Application Being Barred by Limitation: The Corporate Debtor claimed that the application was barred by limitation. The Tribunal referred to the Hon'ble Supreme Court's decision in B. K. Educational Services Private Limited Vs Parag Gupta and Associates, which clarified that the limitation period begins from the date of default, not from the date of the document. Additionally, the Tribunal cited the Hon'ble High Court of Delhi's judgment in Zest Systems Pvt. Ltd v Centre for Vocational and Entrepreneurship Studies and Ors, which held that acknowledgment of debt in the balance sheet extends the period of limitation. The Tribunal observed that the Corporate Debtor had acknowledged the debt in its balance sheets from 2012 to 2019, thus extending the limitation period. Therefore, the application was not barred by limitation. 4. Legal Recoverability of the Debt: The Corporate Debtor argued that the debt was not legally recoverable and, therefore, it could not be termed as a Corporate Debtor. The Tribunal noted that the Corporate Debtor had defaulted on the loan, leading to Revenue Recovery actions initiated by the Financial Creditor. Several writ petitions were filed by the Corporate Debtor and its guarantors to stay the RR actions. The Tribunal emphasized that the pendency of proceedings before other forums does not bar the initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Tribunal cited precedents from the Hon'ble Principal Bench of NCLT, which held that proceedings before DRT or under SARFAESI do not impede CIRP proceedings under Section 7 of the Code. The Tribunal concluded that the debt was legally recoverable, rejecting the Corporate Debtor's contention. Conclusion: The Tribunal found that the application filed by the Financial Creditor met all the definitions of "Financial Creditor," "Default," and "Financial Debt" under the Insolvency and Bankruptcy Code, 2016. The application was deemed complete and deserving of admission for initiating the Corporate Insolvency Resolution Process against the Corporate Debtor. The Tribunal admitted the application and ordered the initiation of CIRP, imposing a moratorium as prescribed under Section 14 of the Code. The Tribunal appointed Mr. Sankar P. Paniker as the Interim Resolution Professional (IRP) and directed him to perform duties as assigned under Sections 15 and 18 of the Code, with progress reports to be submitted within 30 days. The commencement of CIRP was effective from the date of the order of admission.
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