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2020 (10) TMI 964 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - claim of Financial Creditor - time limitation - amount in question has been claimed in a civil suit before the Civil Judge (Senior Division), Amravati, by the Financial Creditor, which dismissed the application of the Financial Creditor for attachment before judgment, the appeal against the order has also been dismissed by the Hon ble Bombay High Court - suppression of facts by Financial Creditor or not. Time Limitation - HELD THAT - The date of default mentioned in the application to be 21.09.2013. Also, the Financial Creditor has relied heavily on the acknowledgements in the balance sheets for the Financial Years 31.03.2013, 31.03.2014, 31.03.2015, 31.03.2016, 31.03.2017 and 31.03.2018, which have been attached to the petition at pp.133-219, to contend that the application filed under section 7 of the Code to be within the period of limitation. The present application filed under section 7 of the Code fails the test of limitation in so far as the Code is concerned - Application dismissed.
Issues Involved:
1. Jurisdiction of the Tribunal. 2. Default in payment by the Corporate Debtor. 3. Validity of the Financial Creditor's claim. 4. Limitation period for filing the petition. 5. Suppression of material facts by the Financial Creditor. 6. Applicability of Section 18 of the Limitation Act, 1963. Issue-wise Detailed Analysis: 1. Jurisdiction of the Tribunal: The Tribunal established its jurisdiction to hear the petition as the Corporate Debtor is registered in Maharashtra, falling under the purview of the Mumbai Bench of the National Company Law Tribunal (NCLT). 2. Default in Payment by the Corporate Debtor: The Financial Creditor claimed that the Corporate Debtor failed to repay a loan amounting to ?1,97,96,082 as of 21.09.2013. The Corporate Debtor contested this claim, asserting that the amount was repaid and questioned the Financial Creditor’s credentials and the source of funds. 3. Validity of the Financial Creditor's Claim: The Corporate Debtor denied the Financial Creditor's averments and highlighted that the matter was already under dispute in a civil suit (Suit No. 225/2013) before the Second Joint Civil Judge (Senior Division), Amravati. The Financial Creditor's application for attachment before judgment was dismissed, and the appeal was also dismissed by the Bombay High Court. The Corporate Debtor argued that the Financial Creditor suppressed these material facts from the Tribunal. 4. Limitation Period for Filing the Petition: The Tribunal examined whether the petition was filed within the prescribed limitation period. The Financial Creditor argued that acknowledgments of liability in the Corporate Debtor’s balance sheets extended the limitation period under Section 18 of the Limitation Act, 1963. However, the Tribunal referred to the Supreme Court’s judgment in Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries Pvt Ltd, which clarified that the date of default is crucial for determining the limitation period. Since the default date was 21.09.2013, the petition filed in 2018 was beyond the three-year limitation period. 5. Suppression of Material Facts by the Financial Creditor: The Corporate Debtor accused the Financial Creditor of suppressing the facts regarding the civil suit and the High Court’s dismissal of the appeal. The Tribunal noted this but focused primarily on the limitation aspect. 6. Applicability of Section 18 of the Limitation Act, 1963: The Financial Creditor relied on acknowledgments in the Corporate Debtor’s balance sheets to argue for an extension of the limitation period. The Tribunal, however, followed the Supreme Court’s ruling in Babulal Vardharji Gurjar, which held that such acknowledgments do not extend the limitation period for initiating Corporate Insolvency Resolution Process (CIRP) under the Insolvency & Bankruptcy Code (IBC). Decision: The Tribunal concluded that the petition failed the test of limitation as per the Supreme Court’s judgment in Babulal Vardharji Gurjar. Consequently, the application was rejected. The Tribunal clarified that this decision should not prejudice the petitioner’s rights in any other judicial forum. The Court Officer was directed to communicate the order to the parties as per Section 7(5)(b) of the IBC.
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