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2021 (1) TMI 615 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - default on the part of Corporate Debtor in repayment of an amount together with the agreed rate of interest, to Financial Creditor - existence of Operational Debt or not - presence of document evidence to show that the aforesaid debt is payable and has not yet been paid - existence of a dispute between the parties or not - HELD THAT - It is noticed that the foremost objection of the applicant/Corporate Debtor regarding maintainability of the IB application is based on the arbitration clause mentioned in Memorandum of Understanding dated 27.12.2010, Joint Development Agreement dated 09.02.2012 and Agreement dated 28.06.2013, which was already been dismissed on 17.02.2020 under separate Interlocutory Application (IA/09/KOB/2020 in IBA/46/KOB/2019), to which an appeal was filed before the Hon ble NCLAT (Company Appeal (AT) (Insolvency) No. 429 of 2020) and the same was also dismissed as being premature stating that it is open to the learned Adjudicating Authority to decide the application on merits and in the event of the Appellant being aggrieved of the order of admission passed under Section 7, it shall be open to the Appellant to raise all issues in appeal. As regards the allegation that no demand notice has been issued by the Applicant as mandated under Section 8 of the Code, it does not hold ground for the reason that the Application has been filed by the Financial Creditor for recovery of money borrowed as Inter Corporate Deposit by the Corporate Debtor against payment of interest. In terms of clause (a) Sub-Section (8) of Section 5 of the I B Code, the same tantamount to a debt disbursed against consideration of time value of money, which falls within the ambit of Financial Debt . This Bench is of the view that the provisions of Limitation Act do apply while implementing the provisions of Insolvency Code. Since it is clear that there is an acknowledgement in the records of the Financial Creditor, the Limitation Act are to be examined in the light of the facts and circumstances of this particular case. In the present case, the true extract of statement of accounts maintained by the Financial Creditor clearly depicts that the period of non-payment is from April 2017 and the last date of payment received by the Financial Creditor as 24.11.2017. Indisputably, in the present case, the Financial Creditor itself came out with a pleading with the documents stating the date of default of outstanding principal and interest is from 01st April 2017 till 31st March 2019, as stated in Part IV of the application. Hence, this Bench is of the view that the application filed by the Financial Creditor (TATA Global Beverages Limited) is well within the limitation period and the contention of the applicant that the debt is time barred is to be rejected. Application disposed off.
Issues Involved:
1. Maintainability of the Insolvency and Bankruptcy Application (IBA) based on limitation. 2. Classification of the creditor as Financial Creditor or Operational Creditor. 3. Requirement of a demand notice under Section 8 of the Insolvency and Bankruptcy Code (IBC). 4. Allegation of suppression of material facts by the applicant. 5. Applicability of the arbitration clause in the agreements. Detailed Analysis: 1. Maintainability of the Insolvency and Bankruptcy Application (IBA) based on limitation: - The Corporate Debtor (KAL) argued that the claim by the Financial Creditor (TGBL) is barred by limitation since the Inter Corporate Deposit (ICD) was not renewed after 30.06.2014, and the application was filed on 01.11.2019, more than five years later. - The Financial Creditor countered that payments were made till March 2017, extending the limitation period under Section 19 of the Limitation Act, 1963. Additionally, they argued that the ICD was secured by a mortgage, invoking a 12-year limitation period under Article 62 of the Limitation Act. - The Tribunal referred to the Supreme Court's decision in Babulal Vardharji Gurjar V. Veer Gurjar Aluminium Industries Pvt. Ltd., emphasizing that the question of limitation involves a mixed question of law and facts requiring examination of relevant evidence. - The Tribunal found that the Financial Creditor's records showed payments made until 24.04.2017, making the application within the limitation period. Consequently, the contention that the debt is time-barred was rejected. 2. Classification of the creditor as Financial Creditor or Operational Creditor: - KAL argued that TGBL is an Operational Creditor, not a Financial Creditor, as the ?5 Crores advanced was towards a joint venture, and invoices were to be adjusted against this amount. - The Tribunal determined that the ICD constituted a "financial debt" as it was disbursed against the consideration of time value of money, falling within the ambit of Section 5(8) of the IBC. 3. Requirement of a demand notice under Section 8 of the Insolvency and Bankruptcy Code (IBC): - KAL contended that no demand notice was issued as required under Section 8 of the IBC. - The Tribunal clarified that the application was filed by a Financial Creditor, not an Operational Creditor, thus the requirement for a demand notice under Section 8 did not apply. 4. Allegation of suppression of material facts by the applicant: - KAL alleged that TGBL suppressed material facts, claiming the ?5 Crores was a joint venture contribution and not a loan. - The Tribunal found that the Tripartite Agreement dated 05.09.2014 clearly indicated that the amount was a financial debt guaranteed by Arudrama Developments Private Limited, and thus, the claim of suppression of material facts was not substantiated. 5. Applicability of the arbitration clause in the agreements: - KAL's objection based on the arbitration clause in various agreements was dismissed in a separate Interlocutory Application (IA/09/KOB/2020), and the appeal against this dismissal was also rejected by the NCLAT. - The Tribunal reiterated that the matter was to be decided on merits, and the arbitration clause did not preclude the maintainability of the IBA. Conclusion: The Tribunal dismissed the Interlocutory Application (IA/80/KOB/2019), upholding the maintainability of the IBA/46/KOB/2019 filed by TGBL. The Tribunal concluded that the application was within the limitation period, TGBL was a Financial Creditor, and the procedural requirements under the IBC were met. The allegations of suppression of facts and the applicability of the arbitration clause were also rejected.
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