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2021 (5) TMI 66 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Time Limitation - HELD THAT - Whether the period of limitation gets extended upon acknowledgement of debt or not is the point completely been answered by the Hon'ble NCLAT in case of Kishanlal Likhmichand Bothra Vs. Canara Bank 2021 (4) TMI 50 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , NEW DELHI . It has been held by Hon'ble NCLAT that we have no difficulty to state that Section 18 of the Limitation Act is applicable to proceedings under IBC and that if there is acknowledgement of debt in the balance sheets or the OTS proposal, the period of limitation would get extended if the acknowledgement is made before the period of limitation expires. Thus, the date of default is 27.12.2014 thereafter by way of OTS, firstly on date 09.11.2015 and thereafter on 29.01.2016, the Corporate Debtor acknowledged the date (before expiry of period of three years from the date of default). This application is filed on 12.02.2019, i.e. three years from the last date of acknowledgement of the debt. Hence, we hold that it is filed well within the period of limitation - Financial Creditor established that an amount of debt of ₹ 5,99,73,482/- is due and payable by the Corporate Debtor and the Corporate Debtor has committed default failed in paying the same. This application is defect filed within the limitation. Hence, we admit the Corporate Debtor in the Corporate Insolvency Resolution Process. Application admitted - moratorium declared.
Issues:
1. Default in payment of financial debt by the Corporate Debtor leading to the initiation of Corporate Insolvency Resolution Process (CIRP) by the Financial Creditor. 2. Dispute regarding the date of default and the maintainability of the application by the Corporate Debtor. 3. Determination of whether the application is time-barred based on the date of default and the acknowledgment of debt by the Corporate Debtor. Issue 1: Default in Payment of Financial Debt: The Financial Creditor, Punjab National Bank, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor, Mithilanchal Industries Private Limited, citing a default of ?5,99,73,482 in paying the financial debt. The Corporate Debtor had failed to repay the loan installment as agreed, leading to the initiation of Corporate Insolvency Resolution Process (CIRP) by the Bank. The Corporate Debtor, through its authorized signatory, contested the application, claiming it was filed to pressurize them and contained errors regarding the date of default and identification details. Issue 2: Dispute Regarding Date of Default and Application Maintainability: The Corporate Debtor argued that the Bank wrongly declared their loan account as a Non-Performing Asset (NPA) and questioned the authority of the Bank officer who filed the petition. However, the Tribunal held that the focus should be on whether a default occurred, not the NPA status. The Corporate Debtor's technical defenses regarding identification details and time-barring of the application were dismissed as insignificant, with the Tribunal emphasizing the acknowledgment of debt and the default in payment. Issue 3: Time-Barred Application and Acknowledgment of Debt: The Corporate Debtor claimed the application was time-barred as it was filed beyond three years from the date of default. However, the Financial Creditor argued that the Corporate Debtor had acknowledged the debt through settlement proposals within the limitation period. Citing legal precedents and the acknowledgment of debt by the Corporate Debtor, the Tribunal held that the application was filed within the period of limitation. The Tribunal admitted the Corporate Debtor to CIRP and appointed an Interim Resolution Professional, directing the continuation of services and protection of the Corporate Debtor's assets during the moratorium period. This detailed analysis of the judgment highlights the key issues of default, application maintainability, and the time-barred nature of the application, providing a comprehensive overview of the Tribunal's decision in the matter.
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