2021 (5) TMI 311 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational creditors - existence of debt and dispute or not - Time Limitation - HELD THAT - The period of limitation prescribed under section 137 of the Limitation Act is 3 years - In the present case, the debit notes raised by the Corporate Debtor is more than 3 years from the date of filing this application on 24.10.2019 and last payment received from the corporate debtor on 23.02.2016. Even, in this case, the Operational Creditor has not filed condone delay in filing application on the cause of action. By taking into consideration the facts, this application is hit by the limitation - Application dismissed.

Summary

Issues:
Insolvency and Bankruptcy Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Maintainability based on the period of limitation.

Analysis:
The judgment pertains to an Insolvency and Bankruptcy Application (IBA) filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, by an Operational Creditor against a Corporate Debtor for defaulting in payment for services rendered. The application included details of the Operational Creditor, Corporate Debtor, operational debt, and circumstances leading to the default. The Operational Creditor raised invoices under agreements for distribution of motion pictures, claiming an outstanding amount of ?1,21,68,732, which the Corporate Debtor failed to pay despite reminders and a demand notice.

The Tribunal examined the application and noted that the debit notes raised by the Corporate Debtor were more than three years old from the date of filing the application, with the last payment received in February 2016. Considering the limitation period prescribed under section 137 of the Limitation Act as three years, the Tribunal found the application to be time-barred. Referring to a Supreme Court judgment, the Tribunal emphasized that applications under the Insolvency and Bankruptcy Code should be treated as falling under Article 137 of the Limitation Act, where the right to sue accrues when a default occurs, and any application filed after three years from the default is barred unless delay is condoned under section 5 of the Limitation Act.

Based on the above analysis and legal principles, the Tribunal concluded that the application was hit by the limitation and therefore dismissed it as not maintainable. The judgment highlighted the importance of adhering to the prescribed limitation period for such applications. The Registry was directed to communicate the order to the Operational Creditor, Corporate Debtor, and the Interim Resolution Professional promptly.

This detailed analysis of the judgment showcases the Tribunal's thorough examination of the application, consideration of legal provisions, and application of relevant case law to arrive at a decision regarding the maintainability of the Insolvency and Bankruptcy Application based on the period of limitation.