2021 (8) TMI 625 - 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 - date of default is 02.06.2014 and the Application has been filed on 16.10.2019 - HELD THAT - Apart from the decree passed by the Principal District Judge, Kadapa on 02.06.2014, the Operational Creditor has not attached any other document in order to show proof of the debt. Further, in Part-IV of the Application, the Operational Creditor has mentioned the date of default clearly as 02.06.2014 and it is an undisputed fact that the present Application has been filed before this Tribunal on 16.12.2019. Also, the Operational Creditor has failed to place on record any document to show that the debt claimed by them, is well within the period of limitation. The Operational Creditor has clearly slept over his rights to enforce the purported decree in accordance with law against the Corporate Debtor within the stipulated limitation period and is now attempting to use this forum as a Court of execution and the Hon'ble Supreme Court in the matter of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED 2017 (9) TMI 1270 - SUPREME COURT has categorically held that this Authority should not be used as a Court of execution. The debt as claimed by the Operational Creditor is time barred and the Operational Creditor has failed to place on record any iota of document recognized under the law to substantiate that the debt falls well within the period of limitation - the debt as claimed by the Operational Creditor is time barred and as such the Application filed by the Operational Creditor stands dismissed as not maintainable.

Summary

Issues:
1. Maintainability of the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 based on the ground of limitation.

Analysis:
The Tribunal received an application from the Operational Creditor seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor due to alleged default in repayment of dues. The Operational Creditor provided papers to the Corporate Debtor in 2010, leading to a default in repayment of a sum of ?6,43,176. A suit was filed and decreed in favor of the Operational Creditor for ?10,63,600 on 02.06.2014. A demand notice under Section 8 of the IBC, 2016 was sent to the Corporate Debtor on 19.09.2019, with no response. The application to initiate CIRP was filed on 16.12.2019, claiming non-payment of the decreed sum by the Corporate Debtor.

The Tribunal noted that besides the decree from 02.06.2014, the Operational Creditor failed to provide additional documents to prove the debt. The Operational Creditor mentioned the default date as 02.06.2014 in the application filed on 16.12.2019, without evidence that the debt was within the limitation period. The Operational Creditor neglected to enforce the decree within the limitation period, attempting to use the Tribunal as a Court of execution, contrary to the Supreme Court's ruling in Mobilox Innovations (P) Ltd. vs. Kirusa Software (P) Ltd. (2018) 1 SCC 353, cautioning against such use.

Consequently, the Tribunal determined that the debt claimed by the Operational Creditor was time-barred. Due to the lack of supporting documents within the limitation period, the Tribunal dismissed the application as not maintainable at the stage of scrutiny.