9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (12) TMI 485 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - pre-existing dispute between the Operational Creditor and the Corporate Debtor or not - HELD THAT - There are material substances in the appeal and the appeal deserves to be allowed. Matter remanded to the Adjudicating Authority to initiate CIRP against the Corporate Debtor after allowing a period of 30 days to the parties to settle the matter failing which to initiate CIRP against the corporate debtor - appeal allowed by way of remand.
Issues Involved:
1. Limitation period for filing the insolvency petition. 2. Nature of the transaction (loan vs. advance). 3. Pre-existing dispute between the parties. 4. Classification of the debt as an operational debt. Detailed Analysis: 1. Limitation Period for Filing the Insolvency Petition: The Appellant contended that although the advance was given in 2014, the transactions continued till November 2017, with debit notes signed by the Director of the Corporate Debtor. Thus, the application filed on 06.12.2019 is within the limitation period as per Section 18 of the Limitation Act, 1963. This section allows for the extension of the limitation period if an acknowledgment of liability is made in writing before the expiration of the prescribed period. The Tribunal acknowledged this argument, referencing the case of Asset Reconstruction Company Ltd. vs. Bishal Jaiswal, which supports the extension of the limitation period based on entries in the balance sheet. 2. Nature of the Transaction (Loan vs. Advance): The Appellant argued that the amount of ?30 Lakhs was an advance, not a loan, citing the Supreme Court's judgment in Commissioner of Income Tax Assam, Tripura, and Manipur v. Panbari Tea Co. Ltd., which emphasizes the substance over the form of the transaction. The Tribunal noted that the Adjudicating Authority erred in treating the amount as a loan. The Tribunal concluded that the amount was indeed an advance, which qualifies as an operational debt under Section 5(21) of the Insolvency and Bankruptcy Code, 2016. 3. Pre-existing Dispute Between the Parties: The Respondent claimed that the amount was part of a settlement under an MoU and not an advance. However, the Tribunal found no evidence of a pre-existing dispute before the demand notice dated 14.11.2019. The Tribunal referenced the Mobilox Innovations Private Limited v. Kirusa Software Private Limited case, which mandates that any dispute must predate the demand notice. The Tribunal concluded that the dispute raised by the Respondent was not substantiated and was unrelated to the Corporate Debtor. 4. Classification of the Debt as an Operational Debt: The Tribunal examined the nature of the debt and found that the ?30 Lakhs was recoverable from the Corporate Debtor and was advanced towards commission/brokerage payable in the future. This aligns with the definition of operational debt under Section 5(21) of the Code, which includes claims for the provision of goods or services. The Tribunal noted that the amount was reflected in the audited balance sheet of the Operational Creditor as an advance to be recovered, supporting the classification as an operational debt. Conclusion: The Tribunal set aside the impugned order dated 15.07.2021 of the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, and remanded the matter back to the Adjudicating Authority to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The parties were given 30 days to settle the matter, failing which CIRP would be initiated. The Tribunal directed the Registry to forward a copy of the judgment to the Registrar NCLT, New Delhi, for implementation. Pending applications were disposed of, and no order as to costs was made.
|
