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2022 (1) TMI 457 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - application is barred by time limitation or not - HELD THAT - The prescribed period of limitation for filing the Application for recovery of amount due being 3 years which period is to be reckoned from 30.03.2017 the argument that the present application is barred by limitation becomes wholly unsustainable and unacceptable. That apart it is to be noted that soon after filing the present application the Corporate Debtor made payment of 1.49 lacs on 23.10.2019 as is evident from the counter filed by the Corporate Debtor. This payment undoubtedly amounts to acknowledgment of liability by the corporate debtor herein - the sum claimed as due and payable by the Corporate Debtor is well within the period of limitation as on the date of filing this application. There are no force in the contention of the learned Senior Counsel for the Corporate Debtor that the debt claimed as due and payable by the Corporate Debtor in this application is barred by limitation. Whether the Operational Creditor has made out a case for ordering initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor? - HELD THAT - It is trite to say that establishment of legally enforceable debt and default in payment of the said debt by the corporate debtor is the sine qua non for setting the corporate insolvency resolution process in motion against the corporate debtor. The applicant in this case has convincingly established the same. Therefore the petition deserves to be allowed and Corporate Insolvency Resolution Process against the respondent corporate debtor shall be ordered. Application admitted - moratorium declared.
Issues Involved:
1. Whether the application is barred by limitation. 2. Whether the Operational Creditor has made out a case for ordering the initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. Issue-wise Detailed Analysis: 1. Whether the application is barred by limitation: The Tribunal examined whether the debt claimed by the Operational Creditor was within the prescribed period of limitation. The Operational Creditor argued that the payments related to the Purchase Orders dated 09.07.2015 and 04.11.2015 were made in parts until 30.03.2017, as evidenced by the undisputed ledger account. Therefore, the application filed on 15.10.2019 was within the three-year limitation period. The Corporate Debtor contended that the claim, related to Purchase Orders from 2015 and excise duty deductions made in 2015-2016, was barred by limitation since the application was filed beyond the three-year period. The Tribunal found that part-payments made by the Corporate Debtor until 30.03.2017 extended the limitation period, making the application timely. Additionally, a payment made by the Corporate Debtor on 23.10.2019 was considered an acknowledgment of liability, further confirming that the claim was within the limitation period. Therefore, the Tribunal concluded that the debt was not barred by limitation. 2. Whether the Operational Creditor has made out a case for ordering initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor: The Operational Creditor claimed a total of ?44,20,909, including ?25,71,244 as the principal amount and ?18,49,665 as interest. The main contention was that the Corporate Debtor failed to submit the Excise Duty Exemption Certificate (EDEC) before dispatching the materials, compelling the Operational Creditor to pay the excise duty, which the Corporate Debtor was liable to reimburse. The Corporate Debtor argued that it had provided the EDEC before placing the relevant purchase orders and was exempt from paying excise duty. The Tribunal examined the records and found that the Corporate Debtor had not provided evidence of submitting the EDEC before the dispatch of materials. The Tribunal accepted the Operational Creditor's claim that the EDEC was submitted only on 02.01.2016, after the supplies were made. Consequently, the Tribunal held that the Corporate Debtor was liable to reimburse the excise duty amount of ?22,35,961 as per the terms of the purchase orders. The Tribunal also noted that the establishment of a legally enforceable debt and default in payment by the Corporate Debtor was a prerequisite for initiating CIRP. The Operational Creditor successfully demonstrated both, leading the Tribunal to allow the petition and order the initiation of CIRP against the Corporate Debtor. Order: The Tribunal admitted the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, declaring a moratorium and appointing an Interim Resolution Professional (IRP). The order included prohibitions on the institution or continuation of suits against the Corporate Debtor, transferring or disposing of assets, and actions to recover property. The supply of essential goods or services to the Corporate Debtor was to continue uninterrupted during the moratorium period. The public announcement of the initiation of CIRP was to be made immediately, and the IRP was appointed to carry out the functions as per the Code. The Registry was directed to send a copy of the order to the Registrar of Companies, Hyderabad, to update the status of the Corporate Debtor on the MCA-21 site of the Ministry of Corporate Affairs.
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