2022 (12) TMI 916 - AT - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - barred by limitation - pecuniary jurisdiction to entertain the claim - HELD THAT - This Tribunal is of the view that the averments made in the reply by the Respondent is clearly an afterthought only for the purpose of vitiating the proceedings. Further, as per Section 8(2)(a) of the I B Code, 2016, the existence of dispute, if any or, record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute. As per the above position of law the dispute must be specific with regard to the same amount. In that present case, the Respondent failed to raise any dispute prior to issue of demand notice and claim of set off is only an afterthought. Accordingly, the issue is answered. Whether the claim is barred by limitation - maintaining the pecuniary jurisdiction to entertain the claim - HELD THAT - The Adjudicating Authority taken a stand that out of 13 invoices claimed by the Appellant 11 invoices are time barred i.e. the last invoice dated 23.08.2016 and the Application under Section 9 was filed on 26.08.2019, therefore, it is beyond 3 years as per Section 137 of the Limitation Act. However, the (2) invoices both dated 31.08.2016 are within the period of limitation, since the application filed on 26.08.2019. Having taken into consideration the 2 invoices which are within the period of limitation, the Adjudicating Authority failed to consider that the amount even for the 2 invoices satisfies the minimum threshold prescribed under Section 4 of the I B Code, 2016 (pre-amended). As per Section 4 of the I B Code, 2016 the minimum threshold was Rs.1,00,000/- and the amount for the 2 invoices both dated 31.08.2016 was Rs.3,64,100/-, thus, it exceeds the minimum threshold as prescribed under the law prior to the amendment. The Adjudicating Authority miserably failed to take into consideration the pecuniary jurisdiction under which the application ought to have been admitted. Thus, the observation of the Adjudicating Authority is factually incorrect with regard to the non-maintainability of the application. The Adjudicating Authority having noticed that the claim of the Appellant is more than Rs.1,00,000/- and is within the threshold limit, however, was of the view that the claim made by the Respondent is more than the claim made by the Appellant. The said observation is without any basis. Further the Adjudicating Authority was of the view that though the Corporate Debtor raised the claim after the issuance of demand notice, however, it observed that the goods were delivered by the Corporate Debtor to the Appellant before issuance of demand notice and raising of invoices was delayed by the Corporate Debtor, is absurd and without any basis. This Tribunal comes to an irresistible and inescapable conclusion that the order passed by the Adjudicating Authority is per-se illegal and the same is hereby set aside. The Company Appeal is allowed with a direction to the Adjudicating Authority to admit the application and initiate Corporate Insolvency Resolution Process (CIRP) proceeding against the Respondent / Corporate Debtor.

Summary

Issues Involved:
Existence of dispute, limitation of claim, pecuniary jurisdiction.

Existence of Dispute:
The Appellant filed an Application under Section 9 of the I&B Code, 2016 seeking initiation of Corporate Insolvency Resolution Process against the Respondent for defaulting in payment. The Adjudicating Authority found that out of 13 invoices, only 2 were within the period of limitation. The Respondent claimed a set-off for goods supplied, but the Tribunal noted that the Respondent failed to raise any dispute prior to the demand notice. The Tribunal concluded that the Respondent's claims were an afterthought to disrupt the proceedings, as per Section 8(2)(a) of the I&B Code. Thus, the issue of dispute was resolved in favor of the Appellant.

Limitation of Claim & Pecuniary Jurisdiction:
The Respondent argued that the claim was time-barred as the application was filed after 3 years from the date of default. The Adjudicating Authority found 11 out of 13 invoices time-barred. However, the Tribunal noted that the 2 invoices within the limitation period exceeded the minimum threshold prescribed under the law. The Adjudicating Authority's observation of non-maintainability was deemed factually incorrect. The Tribunal concluded that the order was illegal and set it aside. The Company Appeal was allowed, directing the Adjudicating Authority to admit the application and initiate Corporate Insolvency Resolution Process against the Respondent. No costs were awarded.

This detailed analysis of the judgment from the National Company Law Appellate Tribunal, Principal Bench, New Delhi, delves into the issues of dispute existence, claim limitation, and pecuniary jurisdiction, providing a comprehensive understanding of the legal intricacies involved in the case.