2024 (7) TMI 317 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operatioal Creditors - time limitation - Effect of winding up petition. Whether limitation would come to a hold on account of the order passed on 29.03.2016 by the Hon ble High Court of Calcutta in a petition under Section 433 and 434 of the Act, 1965 filed by the Appellant on 19.02.2016 and it would start to run again on account of order passed by the Hon ble Supreme Court on 04.10.2019 in the case of Duncans Industries Limited 2019 (10) TMI 301 - SUPREME COURT ? - HELD THAT - In the earlier part of this order, while referring to the facts of this case, that the petition for winding up was disposed of by the Hon ble High Court vide its order dated 29.03.2016 only on the ground that by virtue of notification dated 28.01.2016 which came prior to the filing of petition under Section 433 and 434 of the Act, 1956 on 19.02.2016, it was required that in order to take any legal action against the Respondent, the consent of the central government was necessary. However, despite the order dated 29.03.2016 in which the liberty was granted to the Appellant to take recourse in accordance with law, no such application was filed by the Appellant to the Central Government for the purpose of taking its consent to pursue its remedy or recovery of the debt against the Respondent. The Respondent has solely relied upon a decision of the Hon ble Supreme Court in the case of Duncans Industries Ltd. in which the Appellant and the Respondent were not a party, therefore, it has no bearing at all. There is hardly any error in the impugned order for the purpose of interference because the Adjudicating Authority has also held that there was ample time with the Appellant to seek prior consent of the Central Government for the purpose of taking action against the Respondent in accordance with law. There are no error in the impugned order which requires any interference - the present appeal is held to be without any merit and the same is hereby dismissed.

Summary

Issues:
1. Dismissal of application under Section 9 of the IBC, 2016 on the ground of limitation.
2. Calculation of limitation period for filing the application.
3. Impact of previous winding up proceedings on limitation period.
4. Requirement of Central Government consent for legal action against the Respondent.
5. Applicability of the decision in the case of Duncans Industries Limited on the limitation period.

Analysis:
1. The judgment pertains to an appeal against the dismissal of an application under Section 9 of the IBC, 2016 due to limitation. The Appellant, an Operational Creditor, sought to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor but faced dismissal based on the limitation issue.

2. The Appellant claimed a sum with interest, alleging that the Corporate Debtor defaulted on payments starting from 90 days after the first bill in 2012. The last payment was made in 2014, and the accounts were confirmed in 2015. The limitation period for filing under Section 9 is three years as per Article 137 of the Act, 1963, which seemingly expired before the petition was filed in 2020.

3. The Respondent argued that the petition was time-barred, citing the dates of last supply, last payment, and account confirmation. The winding up petition filed earlier was disposed of in 2016 due to the requirement of Central Government consent, which the Appellant failed to obtain for further legal action.

4. The judgment highlighted the necessity of obtaining Central Government consent for legal actions against the Respondent, as mandated by the earlier winding up proceedings. Despite the liberty granted to the Appellant to seek necessary steps, no such action was taken, leading to the current dismissal of the appeal.

5. The decision emphasized that the case law cited by the Appellant, regarding a separate matter involving Duncans Industries Limited, was irrelevant to the present situation. The judgment concluded that there was no error in the impugned order, as the Appellant had sufficient time to comply with the legal requirements, and thus dismissed the appeal without costs.