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2023 (8) TMI 1399 - AT - Insolvency and BankruptcyMaintainability of application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 - time limitation - HELD THAT:- In the present case, the Adjudicating Authority has recorded a finding in favour of the Respondent that on 11.07.2017, when the first petition was filed by the alleged Financial Creditor, the date of recalling of the financial assistance in terms of clause 4 of the MOU dated 02.05.2012. However, this finding cannot be accepted, the date of default cannot be 11.07.2017 which in fact the date of filing of the petition under Section 7 of the Code because the date of default has to be mentioned in the petition and only thereafter, the application is filed under Section 7 of the Code. It means that the date of default has to be before the date of filing of application under Section 7 of the Code and the date of filing cannot be presumed to be the date of default. As a matter of fact, the Adjudicating Authority, while answering the contention of the Corporate Debtor that the application under Section 7 was not within limitation, has observed that “therefore, it can be said that the financial assistance was recalled on 11.07.2017. Since, the instant petition was filed on 16.03.2018, it cannot be said that the same is barred by limitation. The application filed under Section 7 is not found to be within the period of limitation because the last payment was admittedly made on 27.02.2015. The application under Section 7 was filed on 16.03.2018 which is apparently beyond the period of three years and was barred by limitation had the date of default not been taken as 11.07.2017 by the Adjudicating Authority as the date of recall of the financial assistance. Counsel for the Appellant has referred to Section 65 of the Code which provides in the punishment for fraudulent and malicious initiation of proceedings and contended that it is a case where there was collusion for the purpose of obtaining order of admission in regard to the initiation of CIRP against the Corporate Debtor. This aspect should have been looked into by the Adjudicating Authority and should not have brushed aside only on the ground that it is not required to look into for the purpose of consideration of admission of the CP. In the end, even after taking into consideration the MOU dated 02.05.2012, which is the basis of the order of admission having been passed by the Adjudicating Authority and relied upon heavily by the alleged Financial Creditor, the application under Section 7 could not have been filed until and unless the financial assistance given by the Financial Creditor to the Corporate Debtor has been recalled which is a fact conspicuous by its absence in these proceedings - looking from any angle, the order of admission passed by the Adjudicating Authority is found to be patently illegal. Appeal allowed.
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