Case Laws
Acts
Notifications
Circulars
Classification
Forms
Manuals
Articles
News
D. Forum
Highlights
Notes
🚨 Important Update for Our Users
We are transitioning to our new and improved portal - www.taxtmi.com - for a better experience.
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (10) TMI 686 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - time limitation - refusal of delivery - deemed delivery or not - photocopies of envelope in which the demand notice was sent - valid evidence or not. Whether this application is time barred? Would limitation in insolvency matters be saved by virtue of a decree passed in a civil suit for recovery of money? - HELD THAT - In the present case the default has occurred over four years prior to the date of filing of the present application. The provision that may save the limitation for Applicant-Operational Creditor is acknowledgement under section 18 of the Limitation Act 1963 however there is nothing on record to prove any acknowledgement from the Corporate Debtor. Learned Counsel appearing for the Operational Creditor submits that limitation is saved due to a decree in a civil suit for recovery of money that was pronounced on 18.09.2018. However the decree has been pronounced way beyond the limitation period got over. Moreover an ex-parte decree is not an acknowledgement of debt with regards to section 18 of the Limitation Act - the application is time barred and the said ex-parte decree does not amount to acknowledgment of debt under section 18 of the Limitation Act. This issue is answered accordingly. Can refusal of delivery be accepted as deemed delivery for the purpose of section 8 of the Code? - Whether photocopies of envelope in which the demand notice was sent can be admitted as a valid evidence? - HELD THAT - As per Rule 5(2) of IBBI (Application to Adjudicating Authority) Rules 2016 the demand notice under section 8 of the Code has to be effectively delivered on the Corporate Debtor. The IBC being a complete code in itself and its provisions having an overriding effect on other laws by virtue of the said Rule 5(2) there can be no presumption of delivery in matters related to Insolvency Proceedings unlike matters otherwise than under the Code where section 27 of the General Clauses Act applies. Moreover no explanation is forthcoming as to non production of the original envelope for our perusal - the refusal of delivery cannot be accepted as deemed delivery for the purpose of section 8 of the Code. These issues are answered accordingly. Although the Corporate Debtor in its reply affidavit has agreed to the debt and default the claim being barred by law of limitation and for want of delivery proof of Section 8 demand notice to the Corporate Debtor this application is not fit for admission - Application dismissed.
Issues involved:
1. Whether the application is time-barred and if the limitation in insolvency matters can be saved by a civil suit decree? 2. Can refusal of delivery be considered as deemed delivery under section 8 of the Insolvency and Bankruptcy Code? 3. Whether photocopies of the envelope containing the demand notice can be admitted as valid evidence? Analysis: Issue No. 1: The application under Section 9 of the Insolvency and Bankruptcy Code was filed for initiating Corporate Insolvency Resolution Process against the Corporate Debtor due to non-payment of hire charges for cranes supplied by the Operational Creditor. The default occurred on 31.01.2015, and the application was filed on 16.07.2019, beyond the limitation period. The Operational Creditor relied on a civil suit decree dated 18.09.2018 for recovery, but the decree was pronounced after the limitation period. The National Company Law Appellate Tribunal (NCLAT) has clarified that a decree does not shift the date of default and insolvency proceedings are not for mere recovery of money. Hence, the application was held time-barred. Issue No. 2 & 3: The Operational Creditor claimed that the demand notice sent by post was refused by the Corporate Debtor, arguing it should be deemed delivered. However, as per the IBBI Rules, the demand notice under section 8 of the Code must be effectively delivered. The refusal of delivery cannot be accepted as deemed delivery under the Code. Without the original envelope for verification, the claim of deemed delivery was not substantiated. As the application was time-barred and lacked proof of effective delivery of the demand notice, it was deemed unfit for admission. In conclusion, the application was dismissed as it was time-barred, and the claim of deemed delivery was not supported by sufficient evidence. The Registry was directed to communicate the order to both parties, and no costs were awarded.
|