2020 (12) TMI 876 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make payment of financial dues - existence of debt and dispute or not - HELD THAT - In Section 7 of the IBC Application filed on behalf of the Respondent No. 1 that dues amount claimed in default has been shown as Rs. 23, 90, 64, 696.69/- till 28.08.2018 plus further interest the date of default has been shown on 30.06.2015. The Appellant has failed to demonstrate that the impugned order suffers from any legal infirmity - Appeal dismissed.

Summary

Issues Involved:
1. Timeliness of the Application under Section 7 of the Insolvency and Bankruptcy Code (IBC).
2. Acknowledgment of Debt and its impact on the limitation period.
3. Conduct of the Appellant regarding One-Time Settlement (OTS) proposals.

Issue-wise Detailed Analysis:

1. Timeliness of the Application under Section 7 of the IBC:
The Appellant contended that the application filed by the Financial Creditor under Section 7 of the IBC was time-barred. The account was declared Non-Performing Asset (NPA) on 31.03.2015, and the application was filed on 30.08.2018, beyond the three-year limitation period. The Appellant argued that the petition was time-barred as of 30.06.2018 and thus could not form the basis for filing the application under Section 7 of the IBC.

2. Acknowledgment of Debt and its Impact on the Limitation Period:
The Respondent No. 1 argued that the application was not time-barred, citing that the Corporate Debtor had executed two separate Deeds of Acknowledgment of Debt and Securities on 31.08.2015, confirming its indebtedness. The Appellant had also made multiple OTS proposals, indicating acknowledgment of the debt. The Financial Creditor submitted that the date of default was 31.03.2015, and the acknowledgment of debt extended the limitation period, making the application timely.

3. Conduct of the Appellant Regarding OTS Proposals:
The Respondent No. 1 presented evidence of multiple OTS proposals made by the Appellant, including letters dated 1st April 2017, 21st November 2017, 4th January 2018, 9th July 2018, and 14th September 2020. These letters indicated the Appellant's willingness to settle the debt and acknowledged the outstanding dues. The Appellant's conduct, as evidenced by these proposals, demonstrated an acknowledgment of debt and a willingness to settle, which was inconsistent with their argument that the debt was time-barred.

Findings:
The Tribunal found that the Appellant had not raised the issue of limitation before the Adjudicating Authority and was raising it for the first time before the Appellate Tribunal. The Tribunal noted that the Appellant had acknowledged the debt through multiple OTS proposals and had admitted their dues. The Tribunal concluded that the conduct of the Appellant and the acknowledgment of debt extended the limitation period, making the application under Section 7 of the IBC timely.

Order:
The Tribunal affirmed the impugned order dated 17.07.2020, finding no illegality in it. The appeal was dismissed, and the Tribunal held that the Appellant had failed to demonstrate any legal infirmity in the impugned order. No order as to costs was made.