Synergy Property Development Service ... vs Bellona Estate Developers Ltd

Synergy Property Development Service Pvt. Ltd. ...Appellant

Vs.

Bellona Estate Developers Ltd. ...Respondent

Present: For Appellant: - Mr. Balaji Srinivasan and Mr. Akash Chatterjee, Advocates.

For Respondent: - Ms. Surekha Raman and Mr. Dileep Poolakkot, Advocates.

O R D E R

28.08.2019─ The Appellant- 'Synergy Property Development

Services Pvt. Ltd.'- ('Operational Creditor') filed an application under

Section 9 of the Insolvency and Bankruptcy Code, 2016 ("I&B Code" for

short) for initiation of the 'Corporate Insolvency Resolution Process'

against 'Bellona Estate Developers Limited'- ('Corporate Debtor') who

committed default in making payment for the invoices raised from 1st

March, 2014 to 1st September, 2014 to the extent of Rs. 1,57,70,825/-.

The Adjudicating Authority (National Company Law Tribunal), Mumbai

Bench, Mumbai, by impugned order dated 22nd January, 2019 rejected

the claim on the ground that the claim is barred by limitation. 2

2. Learned counsel appearing on behalf of the Appellant submits that

the claim is not barred by limitation. The stand of the counsel for the

Respondent is that it is barred by limitation.

3. It is submitted on behalf of the Respondent- ('Corporate Debtor')

that the Demand Notice under Section 8(1) was issued on 24th May, 2017

to which the 'Corporate Debtor' replied on 5th June, 2017 disputing the

debt.

4. The Adjudicating Authority having noticed the aforesaid fact and

an e-mail sent by the Appellant ('Operational Creditor') dated 16th

February, 2015, held that the invoices were issued in the year 2014 and

the petition was filed on 22nd March, 2018 and, therefore, the claim is

time barred.

5. In the present case, it is not in dispute that the Appellant-

'Operational Creditor' placed invoices between 1st March, 2014 to 1st

September, 2014. The last date invoice bearing no. PRIL-46 was issued

on 1st September, 2014 for Rs. 28,09,000/-.

6. The Demand Notice under Section 8(1) having been issued by the

Appellant on 24th May, 2017, we hold that the claim was not barred by

limitation. The Adjudicating Authority failed to calculate the period of

three years which was to be calculated for ascertaining the date of cause

of action i.e. the last date of Demand Notice dated 1st September, 2014.

The Demand Notice was issued on 24th May, 2017 to which denial was

Company Appeal (AT) (Insolvency) No. 371 of 2019 3

made by the 'Corporate Debtor' on 5th June, 2017. It was wrongly

calculated on the basis of date of filing of application under Section 9.

7. This apart, the Adjudicating Authority failed to notice the amended

agreement reached between the parties on 30th December, 2010 in terms

of which the contract period was extended to February, 2015 and in such

case also, it could not have been held to be a claim barred by limitation.

8. Learned counsel for the Respondent submitted that the 'Corporate

Debtor' disputed the claim. However, such submission cannot be

accepted in absence of any pre-existing dispute.

9. In "Innoventive Industries Ltd. v. ICICI Bank and Anr.─ (2018)

1 SCC 407", the Hon'ble Supreme Court while explaining the provisions

of Section 9 observed and held:

"27. The scheme of the Code is to ensure that

when a default takes place, in the sense that a debt

becomes due and is not paid, the insolvency

resolution process begins. Default is defined in

Section 3(12) in very wide terms as meaning non-

payment of a debt once it becomes due and payable,

which includes non-payment of even part thereof or

an instalment amount. For the meaning of "debt", we

have to go to Section 3(11), which in turn tells us that

a debt means a liability of obligation in respect of a

Company Appeal (AT) (Insolvency) No. 371 of 2019 4

"claim" and for the meaning of "claim", we have to

go back to Section 3(6) which defines "claim" to

mean a right to payment even if it is disputed. The

Code gets triggered the moment default is of rupees

one lakh or more (Section 4). The corporate

insolvency resolution process may be triggered by

the corporate debtor itself or a financial creditor or

operational creditor. A distinction is made by the

Code between debts owed to financial creditors and

operational creditors. A financial creditor has been

defined under Section 5(7) as a person to whom a

financial debt is owed and a financial debt is

defined in Section 5(8) to mean a debt which is

disbursed against consideration for the time value of

money. As opposed to this, an operational creditor

means a person to whom an operational debt is

owed and an operational debt under Section 5(21)

means a claim in respect of provision of goods or

services

10. It is evident that even if a claim is disputed, if the default is more

than Rs. 1 lakh, the 'Corporate Insolvency Resolution Process' may be

triggered by the 'Corporate Debtor' itself or a 'Financial Creditor' or

'Operational Creditor'.

Company Appeal (AT) (Insolvency) No. 371 of 2019 5

11. In the present case, even if the 'Corporate Debtor' has disputed

certain claims, the claim of Rs. 28,09,000/- as raised by Invoice dated 1st

September, 2014 is not under dispute, we hold that it is a fit case for

initiation of 'Corporate Insolvency Resolution Process' against the

'Corporate Debtor'.

12. For the reasons aforesaid, we set aside the impugned order dated

22nd January, 2019 and remit the case to the Adjudicating Authority,

Mumbai Bench, and direct it to admit the application under Section 9

preferred by the Appellant after notice to the Respondent- ('Corporate

Debtor') so that the Respondent- ('Corporate Debtor') may get an

opportunity to settle the matter prior to the admission of the application.

The appeal is allowed with aforesaid observations and direction. No

costs.

(Justice S.J. Mukhopadhaya) Chairperson

(Justice A.I.S. Cheema) Member(Judicial)

(Kanthi Narahari) Member(Technical) Ar/g

Company Appeal (AT) (Insolvency) No. 371 of 2019