Corporate authority and limitation defeated the insolvency claim where the MOU was not properly executed and the debt was time-barred.

A memorandum of understanding is not binding on a corporate debtor where it is not shown to have been executed with proper corporate authority, such as a board resolution, corporate seal, or clear execution for and on behalf of the company. The claim also fails where the debt is stated to have arisen on 01.08.2013 but the insolvency petition was filed only on 30.04.2019, because the three-year limitation period had expired and no valid acknowledgement was pleaded or proved to extend time. On both grounds, insolvency relief was unavailable.

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Issues: (i) Whether the memorandum of understanding was validly executed and binding on the corporate debtor; (ii) Whether the claim under the memorandum of understanding was barred by limitation.

Issue (i): Whether the memorandum of understanding was validly executed and binding on the corporate debtor.

Analysis: The memorandum of understanding did not bear the corporate seal and disclosed no board resolution or other material showing proper authority to execute it on behalf of the company. The signature block also did not clearly show execution for and on behalf of the corporate debtor. In the absence of clear authorisation, the document could not be treated as a valid and binding corporate act.

Conclusion: The memorandum of understanding was not validly executed and was not binding on the corporate debtor.

Issue (ii): Whether the claim under the memorandum of understanding was barred by limitation.

Analysis: The claim arose from a liability stated to be payable from 01.08.2013, while the petition was filed on 30.04.2019. Applying Article 137 of the Limitation Act, 1963, and the principles governing insolvency applications, the period of limitation expired three years after the default. There was no pleaded or proved acknowledgement within the limitation period to extend time under Section 18 of the Limitation Act, 1963.

Conclusion: The claim was barred by limitation.

Final Conclusion: The petition failed both on the enforceability of the underlying document and on limitation, so insolvency relief was not available.

Ratio Decidendi: A claim under Section 9 of the Insolvency and Bankruptcy Code, 2016 cannot be maintained where the underlying document is not shown to be validly executed on behalf of the corporate debtor and the debt, on the admitted dates, is beyond the three-year limitation period without any valid acknowledgement extending time.

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