2020 (3) TMI 1266 - Tri - Insolvency and Bankruptcy

Application dismissed as time-barred under the Insolvency and Bankruptcy Code

The Tribunal dismissed the application as time-barred, emphasizing the significance of the acknowledgment date of debt in determining the accrual of the ... Refusal to pay the debt amount - right to sue - time limitation - HELD THAT:- Mere plain reading of the Article 137 of the Limitation Act shows that any other application for which no period of limitation is provided elsewhere in this division the application must have been filed within three years, when the right to apply accrues. Here in this case, the right to apply accrues on 08.08.2015, when the applicant has raised the invoices and we further find, the applicant has enclosed the ledger account of the Corporate Debtor and tried to convince us that the said amount is reflected in the ledger account of the Corporate Debtor at page 77 and it comes within the acknowledgment under Section 18 of the Limitation Act. There is no dispute that the Article 137 of the Limitation Act is applicable in case of IBC, and therefore, that decisions will not help the applicant rather it Corroborate our contentions that the Limitation runs from the date when the right to apply accrues that is either from the first date of debt become due or the date when it was acknowledged. Since the acknowledgement was made on 14.03.2016 and the present application has been filed on 15.01.2020 therefore, the present application is barred by the limitation. The present application is dismissed as barred by limitation. Issues:- Calculation of limitation period for filing the application based on the acknowledgment of debt by the Corporate Debtor.- Determination of the accrual of the right to sue in the context of the refusal to pay the debt.- Interpretation of Article 137 of the Limitation Act in relation to the application filed under the Insolvency and Bankruptcy Code (IBC).Analysis:1. Calculation of Limitation Period:The Tribunal considered the timeline of events, including the issuance of invoices on 06.07.2015, the date of default mentioned as 08.08.2015, and the Corporate Debtor disputing the liability on 04.02.2017. The Applicant argued that the right to sue accrued on the date of refusal to pay the debt. However, the Tribunal analyzed the acknowledgment of debt under Section 18 of the Limitation Act, noting that the ledger account reflecting the amount was dated 14.03.2016. The Tribunal emphasized that if the acknowledgment date is considered, the application should have been filed within three years from 14.03.2016, which was not the case as the application was filed on 15.01.2020, rendering it time-barred.2. Accrual of Right to Sue:The Applicant relied on certain decisions to support the argument that the right to sue arises at the time of refusal to pay the debt. However, the Tribunal distinguished those cases, emphasizing that the right to sue accrues from the date of acknowledgment of debt, which in this case was 14.03.2016. The Tribunal clarified that the acknowledgment date is crucial for determining the limitation period for filing the application, rather than the date of refusal to pay by the Corporate Debtor.3. Interpretation of Limitation Act under IBC:The Tribunal referred to Article 137 of the Limitation Act, which specifies a three-year limitation period for applications without a defined limitation elsewhere. It highlighted that the right to apply accrues when the debt is acknowledged, as per Section 18 of the Limitation Act. Despite the Applicant's arguments and references to other decisions, the Tribunal reiterated that the acknowledgment date is pivotal for calculating the limitation period, and in this case, the application filed in 2020 was beyond the permissible timeframe, leading to the dismissal of the application as time-barred.In conclusion, the Tribunal dismissed the application as barred by limitation, emphasizing the significance of the acknowledgment date of debt in determining the accrual of the right to sue and calculating the limitation period for filing under the IBC. The analysis underscored the importance of adherence to statutory timelines and the legal principles governing the acknowledgment of debt in insolvency proceedings.