Limitation for insolvency claims and proof of debt require timely acknowledgment and evidence of delivery under the IBC.

An application under section 9 of the Insolvency and Bankruptcy Code was held to be governed by article 137 of the Limitation Act, 1963, so the three-year limitation period ran from the last relevant date of default. In the absence of any payment or acknowledgment of liability within that period, section 18 of the Limitation Act did not extend time and the petition was barred by limitation. The operational creditor also failed to prove debt and default on merits because the record did not satisfactorily show receipt of invoices or delivery of goods, and no delivery challans or comparable evidence was produced.

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Issues: (i) Whether the application under section 9 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation; (ii) Whether the operational creditor established the debt and default on the basis of material showing supply and receipt of goods by the corporate debtor.

Issue (i): Whether the application under section 9 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation.

Analysis: The default was stated to have arisen from transactions in September 2014, and even on the most favourable assumption the limitation period would have expired three years from the last relevant date of default. The Limitation Act, 1963 applies to applications under the Code from the inception, and article 137 governs the period of limitation. In the absence of any payment after the relevant date or any acknowledgment of liability within the limitation period, section 18 of the Limitation Act, 1963 did not extend time.

Conclusion: The application was barred by limitation.

Issue (ii): Whether the operational creditor established the debt and default on the basis of material showing supply and receipt of goods by the corporate debtor.

Analysis: The invoices and ledger entries were relied upon, but there was no satisfactory evidence that the invoices were received by the corporate debtor. No delivery challans or other material evidencing service or receipt of goods was placed on record. The materials on record therefore did not adequately establish the operational creditor's claim on merits.

Conclusion: The operational creditor failed to establish the claim on merits.

Final Conclusion: The petition did not survive judicial scrutiny and was liable to be rejected, with the substantive grounds failing both on limitation and on proof of the operational debt.

Ratio Decidendi: An application under section 9 of the Insolvency and Bankruptcy Code, 2016 is governed by article 137 of the Limitation Act, 1963, and in the absence of a timely acknowledgment under section 18 of the Limitation Act, 1963, a time-barred operational insolvency application must fail.

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