Operational debt and limitation in Section 9 insolvency: unpaid retainership invoices partly survived, default was established, and CIRP commenced.

A Section 9 insolvency application was treated as maintainable where services under retainership contracts gave rise to unpaid operational debt, no pre-existing dispute was shown, and default was established. Invoices for the earlier period were held time-barred because there was no acknowledgement extending limitation, but invoices raised from 12.11.2015 onwards were within limitation. On that basis, the applicant was recognised as an operational creditor, the application was found complete, and insolvency resolution steps, including moratorium, were directed to commence.

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Issues: Whether the application under Section 9 was maintainable, whether the debt was an operational debt and default was established, and whether the claim was barred by limitation.

Analysis: The claim arose from services rendered under retainership contracts and invoices raised for those services. On the record, no payment was made and no pre-existing dispute was shown. The invoices for the earlier period were held to be time-barred for want of acknowledgement to extend limitation, but the invoices from 12.11.2015 onwards were found to be within limitation. The debt was therefore treated as operational debt, and the applicant was held to be an operational creditor. The existence of debt and occurrence of default were established, and the application was found complete. The Adjudicating Authority also directed initiation of corporate insolvency resolution process, appointment of the proposed interim resolution professional, public announcement, and declaration of moratorium.

Conclusion: The application was admitted to the extent of the timely invoices, default was found, and insolvency resolution proceedings were ordered to commence with moratorium.

Ratio Decidendi: A Section 9 application is maintainable when operational debt and default are established, but claims barred by limitation cannot be enforced unless limitation is validly extended or condoned.

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