Limitation and proof of operational debt bar Section 9 insolvency admission where supporting records are unreliable.

An application under Section 9 of the Insolvency and Bankruptcy Code was held to be time-barred because the default was stated to have occurred on 01.04.2015 and the petition was filed on 15.05.2019, beyond the three-year limitation period applied through Article 137 of the Limitation Act. The operational creditor also failed to establish a maintainable claim, because the relied-upon agreement contained unsigned pages and unexplained blanks, no fresh agreement was produced after the corporate debtor's name change, and the invoices lacked signatures or other reliable proof of issuance. On those facts, the insolvency application could not be admitted.

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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 had established a maintainable claim on the basis of a valid and enforceable agreement and supporting documents.

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

Analysis: The debt was stated to have fallen due on 01.04.2015, while the petition was filed on 15.05.2019. The prescribed limitation period for an application under the Code is three years from the date of default, as applied through Article 137 of the Limitation Act, 1963. On the petitioner's own showing, the claim had become time-barred before filing.

Conclusion: The application was barred by limitation and the finding was against the operational creditor.

Issue (ii): Whether the operational creditor had established a maintainable claim on the basis of a valid and enforceable agreement and supporting documents.

Analysis: The record showed defects in the relied-upon agreement, including absence of signatures on the pages, blank pages without explanation, and no fresh agreement after the corporate debtor's name change. The invoices also did not bear signatures or other proof of proper issuance. In these circumstances, the supporting material was held insufficient to sustain the petition.

Conclusion: The claim was not proved through reliable and enforceable documentation and the finding was against the operational creditor.

Final Conclusion: The insolvency application could not be admitted since it was time-barred and also failed on maintainability and proof of the underlying operational claim.

Ratio Decidendi: An application under Section 9 of the Insolvency and Bankruptcy Code, 2016 must be filed within three years of default and must be supported by credible, enforceable ary material establishing the operational debt.

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