Operational Creditor's Late Filing Denied: Limitation Period Lapsed

The National Company Law Tribunal, Ahmedabad Bench, held that the application filed by the Operational Creditor against the Corporate Debtor for initiating the Corporate Insolvency Resolution Process (CIRP) was beyond the limitation period. Despite the Operational Creditor's argument regarding a debt acknowledgment, the Tribunal found that the acknowledgment was made after the three-year limitation period had lapsed. Consequently, the Tribunal rejected the application (CP(IB) No.555/9/NCLT/AHM/2018) and disposed of the case, directing the issuance of an urgent certified copy of the order to all concerned parties.

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Issues: Limitation period for filing Corporate Insolvency Resolution Process (CIRP) application.

In the judgment delivered by the National Company Law Tribunal, Ahmedabad Bench, the issue at hand was whether the application filed by the Operational Creditor against the Corporate Debtor for initiating the Corporate Insolvency Resolution Process (CIRP) was within the limitation period. The Operational Creditor claimed that the Corporate Debtor had defaulted in paying operational debt amounting to Rs. 1,37,93,934=17. The Tribunal analyzed the evidence on record and noted that the application seemed to be filed beyond the limitation period.

The Operational Creditor had mentioned in the application that the debt was due and payable in 2006, but the application was filed in 2018. The Operational Creditor argued that a letter of acknowledgement dated 21.10.2015 by the Corporate Debtor served as an acknowledgment of the debt, allowing them to benefit from Section 18 of the Law of Limitation to initiate the CIRP. However, the Tribunal pointed out that as per Section 18 of the Law of Limitation, the acknowledgment of debt must be made within three years from the date on which the debt became due and payable.

The Tribunal observed that the debt was due in 2006, whereas the acknowledgment by the Corporate Debtor was made in 2015, which was beyond the three-year limitation period. Based on these facts and the provisions of the Law of Limitation, the Tribunal held that the proceeding was not maintainable as it was filed beyond the limitation period. Consequently, the Tribunal rejected the application (CP(IB) No.555/9/NCLT/AHM/2018) and disposed of the case. The Tribunal also directed the issuance of an urgent certified copy of the order to all concerned parties upon compliance with formalities.

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