Dismissal of Insolvency Application Due to Time-Barred Claim & Lack of Evidence

The application under Section 9 of the Insolvency and Bankruptcy Code for Corporate Insolvency Resolution Process against M/s. Mekko Steel & Power Pvt. Ltd. was dismissed. The Operational Creditor's claim of outstanding dues since 2011 amounting to Rs. 72,57,236 was found time-barred due to lack of clear acknowledgment and evidence. The absence of a valid balance confirmation and insufficient proof of dues, coupled with the court's clarification that the Code is not a recovery forum, led to the dismissal. The judgment stressed the necessity of proper evidence and adherence to legal requirements for acknowledgment in insolvency proceedings.

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Issues:
Initiation of Corporate Insolvency Resolution Process under Section 9 of Insolvency and Bankruptcy Code, 2016; Jurisdiction of the Adjudicating Authority; Time-barred claims; Conditions for acknowledgment under Section 18 of the Limitation Act, 1963; Validity of balance of confirmation as evidence; Lack of evidence for outstanding dues; Invocation of Insolvency and Bankruptcy Code for recovery.

Analysis:
The judgment pertains to an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 for the initiation of Corporate Insolvency Resolution Process. The applicant, an Operational Creditor, sought resolution against the Corporate Debtor, M/s. Mekko Steel & Power Pvt. Ltd., due to outstanding dues amounting to Rs. 72,57,236 since 2011. The respondent, a Company registered under the Companies Act, 1956, did not represent itself, leading to the application being heard ex parte.

The jurisdiction of the Adjudicating Authority was established as the Registered Office of the Corporate Debtor was in Chhattisgarh. The Operational Creditor submitted 21 invoices as evidence, but it was noted that 18 invoices from 2011 were time-barred under the Limitation Act, 1963, as the application was filed in 2019.

The judgment delved into the conditions for acknowledgment under Section 18 of the Limitation Act, emphasizing that acknowledgment must be in clear terms, unqualified, and signed by the liable party. Various forms of acknowledgment were discussed, including email acknowledgments, balance sheets, and payments made in earlier suits.

Regarding the later invoices from 2013 and 2014, the application was also deemed time-barred. The Operational Creditor produced a balance of confirmation allegedly executed by the Corporate Debtor, but the validity of the signature was questioned. The lack of a Board Resolution authorizing the signatory raised doubts about the claim's authenticity.

The judgment highlighted the absence of evidence for outstanding dues, apart from emails sent by the Operational Creditor. It was noted that the Insolvency and Bankruptcy Code is not intended as a substitute for a recovery forum, as clarified by the Supreme Court in previous cases. Consequently, the application was dismissed, with no costs imposed, allowing the petitioner to seek other remedies for recovery under different laws.

In conclusion, the judgment emphasized the need for proper evidence, adherence to legal requirements for acknowledgment, and the limitations of invoking the Insolvency and Bankruptcy Code for mere recovery purposes. The dismissal of the application underscored the importance of substantiating claims with valid documentation and following due legal processes for debt recovery.

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