Limitation and proof of default govern section 9 insolvency petitions; absent acknowledgement, service, and debt nexus, initiation fails.

A section 9 Insolvency and Bankruptcy Code petition must be filed within three years of default under Article 137 of the Limitation Act, unless limitation is extended by a valid acknowledgement or part-payment; here, the latest possible default dates fell in 2014 and the petition filed in 2018 was time-barred. The operational creditor also failed to prove service of the invoices and demand notice through supporting records such as acknowledgments, delivery proof, postal evidence, or tracking material, and the cheque correspondence did not establish a clear nexus between the debt and the pleaded default. On the facts recorded, the debt and default were not satisfactorily proved, so insolvency resolution could not be initiated.

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Issues: (i) Whether the petition under section 9 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation. (ii) Whether the operational creditor proved service of the invoices and demand notice and established an actionable default on the claimed debt.

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

Analysis: The dates of default, even on the operational creditor's own material, arose from the invoice-wise payment terms and fell between 02.03.2014 and 11.07.2014. No acknowledgement of liability or part-payment within limitation was shown so as to extend time under the Limitation Act, 1963. Applying Article 137 of the Limitation Act, 1963, the petition filed on 15.05.2018 was beyond the three-year period from the latest possible date of default.

Conclusion: The petition was barred by limitation and this issue was decided against the operational creditor.

Issue (ii): Whether the operational creditor proved service of the invoices and demand notice and established an actionable default on the claimed debt.

Analysis: The record did not contain proof of service of the invoices by signed acknowledgment, delivery challans or lorry receipts. There was also no proof of service of the demand notice through postal receipts, acknowledgment cards, tracking reports or hand delivery. The email correspondence and cheque-related material did not satisfactorily correlate the cheques to the invoices in the present petition, particularly in the context of multiple and two-way transactions between the parties. The burden to prove linkage of the debt and default was not discharged.

Conclusion: The operational creditor failed to establish service and default on the pleaded debt, and this issue was decided against the operational creditor.

Final Conclusion: The insolvency petition was not maintainable on merits and was also time-barred, so corporate insolvency resolution could not be initiated on the facts proved.

Ratio Decidendi: A section 9 insolvency petition must be filed within three years from the date of default under Article 137 of the Limitation Act, 1963 unless limitation is extended by a legally cognizable acknowledgement or payment, and the operational creditor must prove service and nexus of the debt and default on the record.

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