Timely dispute notice and part-payment restart limitation can sustain admission of an operational creditor's insolvency petition.

An operational creditor's section 9 application was maintainable because the corporate debtor did not raise a dispute within the statutory ten-day period after service of the demand notice; a dispute first raised in the reply to the application was too late to defeat admission. The application was also within limitation because the record showed a last payment on 18 January 2017, and under Section 19 of the Limitation Act, 1963 a fresh limitation period ran from that part-payment. The petition was admitted, moratorium was ordered, and an interim resolution professional was appointed for commencement of the corporate insolvency resolution process.

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Issues: (i) whether the operational creditor's application under the Insolvency and Bankruptcy Code, 2016 was maintainable in the absence of a timely notice of dispute from the corporate debtor; (ii) whether the application was barred by limitation.

Issue (i): whether the operational creditor's application under the Insolvency and Bankruptcy Code, 2016 was maintainable in the absence of a timely notice of dispute from the corporate debtor.

Analysis: The statutory scheme under Sections 8 and 9 requires the operational creditor to deliver a demand notice on occurrence of default, and requires the corporate debtor, within ten days, to bring to the operational creditor's notice either the existence of a dispute or proof of payment. If no notice of dispute is received within that period, the operational creditor may seek initiation of the corporate insolvency resolution process. The Tribunal held that a dispute first raised in the reply to the section 9 application, and not within the statutory period after service of the demand notice, could not defeat maintainability.

Conclusion: The application was maintainable and the belated dispute was not accepted.

Issue (ii): whether the application was barred by limitation.

Analysis: The invoices were issued in 2015, but the record showed a last payment on 18 January 2017. Applying Section 19 of the Limitation Act, 1963, a fresh period of limitation was computed from the date of that payment. Since the application was filed within three years from that date, it was treated as timely.

Conclusion: The application was within limitation.

Final Conclusion: The insolvency petition was admitted, moratorium was directed, and an interim resolution professional was appointed for commencement of the corporate insolvency resolution process.

Ratio Decidendi: For an operational creditor's section 9 application, a dispute must be raised within the statutory time after the demand notice, and a subsequent dispute cannot defeat admission; limitation for the claim can run afresh from a qualifying part-payment under Section 19 of the Limitation Act, 1963.

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