Limitation under Section 9 runs from default date, and a prior subsisting dispute can bar insolvency admission.

An application under Section 9 of the Insolvency and Bankruptcy Code was treated as time-barred because limitation ran from the date of default under Article 137 of the Limitation Act, and the period spent in earlier proceedings could not be excluded under Section 14 since those proceedings were not shown to be before a wrong forum for the same relief with due diligence. A pre-existing dispute was also found because earlier proceedings had recorded objections regarding non-compliance with work orders and had left liberty to pursue the dispute before the competent forum. The insolvency application was therefore rejected on limitation and dispute grounds.

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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 there was a pre-existing dispute between the parties so as to attract rejection under Section 9(5)(ii)(d) of the Insolvency and Bankruptcy Code, 2016.

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

Analysis: The date of default was taken as 21 July 2009. Applying Article 137 of the Limitation Act, 1963, the period of three years began to run from the date of default. The attempt to exclude the time spent before the West Bengal Micro and Small Enterprises Facilitation Council under Section 14 of the Limitation Act, 1963 was rejected because the earlier proceedings were not before a wrong forum prosecuted with due diligence for the same relief in the manner required by that provision.

Conclusion: The application was barred by limitation.

Issue (ii): Whether there was a pre-existing dispute between the parties so as to attract rejection under Section 9(5)(ii)(d) of the Insolvency and Bankruptcy Code, 2016.

Analysis: The earlier order setting aside the Facilitation Council award recorded that the corporate debtor had raised disputes regarding non-compliance with the work orders and left liberty to pursue the dispute again before the competent forum. That material showed that the dispute subsisted prior to issuance of the demand notice.

Conclusion: A pre-existing dispute was established.

Final Conclusion: The operational creditor failed to establish a maintainable and timely default-based claim for initiation of CIRP, and the insolvency application was rejected on both limitation and dispute grounds.

Ratio Decidendi: For a Section 9 application, limitation runs from the date of default under Article 137 of the Limitation Act, 1963, and time spent in prior proceedings can be excluded only when Section 14 is satisfied; a subsisting dispute evidenced before the demand notice defeats admission under the Insolvency and Bankruptcy Code, 2016.

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