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of <h1>Appellate Tribunal overturns rejection in Insolvency Case, stresses procedural fairness</h1> The Appellate Tribunal allowed the appeal, setting aside the Adjudicating Authority's rejection of the application under Section 9 of the Insolvency and ... Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its dues - Operational Creditors - time limitation - HELD THAT:- The present is a case where Corporate Debtor in spite of several notices issued by the Adjudicating Authority did not appear to contest the Application. The date of default having been specifically mentioned in the Demand Notice as well as in the Section 9 Application as 26.11.2018, there was no material with the Adjudicating Authority to take any contrary view regarding the date of default. The observations of the Adjudicating Authority that last invoice dated 08.07.2017 which does not appear to be correct which is in altogether different format as compared to other 9 invoices. The mere fact that the invoice dated 08.07.2017 was sent in different format was not any factor on which the invoice could have been ignored. The 10 invoices have been referred to in the Demand Notice as well as in the Section 9 Application - When Operational Creditor was accepting the payment of amount in Cash and there was nothing to suggest to the contrary there was no occasion for Adjudicating Authority to disbelieve the said payments. The last payment having been made on 26.11.2018 and the Application filed on 12.12.2019 was well within time and we are thus of the view that Adjudicating Authority without any basis rejected the Application of the Operational Creditor as barred by time - matter remanded to the Adjudicating Authority to pass an appropriate Order of admission of the Application after 30 days from today giving liberty to the parties to settle, if they so desire in between. Issues:- Rejection of Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 on the ground of limitation.Detailed Analysis:1. The appeal was filed against the judgment of the Adjudicating Authority rejecting the application under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Appellant claimed to be an Operational Creditor who supplied 'Readymade-Garments' to the Corporate Debtor between specific dates and raised invoices totaling a specific amount. Despite receiving partial payments, the Appellant filed an application claiming a higher amount, including interest. The Adjudicating Authority rejected the application as barred by limitation.2. The Adjudicating Authority based its decision on the last invoice date and the filing date of the application, stating that the application was beyond the three-year limitation period from the date of default. The Authority also raised concerns about the format of one invoice and the lack of documentary evidence for the payments received by the Appellant.3. The Appellant provided details of the debt, transactions, and the date of default in the application, along with a demand notice. The Appellant also referred to a letter and response exchanged with the Corporate Debtor regarding the outstanding payments.4. The Adjudicating Authority proceeded ex-parte as the Corporate Debtor did not appear despite notices. The Authority's observations regarding the invoice format and payment evidence were challenged by the Appellant. The Appellant argued that the payments were acknowledged, and there was no reason to doubt them.5. The Appellate Tribunal found that the Adjudicating Authority failed to provide an opportunity to rectify any defects in the application, as required by Section 9 of the Code. The Tribunal disagreed with the Authority's findings on the acceptance of cash payments and the validity of the invoice format.6. Considering the timeline of payments and the application filing, the Tribunal concluded that the rejection of the application as time-barred was unfounded. The Tribunal set aside the Adjudicating Authority's order and remitted the matter for an appropriate decision after 30 days.7. In summary, the Appellate Tribunal allowed the appeal, emphasizing the importance of following procedural requirements and ensuring a fair opportunity for rectification before rejecting applications based on technical grounds.
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