2022 (2) TMI 671 - Tri - Insolvency and Bankruptcy

Operational Creditor's Petition Dismissed as Time-Barred and Lacking Evidence

The Tribunal rejected the Operational Creditor's petition against the Corporate Debtor under Section 9 of the Insolvency and Bankruptcy Code, citing the ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- It is an undisputed fact that the goods were supplied to the Corporate Debtor and invoices were raised against the Corporate Debtor. It is also noted that the Corporate Debtor has confirmed the balance amount of ₹ 50,00,000/-. It is also noted that the amount of ₹ 3,50,000/- has been paid by the Corporate Debtor on 28.05.2019. Though, the Corporate Debtor has contended that no such cogent evidence on record has been produced by the Operational Creditor before this Authority in support of his claim but the Corporate Debtor has not denied that such amount is not due towards the Corporate Debtor. The amount of ₹ 50,00,000/- was acknowledged on 01.04.2014 by the Corporate Debtor. Thereafter, no such acknowledgment or payment or part payment in respect to the default amount was made by the Corporate Debtor till 28.05.2019, which is beyond three years from the date of acknowledgement of debt. The contention of the Operational Creditor that the amount of ₹ 3,50,000/- was paid on 28.05.2019 by the Corporate Debtor, which extends the period of limitation for filing and adjudication in the present petition does not sustain. The Limitation Act, 1963 is applicable in the petition filed under Section 7 or 9 under IB Code, 2016, and that the petition should be under the period of three years from the date of default. Limitation is extends under Section 18 and Section 19 of the Limitation Act, 1963 only in case of acknowledgment or payment or part payment made within three years from the date of default. The payment of ₹ 3,50,0000- made by the Corporate Debtor on 28.05.2019 to the Operational Creditor is beyond the prescribed period of limitation. Section 19 of Limitation Act, 1963 states that the period of limitation shall be computed from the date of payment in case the payment of debt or interest is made before the expiry of the prescribed period. Sub-section (j) of Section 2 of the Limitation Act, 1963 states that the 'period of limitation' means period of limitation prescribe for any suit or appeal or application by the schedule and computed as per the provision of the Act. The date of default was on the date on which the invoices were raised wherein the last date of invoice is 24.04.2012. The acknowledgment was made on 01.04.2014 which extended the Limitation till 01.04.2017. Thereafter the payment of ₹ 3,50,000/- was made on 28.05.2019, which is beyond the period of three years, hence, Section 18 and 19 are not applicable in the present case - for filing the application under Section 9 of IB Code, 2016 the delivery of demand notice is mandatory. The proof of delivery of the said notice is not on record. The present application is not within the period of Limitation as per the applicable provision of the Limitation Act, 1963. The present petition is rejected as it is not maintainable being barred by limitation and also for want of evidence of delivery of demand notice to the Corporate Debtor which is mandate of law to maintain application under Section 9 of the IB Code - petition dismissed. Issues:Application under Section 9 of Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process against a Corporate Debtor.Detailed Analysis:1. Claim of Operational Creditor: M/s. Advatech Cera Tiles Limited filed an application as an Operational Creditor against M/s. Naumee Ceramica India Limited for a debt amount of &8377; 1,47,39,391, including interest. The Operational Creditor supplied goods as demanded by the Corporate Debtor and raised invoices for the same.2. Contentions of Operational Creditor: The Operational Creditor claimed that despite repeated reminders and a demand notice, the Corporate Debtor failed to pay the outstanding amount. The Operational Creditor argued that the Corporate Debtor confirmed a default amount and made partial payments, but the full amount remained unpaid.3. Defenses by Corporate Debtor: The Corporate Debtor denied the claims made by the Operational Creditor. They contended that the demand notice issued was invalid and challenged the authenticity of the Board Resolution authorizing the petition. The Corporate Debtor also raised issues regarding the timeline of invoices and payments made.4. Limitation Period: The Corporate Debtor argued that the claim amount was barred by limitation, as the invoices were raised in 2010 and 2011, and no invoices were issued after 2012. The Corporate Debtor emphasized the lack of evidence provided by the Operational Creditor, including proof of delivery of the demand notice.5. Legal Analysis: The Tribunal noted that acknowledgment of the debt was made in 2014, and a partial payment was made in 2019. However, the payment made in 2019 did not extend the limitation period as per the provisions of the Limitation Act, 1963. The Tribunal cited relevant sections of the Limitation Act to support its decision.6. Judicial Precedent: Referring to a Supreme Court judgment, the Tribunal highlighted that the prescribed period of three years under Article 137 of the Limitation Act applies to applications filed under Sections 7 and 9 of the Insolvency and Bankruptcy Code.7. Decision: The Tribunal concluded that the application was barred by limitation and lacked evidence of the delivery of the demand notice, which is mandatory for filing under Section 9 of the Insolvency and Bankruptcy Code. Therefore, the petition was rejected as not maintainable, with no order as to costs.In summary, the Tribunal rejected the Operational Creditor's petition against the Corporate Debtor due to the application being time-barred and the absence of evidence regarding the delivery of the demand notice, as required by law for such proceedings under the Insolvency and Bankruptcy Code.