Appeal Dismissed: Lack of Evidence for Debt Acknowledgment in Insolvency Case

The tribunal dismissed the appeal filed by an operational creditor against the rejection of a Section 9 application under the Insolvency and Bankruptcy Code, 2016 (IBC). The appellant failed to prove a valid acknowledgment of debt that would extend the limitation period under Section 18 of the Limitation Act. The rejection was upheld as the application was found to be barred by limitation, with the tribunal ruling in favor of the respondent due to lack of evidence supporting the acknowledgment of debt. The appeal was dismissed, and no costs were awarded.

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Issues Involved:
1. Rejection of Section 9 application under IBC.
2. Allegation of acknowledgment of debt and its impact on limitation.
3. Applicability of Limitation Act and Indian Contract Act provisions.
4. Validity of documents and claims of forgery.
5. Impact of Sick Industrial Companies Act (SICA) on limitation period.

Detailed Analysis:

1. Rejection of Section 9 Application under IBC:
The appellant, an operational creditor, filed an appeal against the order dated 27.1.2021 by the Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench) which rejected the Section 9 application under the Insolvency and Bankruptcy Code, 2016 (IBC). The appellant claimed the corporate debtor owed Rs. 39,00,631.50 for work performed, but the application was rejected on grounds of being barred by limitation.

2. Allegation of Acknowledgment of Debt and its Impact on Limitation:
The appellant argued that the corporate debtor acknowledged the debt through various communications, including a letter dated 21.10.2015, which confirmed the debt and promised payment. The appellant cited precedents like State Bank of India vs. Kanahiya Lal and Anr. to argue that such acknowledgments and promises to pay extended the limitation period.

3. Applicability of Limitation Act and Indian Contract Act Provisions:
The appellant contended that the provisions of the Limitation Act, 1963, and Section 25(3) of the Indian Contract Act, 1872, applied, claiming that the acknowledgment and promise to pay extended the limitation period. However, the respondent countered that the documents were forged and the acknowledgments were invalid. The tribunal noted that for extending limitation under Section 18 of the Limitation Act, there must be clear acknowledgment within three years from the date of default, which was not established in this case.

4. Validity of Documents and Claims of Forgery:
The respondent argued that the documents presented by the appellant were forged and fabricated, highlighting discrepancies such as the use of outdated city names, signatures of employees who had left the company, and overwriting of dates. The tribunal found these arguments credible and noted that mere receipt of letters by a peon could not be considered valid acknowledgment of debt.

5. Impact of Sick Industrial Companies Act (SICA) on Limitation Period:
The appellant claimed that the corporate debtor's status as a sick company under SICA suspended the limitation period. However, the tribunal referenced the judgment in Mazda Agencies vs. Hemant Plastics & Chemicals Ltd., stating that since the appellant was not part of the rehabilitation scheme, they could not claim exclusion of the period under SICA for computing the limitation.

Conclusion:
The tribunal concluded that the appellant failed to establish valid acknowledgment of debt that would extend the limitation period under Section 18 of the Limitation Act. Consequently, the Section 9 application was rightly held to be barred by limitation by the Adjudicating Authority. The appeal was dismissed with no order as to costs.

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