Operational debt and limitation under insolvency law can be proved by invoices, delivery records, an undisputed ledger and liability acknowledgment.

Invoices, delivery challans, an undisputed ledger account, part-payment by cheque, and no specific denial in reply to the demand notice were treated as sufficient to establish operational debt and default under section 9 of the Insolvency and Bankruptcy Code, 2016. The documentary record also showed that the goods were supplied to the corporate debtor, including invoices bearing its TIN and proof of GST payment, so the objection that no goods were received was rejected. The last supply, the cheque issued in partial discharge, and the corporate debtor's statement before the High Court were treated as acknowledgement of liability, which restarted limitation under the Limitation Act and kept the application within time.

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Issues: (i) Whether the documentary evidence established that an operational debt was due and payable by the corporate debtor and that default had occurred; (ii) whether the application under section 9 was barred by limitation.

Issue (i): Whether the documentary evidence established that an operational debt was due and payable by the corporate debtor and that default had occurred.

Analysis: The invoices, delivery challans and ledger account were relied upon to show supply of garments to the corporate debtor. The objection that no goods were received was rejected because the invoices contained the corporate debtor's TIN number and GST had been paid on the supply. The ledger account was not disputed. The cheque issued in partial discharge of liability and the absence of any specific denial in reply to the demand notice supported the existence of the debt and default.

Conclusion: The issue was decided in favour of the petitioner. The operational debt and default were held to be proved.

Issue (ii): Whether the application under section 9 was barred by limitation.

Analysis: The last supply, the cheque issued in partial discharge, and the corporate debtor's statement before the High Court were treated as acknowledgement of liability. On that basis, a fresh period of limitation was held to have commenced under the Limitation Act. The application was therefore treated as being within time.

Conclusion: The issue was decided in favour of the petitioner. The application was held to be within limitation.

Final Conclusion: The petition was admitted and the corporate debtor was directed into corporate insolvency resolution process with moratorium and appointment of the interim resolution professional.

Ratio Decidendi: In proceedings under section 9 of the Insolvency and Bankruptcy Code, 2016, invoices, delivery records, an undisputed ledger, and an acknowledgement of liability can establish operational debt, default, and extend limitation under section 18 of the Limitation Act, 1963.

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