Limitation and authority under IBC: a stale debt claim and an unauthorised MOU could not bind the corporate debtor.

A Section 9 Insolvency and Bankruptcy Code claim based on an alleged MOU debt was treated as time-barred because the right to apply arose when the dues became due in July 2013 and the application was filed only in April 2019, beyond the three-year period under Article 137 of the Limitation Act; the later payments were not accepted as part-payment of the settled debt and did not extend limitation under Section 19. The MOU also could not bind the corporate debtor because execution by an authorised representative was not proved, as the signatory was neither a director nor key managerial personnel and no board resolution was shown.

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Issues: (i) Whether the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for the claimed amount under the MOU was barred by limitation; (ii) Whether the MOU was validly executed so as to bind the corporate debtor.

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

Analysis: The claim was founded on an alleged settlement of dues as on 31.07.2013, and the right to apply for recovery of that amount accrued from that date. The application was filed in April 2019, well beyond three years from the date when the right to apply arose. The later payments referred to by the appellant were treated as payments towards professional charges and not as part-payment of the settled debt, and therefore did not extend limitation under Section 19 of the Limitation Act, 1963. The residuary period under Article 137 of the Limitation Act, 1963 governed the claim.

Conclusion: The claim was barred by limitation.

Issue (ii): Whether the MOU was validly executed so as to bind the corporate debtor.

Analysis: The MOU was signed by Shantilal Ratanchand Lunkad, but no material was produced to show that he had authority to execute it on behalf of the company. He was neither a director nor a key managerial personnel, and no board resolution authorising him to enter into the MOU was shown. In the absence of proof of authority, the alleged execution of the MOU could not bind the corporate debtor.

Conclusion: The MOU was not proved to have been validly executed on behalf of the corporate debtor.

Final Conclusion: The impugned order suffered from no error warranting interference, and the appeal failed on both limitation and lack of proof of authority.

Ratio Decidendi: A claim under Section 9 of the Insolvency and Bankruptcy Code, 2016 founded on a debt that became due more than three years earlier is barred by Article 137 of the Limitation Act, 1963 unless a legally effective acknowledgment or part-payment is established, and an MOU cannot bind a company unless execution by an authorised representative is proved.

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