2023 (5) TMI 343 - SCH - Insolvency and Bankruptcy

Supreme Court Overturns NCLT Decision on Limitation, Remits for Fresh Consideration

M/s. Next Education India Private Limited Versus M/s. K12 Techno Services Private Limited

The Supreme Court allowed the appeal, overturning the NCLT and NCLAT orders that dismissed the Section 9 application on limitation grounds. The matter was ... Initiation of CIRP - period of limitation - date of default - application dismissed solely on the ground that the claim was barred by limitation - HELD THAT:- At the outset, it is required to be noted that, in fact, the appellant herein, who claimed to be `Operational Creditor’ raised 187 different invoices for the Digital Classroom Solution Services provided for the period between 12.03.2011 and 30.06.2017. The amount under different invoices were unpaid, which gave rise to the appellant to initiate the proceedings under Section 9 of the IBC before the NCLT. The NCLT considering the starting point of limitation as 12.03.2011 held that the claim is barred by limitation. However, the NCLT did not take into consideration the subsequent invoices at least preceding three years from the date of filing of Section 9 application, which ought to have been considered. Under the circumstances, the NCLT ought to have considered the invoices at least for the period preceding three years from the date of the application under Section 9, rather than considering the starting point of limitation as 12.03.2011. Under the circumstances, the order(s) passed by the NCLT and affirmed by the NCLAT are unsustainable - the view taken by the NCLT that the claim is barred by limitation is unsustainable. The impugned judgment and order(s) passed by the NCLT and that of the NCLAT dismissing/rejecting application under Section 9 of the IBC on the ground that the claim is barred by limitation are hereby quashed and set aside and now the matter is remitted to the NCLT to consider Section 9 application afresh in accordance with law and on its own merits - Petition allowed. Appellant, claiming to be an 'Operational Creditor', raised 187 invoices for Digital Classroom Solution Services between 12.03.2011 and 30.06.2017 and filed a Section 9 IBC application for unpaid amounts. The NCLT treated 12.03.2011 as the starting point of limitation and held the claim 'barred by limitation'; NCLAT affirmed. The court found this approach unsustainable, noting the NCLT failed to consider subsequent invoices 'at least for the period preceding three years from the date of the application under Section 9', which ought to have been considered instead of fixing limitation from the earliest invoice. The orders of NCLT and NCLAT dismissing the Section 9 application on limitation grounds are quashed and set aside. Matter is remitted to the NCLT to consider the Section 9 application afresh 'in accordance with law and on its own merits'; all defenses, including that the respondent is commercially viable and has paid Rs.4.5 crores, are kept open. The respondent is, however, barred from raising the 'pre-existing dispute' negated by the NCLAT. No costs.