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Issues: (i) whether the operational creditor proved the existence of operational debt and default with strict documentary evidence so as to maintain an application under Section 9 of the Insolvency and Bankruptcy Code, 2016; (ii) whether the claim was barred by limitation.
Issue (i): whether the operational creditor proved the existence of operational debt and default with strict documentary evidence so as to maintain an application under Section 9 of the Insolvency and Bankruptcy Code, 2016
Analysis: The application was examined on the basis of the material placed on record, including the demand notice and the creditor's own computation of claims. No authenticated invoices, ledger accounts, annual financial statements, or other reliable supporting records were produced to establish the debt, the default, or the nexus of the alleged part-payment with any admitted liability. In the absence of strict proof, the Adjudicating Authority held that the requirements for admission of a Section 9 proceeding were not satisfied.
Conclusion: The issue was decided against the operational creditor and in favour of the corporate debtor.
Issue (ii): whether the claim was barred by limitation
Analysis: The invoices relied upon were stated to pertain to a period much earlier than the filing of the application, and no material was produced to show acknowledgment of liability within the limitation period. The alleged default was therefore held to be beyond three years from the relevant date, and the partial payment relied upon was not accepted as sufficient to extend limitation on the facts proved.
Conclusion: The issue was decided against the operational creditor and in favour of the corporate debtor.
Final Conclusion: The insolvency petition was found to be unsustainable for want of proved operational debt and default and also on limitation, so initiation of corporate insolvency resolution process was declined.
Ratio Decidendi: An application under Section 9 of the Insolvency and Bankruptcy Code, 2016 cannot be admitted unless the operational creditor proves debt and default by reliable documentary evidence and the claim is within limitation.
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