Corporate debtor's appeal dismissed under Section 9 IBC for failing to prove debt acknowledgement after 2013

NCLAT Principal Bench dismissed an appeal under Section 9 of IB Code, 2016 concerning default in fabrication and erection of steel structure work. The appellant failed to identify any document showing acknowledgement of debt by the corporate debtor after 2013, despite being given multiple opportunities to inspect financial documents from 2011-12 to 2017-18. The tribunal found no entries in trial balance or balance sheet that could extend the limitation period through debt acknowledgement, resulting in dismissal of the appeal.

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Issues:
1. Application under Section 9 of the IB Code, 2016 filed by Operational Creditor against Corporate Debtor for defaulting payment.
2. Dispute regarding the application being barred by limitation.
3. Appeal against the order of the Adjudicating Authority dismissing the main petition.
4. Compliance with the order for production of documents.
5. Appeal filed before the Hon'ble Supreme Court against the dismissal of the appeal by the Tribunal.

Issue 1: Application under Section 9 of the IB Code, 2016:
The Operational Creditor filed an application under Section 9 of the IB Code, 2016 against the Corporate Debtor for defaulting a sum of Rs.1,95,28,552 due in relation to work done for fabrication and erection of steel structure at the Corporate Debtor's plant in Meghalaya. The Operational Creditor raised 81 invoices for the work done and the amount due, alleging that demands were made from 2013 to March 2018, leading to the application under Section 9 of the IB Code, 2016.

Issue 2: Dispute on Limitation:
The main defense raised by the Corporate Debtor was that the application was barred by limitation. Initially, the appellant argued that the company petition was filed within three years from the coming into force of the IB Code, 2016. However, following a Supreme Court judgment, it was established that the law of limitation applies from the date of default. The appellant sought to bring on record financial statements to show that the claim was within limitation, but the application was dismissed by the Adjudicating Authority. The Tribunal affirmed the dismissal, stating that the application was barred by limitation based on the judgments of the Hon'ble Supreme Court.

Issue 3: Appeal against the Order of the Adjudicating Authority:
The appellant filed an appeal against the order of the Adjudicating Authority, seeking the production of financial documents by the Corporate Debtor. The Tribunal allowed the appellant to file necessary documents to establish the claim was within limitation. However, the Adjudicating Authority later dismissed the main petition under Section 9 of the IBC, 2016 without discussing the impact of the financial statements, leading to the dismissal of the appeal by the Tribunal.

Issue 4: Compliance with the Order for Production of Documents:
The Hon'ble Supreme Court noted a dispute regarding compliance with the order for the production of documents to establish an acknowledgment of debt. The NCLAT did not provide any finding on whether the order for production of documents was complied with, leading to the setting aside of the NCLAT's order for further consideration. The appellant failed to identify any document showing acknowledgment of debt in the financial documents filed by the Corporate Debtor, resulting in the dismissal of the appeal.

Issue 5: Appeal before the Hon'ble Supreme Court:
The appellant filed an appeal before the Hon'ble Supreme Court, which found that the appellant failed to identify any document showing acknowledgment of debt in the financial documents filed by the Corporate Debtor. The Court set aside the NCLAT's order and restored the appeal for fresh disposal, keeping all rights and contentions of the parties open for adjudication.

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