Section 9 IBC limitation and insolvency threshold depend on Article 137 and contractually agreed interest only.

A Section 9 IBC application is governed by the residuary limitation period under Article 137 of the Limitation Act, not Article 1, because it is not a suit on mutual, open and current accounts with reciprocal demands; limitation runs from the date the operational creditor's right to apply accrues, and the application was therefore time-barred. For computing the insolvency threshold, the principal debt below the statutory minimum could not be inflated by interest unless contractual agreement for delayed-payment interest was shown; a unilateral invoice stipulation or inconsistent interest figures were insufficient. The admission order was thus unsustainable because both limitation and the threshold requirement failed.

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Issues: (i) Whether an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation and whether Article 137 of the Limitation Act, 1963 applied instead of Article 1 of the Limitation Act, 1963; (ii) whether the claim crossed the statutory threshold under Section 4 of the Insolvency and Bankruptcy Code, 2016 by adding interest to the principal amount despite no agreement for such interest.

Issue (i): Whether an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation and whether Article 137 of the Limitation Act, 1963 applied instead of Article 1 of the Limitation Act, 1963.

Analysis: The residuary period under Article 137 governs applications under Sections 7, 9 and 10 of the Insolvency and Bankruptcy Code, 2016. A proceeding under Section 9 is not a suit relating to accounts, and therefore Article 1, which applies to a mutual, open and current account with reciprocal demands, does not apply. The date relevant for limitation was the date on which the operational creditor's right to apply accrued on the last invoice raised by it, not the date of the corporate debtor's later invoice. On that basis, the application filed beyond three years was time-barred.

Conclusion: The issue was decided in favour of the appellant and against the respondent.

Issue (ii): Whether the claim crossed the statutory threshold under Section 4 of the Insolvency and Bankruptcy Code, 2016 by adding interest to the principal amount despite no agreement for such interest.

Analysis: The principal amount claimed was below the statutory threshold. Interest could not be added for determining the default amount unless there was material showing that the parties had agreed to payment of interest on delayed payment. A unilateral stipulation in the invoice or a varying interest figure mentioned in different documents was insufficient to support inclusion of interest in the threshold computation.

Conclusion: The issue was decided in favour of the appellant and against the respondent.

Final Conclusion: The impugned admission order could not be sustained, as the application was barred by limitation and the claimed amount did not satisfy the threshold on the basis of admissible principal and interest.

Ratio Decidendi: A Section 9 application is governed by the residuary limitation under Article 137 of the Limitation Act, 1963, and interest cannot be added to meet the insolvency threshold unless it is shown to have been contractually agreed between the parties.

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