AI Drafter 
TaxTMI 
TaxTMI 
2020 (6) TMI 231
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....im was barred by limitation and initiation of the 'Corporate Insolvency Resolution Process' could not be sustained. 2. The broad features of the case may be briefly adverted to. 'M/s. SVG Fashions Ltd.' ('Operational Creditor') asserted before the Adjudicating Authority that it was engaged in the business of supply of various fabrics and had been doing business with the 'Corporate Debtor' since the year 2013 regularly supplying various fabrics in respect whereof bills were raised from time to time which were cleared by the 'Corporate Debtor' without raising any dispute in regard to the quality of the products supplied by the 'Operational Creditor'. However, since August, 2013, the 'Corporate Debtor' started making irregular payments and the bills were not cleared in time. As the 'Operational Creditor' raised issue regarding payments with the 'Corporate Debtor', in the year 2015, the 'Corporate Debtor' issued signed cheques as security, but since no payment was forthcoming, 'Operational Creditor' was constrained to issue Demand Notice under Section 8 of the 'I&B Code' calling upon the ....
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....after issuance of Demand Notice within the prescribed period of limitation. It is further submitted on behalf of the 'Operational Creditor' that the 'Corporate Debtor' had denied the very transaction of supply of goods as also issuance of cheques by falsely claiming that the cheques had been lost and the same plea was found to be without substance. It is further submitted that the 'Corporate Debtor' had neither complied with the Demand Notice nor raised any dispute in regard to supply or quality of goods as the Demand Notice was not at all responded to by the 'Corporate Debtor'. 5. Having heard learned counsel for the parties and fathomed through the records, we find that the appeal bears merit for the reasons we would be adverting to. 6. It is the settled proposition of law that an application under Section 9 of the 'I&B Code' is governed by Article 137 of the Limitation Act, 1963, which is reproduced hereunder: Part II-OTHER APPLICATION Description of application Period of Limitation Time from which period begins to run When the right to apply accrues 137. Any other application for which no period of ....
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....clearly establishes that the default had occurred on 7th October, 2013 and the application for triggering of 'Corporate Insolvency Resolution Process' under Section 9 of the 'I&B Code' was filed before the Adjudicating Authority on 20th April, 2018 i.e. well after the prescribed period of three years in terms of provisions of residuary clause engrafted under Article 137 of the Limitation Act, 1963. Viewed thus, there can be no hesitation in holding that the application filed by the 'Operational Creditor' under Section 9 of the 'I&B Code' was barred by limitation. 10. The next question arising for attention is whether issuance of six cheques by the 'Corporate Debtor' towards the part payments of the outstanding operational debt would amount to an acknowledgment of debt thereby giving fresh lease of life to the claim of 'Operational Creditor' qua such operational debt. On this issue, it would be appropriate to notice that the general principle embodied in Section 3 of the Limitation Act, 1963 providing that every suit, appeal or application filed after the prescribed period of limitation shall be dismissed irrespective of the fact th....
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.... of limitation having the effect of the period of limitation being reckoned afresh from the date of such acknowledgment in writing being signed by the person of incidence. However, such acknowledgment will take effect only if the liability in respect of such right is acknowledged in writing and signed by the person of incidence before the expiration of the prescribed period of limitation for such suit or application in respect of such right. Applying the dictum of this provision in the facts and circumstances of instant case, it is manifestly clear that in respect of the invoices raised in the year 2013 the prescribed period of limitation being three years in terms of Article 137 of the Limitation Act, 1963 expired in the year 2016 and the issuance of cheques by the 'Corporate Debtor' in the year 2017 being well beyond the prescribed period of three years would not be construed as an acknowledgment in writing within the prescribed period of limitation in terms of Section 18 of the Limitation Act, 1963. The situation would have been different if such cheques issued by the 'Corporate Debtor' towards the part payment of the operational debt had been issued prior to 7th....