TaxTMI 
TaxTMI 
2025 (1) TMI 266
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.... 2. Brief facts of the case necessary to be noticed for deciding the Appeal are : - 2.1. The Operational Creditor is a manufacturer and exporter of all types of PVC vinyl floorings, multipurpose sheets and other insulation products for automotive and other industries. Various items were supplied by the Operational Creditor- Napin Inpex Limited (Respondent herein) to the Corporate Debtor during the period from 03.01.2018 to 16.08.2018. The payments were made by the Corporate Debtor on different dates. Last payment of Rs.3 Lakhs was made on 26.08.2019 by bank transfer. The notice under Section 8 dated 16.09.2022 was given by the Operational Creditor to the Corporate Debtor claiming an amount of Rs.2,14,16,735/-. Reply to demand notice was issued by the Corporate Debtor on 28.09.2022. Section 9 application was filed on 29.11.2023. When the application came for consideration, Corporate Debtor raised preliminary objection on the point of limitation. The Adjudicating Authority heard both the parties and directed parties to file notes on point of limitation. Both the parties filed their notes on point of limitation and Adjudicating Authority after hearing both the parties, by impugned or....
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....d notice. It is submitted that both the conditions under Section 19 of the Limitation Act are fulfilled in the present case. The payment by bank transfer is also made on instructions by the Corporate Debtor, hence, the bank transfer which is on the instructions of the Corporate Debtor is also an acknowledgment within the meaning of Section 19 and any view of the matter acknowledgment in writing by the Corporate Debtor is reflected in the reply to the demand notice and it is well settled that acknowledgment which was subsequently made can also be relied for purposes of Section 19 of the Limitation Act. Section 9 application was filed on 29.11.2023 and giving the benefit of suo motu order of the Hon'ble Supreme Court in Suo Moto Writ Petition (C) No.3 of 2020, the period of limitation for filing Section 9 would have expired on 13.08.2024 and the application filed within the said time is valid. 6. We have considered the submissions of the Counsel for the parties and perused the record. 7. It is an admitted fact between the parties that invoices were raised from January, 2018 to August 2018. The copy of ledger has also been brought on the record which indicates that payments were mad....
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....ys beginning from the date of default i.e. 26.08.2019; out of which a total no. of 202 days has expired from 26.08.2019 till 15.03.2020. From 01.03.2022, the petitioner would get the remaining balance of 893 days, and the new date of expiration of the limitation would be 10.08.2024, which is calculated as below: Date of default 26.08.2019 Extent of limitation expired till 15.03.2020 202 days Exclusion period 15.03.2020-28.02.2022 Balance limitation as available on 01.03.2022 893 days 893 days w.e.f. 01.03.2022 10.08.2024 8. The submission which has been pressed by Shri Kaushik is that the condition for extension of limitation as statutory prescribed under Section 19 of the Limitation Act are not attracted in the present case. Section 19 of the Limitation Act provides as follows:- "19. Effect of payment on account of debt or of interest on legacy.-Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made: Provided that, save in the c....
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....irst, the payment must be made within the prescribed period of limitation and secondly, it must be acknowledged by some form of writing either in the handwriting of the payer himself or signed by him. We agree with the Subordinate Judge that it is the payment which really extends the period of limitation under Section 20, Limitation Act; but the payment has got to be proved in a particular way and for reason of policy the legislature insists on a written or signed acknowledgment as the only proof of payment and excludes oral testimony. Unless, therefore, there is acknowledgment in the required form, the payment by itself is of no avail. The Subordinate Judge, however, is right in holding that while the section requires that the payment should be made within the period of limitation, it does not require that the acknowledgment should also be made within that period. To interpret the proviso in that way would be to import into it certain words which do not occur there. This is the view taken by almost all the High Courts in India and to us it seems to be a proper view to take. (See Mohd. Moizuddin Mia v. Nalini Bala Devi [Mohd. Moizuddin Mia v. Nalini Bala Devi, 1937 SCC OnLine Cal 2....
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....riting signed by, the person making the payment. 12. We look into the ledger which is part of the demand notice dated 16.09.2022 with regard to payment dated 26.08.2019 particulars mentioned are "bank receipt". The demand notice was replied by the Corporate Debtor vide reply dated 28.09.2022. In paragraph 3 of the reply, the factum of last payment on 26.08.2019 is admitted fact. In paragraph 3, following has been stated:- "3. In any event, last transaction involving supply of goods had taken place on 16.08.2018, while the last payment towards price of goods was made on 26.08.2019" 13. We also need to notice judgments of this Tribunal which have been relied by the Appellant. Appellant has placed reliance on the judgment of this Tribunal on "S.M. Ghogbhai vs. Schedulers Logistics India Pvt. Ltd.- 2022 SCC OnLine NCLAT 216". In the above case, the question of limitation for filing Section 9 application came for consideration. The Operational Creditor in the above case has claimed that both the parties were maintaining a running account, hence, the limitation shall be governed by Article 1 of the Limitation Act, 1963. The question which came for consideration has been noticed in pa....
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....e Impugned Order. We are satisfied that for the limitation for filing Section 9 application it is Article 137 of the Limitation Act, 1963 which is attracted. Under Article 137, time from which period begins to run is "when the right to apply accrues" the right to apply accrues when invoices issued by the Appellant to the Corporate Debtor were not paid. Invoices on the basis of which payment is claimed are more than three years earlier from the date of filing of Section 9 Application which is the basis for rejection of the Application of the Appellant by the Adjudicating Authority. We are not persuaded with the submissions of Learned Counsel for the Appellant that present is the case where Article 1 is applicable and limitation should be counted from 31st March, 2017. Limitation as per Article 137 will begin to run from the date when the right to apply accrues and the Application filed on the basis of 174 invoices and all invoices being prior to much before three years period from filing of Section 9 Application, the Adjudicating Authority has rightly rejected the Application. We do not find any merit in the Appeal, the Appeal is dismissed." 15. It is further relevant to notice tha....
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....acy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy, (ii) an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment. 16. We may notice the judgment of this court dealing with section 20 of the Limitation Act, 1908, which was akin to present section 19 of the Limitation Act, 1963. In Sant Lal Mahton v. Kamla Prasad [1951 SCC 1008 : AIR 1951 SC 477.] , this court held that for applicability of section 20 of the Limitation Act, 1908, two conditions were essential that the payment must be made within the prescribed period of limitation and it must be acknowledged by some form of writing either in the handwriting of the payer himself or signed by him. This court further held that for claiming benefit of exemption under section 20, there has to be pleading and proof. In paragraphs 9 and 10, following has been laid down : '9. It would be clear, we think, from the language of section 20 of the Limitation Act, that to attract its operation two conditions are essential : first, the payment must be made within the prescribed period of limitation and secondly, it must be a....
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....e settlement, it has come on record that the one-time settlement has occurred much after the expiry of period of limitation, therefore, it cannot be taken into consideration for the purpose of section 18 to extend the period of limitation." 20. Counsel for the Appellant has relied on the judgment of this Tribunal in "Laxmi Trading Corporation vs. Hindustan Construction Company Ltd.- 2024 SCC OnLine NCLAT 282". The above was a case where this Tribunal rejected the argument that for Section 9 application, Article 1 of the Limitation Act shall not be applicable. In paragraph 22 of the judgment, following was held:- "22. It is well settled that the period of limitation for application under Section 9 of the IBC, would be governed by Article 137 of the Limitation Act, 1963. The claim of the Operational Creditor that they were having running account and are covered under Article 1 of the Limitation Act cannot be accepted. Since their claim of a running account cannot be accepted, therefore, the limitation does not get extended as claimed. Accordingly, the time from which period of limitation begins is when the right to apply accrues and right to apply accrues when the invoices were to....