TaxTMI 
TaxTMI 
2026 (8) TMI 20
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.... Corporate Insolvency Resolution Process ("CIRP") against the Respondent, a Corporate Debtor. The present appeal is filed under Section 61(1) of the Code against the rectified order dated 12.02.2025 read with original order dated 06.11.2024) ("Impugned Order") passed by the Ld. Adjudicating Authority, National Company Law Tribunal, Jaipur Bench, whereby the Ld. Adjudicating Authority has dismissed the application filed by the Appellant under Section 9 of the Insolvency and Bankruptcy Code, 2016. Brief relevant facts are as follows: 2. The Respondent used to purchase goods from the Appellant during 2014-15. Invoices were raised on each delivery. Payments were made from time to time, and the accounts stood settled and reconciled till 23.02.2015. The Appellant's own pleadings, at Part IV of the Section 9 petition, record the date of default as 07.03.2015. Between 2015 and 2021, the Appellant claims to have made repeated requests for payment, without success. A demand notice dated 10.03.2021 was issued under Section 8 of the Code and served on the Respondent on 12.03.2021. 3. The Section 9 petition came to be filed on 23.09.2021 - over six years after the stated date of de....
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....e impugned rectified order dated 12.02.2025 read with original order dated 06.11.2024 is not sustainable and the same merits to be set aside on the following grounds: - • Adjudicating Authority failed to consider the balance confirmation letter of the Corporate Debtor to M/S Prakash Ved & Co., Chartered Accountants, the forensic auditors, appointed by Punjab National Bank, due to which the period of limitation extended. • Adjudicating Authority failed to consider that the Respondent has admitted the receipt of balance confirmation letter dated 14.12.2017, dated 30.05.2018 and dated 22.05.2019 sent by the Appellant to the respondent. • Adjudicating Authority failed to consider that the Respondent in its reply has not denied the receipt of goods and has admitted that no payments being made for the goods, and the due debts are unilaterally adjusted by Respondent with other creditor account. • The claim of the appellant is not disputed at all by the respondent and thus the same squarely falls within the definition of operational debt as prescribed in section 5 (21) of the Insolvency and bankruptcy Code, 2016. • Adjudicati....
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....3. The Appellant filed a Section 9 application being C.P. (IB) No. 79/9/JPR/2021 before the Hon'ble NCLT, Jaipur Bench seeking initiation of CIRP against the Respondent on the basis of alleged operational dues said to have arisen in 2014-2015. The alleged default date as claimed by the Appellant is 07.03.2015 as recorded in the Appellant's own pleadings (Part IV, Section 9 Petition). 14. The Appellant filed the Section 9 petition on 23.09.2021, admittedly more than six years after the alleged default, and far beyond the three-year limitation prescribed under Article 137 of the Limitation Act, 1963. 15. The Respondent had repeatedly raised disputes regarding reconciliation of accounts, set-offs due, and incorrect figures supplied by the Appellant. These disputes were communicated through courier dated 19.01.2017 and emails dated 17.02.2018, 24.07.2018, 25.07.2018, 30.07.2018, 02.08.2018, and 04.08.2018. 16. The Appellant issued balance confirmations dated 14.12.2017, 30.05.2018 and 22.05.2019 respectively for an amount of Rs. 4,73,31,706/-; Rs. 3,05,58,222/- and Rs. 2,44,46,578/- showing drastically different figures from those claimed in the Section 9 petition, cle....
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....tion Act, 1963 made before the expiry of the 3-year period, can extend limitation. Thus the finding is correctly recorded in the NCLT order. 21. Respondent also claims that Section 18 Limitation Act does not apply as there is no valid acknowledgement. The Appellant relied upon an undated, unproved, and disputed balance confirmation. Ld. NCLT correctly held that such a document cannot constitute acknowledgement under Section 18 of the Limitation Act, 1963. Even otherwise, an acknowledgement must be before the expiry of limitation and must be unequivocal. None of the documents relied upon by the Appellant meet these statutory requirements. 22. Respondent also brings to our notice that there was a pre-existing dispute and the Section 9 petition was not maintainable. The Respondent had raised clear and substantial pre-existing disputes much prior to the issuance of the demand notice dated 10.03.2021 and the filing of the Section 9 petition. The Respondent had repeatedly disputed the alleged claim through (i) courier dated 19.01.2017 addressed to the Appellant's office, and (ii) multiple emails dated 17.02.2018, 24.07.2018, 25.07.2018, 30.07.2018, 02.08.2018 and 04.08.2018, wh....
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....e. 26. Learned Counsel for the Respondent submits that the appeal itself is barred by limitation. Under Section 61(2) of the Code, an appeal must be filed within 30 days, extendable by a further 15 days on sufficient cause, and no further. The delay of 125 days is admitted and is not condonable in law. It is submitted that the rectification of 12.02.2025 corrected only a clerical error in the date of pronouncement and did not modify the order in any substantive respect; limitation for the appeal therefore runs from 06.11.2024, and not from the date of rectification. On merits, Respondent contends that the date of default, admitted by the Appellant to be 07.03.2015, rendered the Section 9 petition - filed on 23.09.2021 - hopelessly time-barred under Article 137 of the Limitation Act, 1963, which prescribes a three-year period from the date the right to apply accrues. It is further contended by the Respondent that the balance confirmation letters relied upon by the Appellant were undated, unproved and mutually inconsistent as to the amount claimed, and could not amount to a valid, unequivocal acknowledgment of liability under Section 18 of the Limitation Act. In any event, the cor....
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....the aggrieved party", in contradistinction to Section 421(3) of the Companies Act. Owing to the special nature of the IBC, the aggrieved party is expected to exercise due diligence and apply for a certified copy upon pronouncement of the order it seeks to assail, in consonance with the requirements of Rule 22(2) of the NCLAT Rules. Section 12(2) of the Limitation Act allows for an exclusion of the time requisite for obtaining a copy of the decree or order appealed against. It is not open to a person aggrieved by an order under the IBC to await the receipt of a free certified copy Under Section 420(3) of the Companies Act 2013 read with Rule 50 of the NCLT and prevent limitation from running. Accepting such a construction will upset the timely framework of the IBC. The litigant has to file its appeal within thirty days, which can be extended up to a period of fifteen days, and no more, upon showing sufficient cause. A sleight of interpretation of procedural Rules cannot be used to defeat the substantive objective of a legislation that has an impact on the economic health of a nation." 29. Another related issue which is claimed by the appellant that limitation runs from the rectif....
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....ssed. Consequently, the memo of Appeals is rejected." 30. (Ashok Tiwari Tattva & Mittal Lifespaces Private Limited (2023 SCC Online NCLAT 2179)) Ashok Tiwari Tattva & Mittal Lifespaces Private Limited (2023 SCC Online NCLAT 2179) on which the Appellant places reliance, belongs to the former category and is accordingly distinguishable has also been cited herein above. We observe that Ashok Tiwari Supra was a case of modification of the original order and not a case of rectification of errors in the impugned judgment which are of cosmetic in nature. 31. The same principle was applied in Company Appeal (AT) (Insolvency) No.1470 of 2024 titled "Industrial Forgings Industrial Pvt. Ltd. Vs A2Z Infra Engineering Ltd." Company Appeal (AT) (Insolvency) No.1470 of 2024 titled "Industrial Forgings Industrial Pvt. Ltd. Vs A2Z Infra Engineering Ltd." where, at paragraph 7, this Appellate Tribunal held that correction of a mistakenly recorded date of judgment does not shift the starting point of limitation, which continues to run from the date the order was actually delivered. Relevant para 7 is extracted as below: "7. However, on the first page of the order by inadvertent mistake....
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....d as below: "9. Section 60 sub-Section 6 of the Code has been enacted in the Code for a purpose and object. The benefit of limitation has been extended for any suit or application by or against a Corporate Debtor for which an order of moratorium has been made to enable the Corporate Debtor to prosecute any proceeding or any proceeding to be prosecuted against the Corporate Debtor giving the benefit of the period of moratorium for a specific purpose and object. The Object is to protect the Corporate Debtor who is unable to institute proceedings during the moratorium period and object is also to protect those who want to initiate action against the Corporate Debtor who are unable to initiate action due to moratorium. The present is a case of limitation for filing an appeal under Section 61 of the Code which is 30 days from order of the Adjudicating Authority. The order passed by the Adjudicating Authority dated 31.08.2021 could have been appealed within 30 days and the benefit of Section 60(6) of the Code which is sought to be claimed in the present case is not applicable nor the Appellant can claim that in the period of limitation for filing the appeal, this period should b....
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....Section 9. 38. We note that the Hon'ble Supreme Court, in 1B.K. Educational Services Pvt. Ltd. (supra), held at paragraph 42 that the right to apply accrues on the date of default, that limitation for an IBC application runs from that date, and that the Code cannot be used as a mechanism to revive time-barred debts. The relevant para is extracted below for easy reference: "42. It is thus clear that since the Limitation Act is applicable to applications filed under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted. "The right to sue", therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application." 39. We observe that the Appellant's own pleadings record the date of default as 07.03.2015. Applying Article 137, limitation expired on 07.03.2018, without a valid extension. The Section 9 petition, filed on ....
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.... which the Respondent raised specific and recurring objections to the figures claimed by the Appellant, referred to set-offs, and disputed the correctness of the ledger accounts. These are not disputes created after the demand notice to defeat an admitted claim. They precede the notice by years, and concern the very figures forming the basis of the claim - a coincidence borne out by the shifting amounts across the Appellant's own balance confirmations discussed above. 44. The Appellant's contention that the Respondent never denied receipt of goods, and that any dispute raised was merely superficial, does not withstand scrutiny once the correspondence is read as a whole. What emerges is a genuine and continuing dispute over reconciliation of accounts, not an admitted and crystallized debt. The Adjudicating Authority was correct in holding that a pre-existing dispute existed, and that the Section 9 petition was not maintainable on this ground as well. 45. This Tribunal does not consider it necessary to render any finding on the Respondent's further submission attributing an ulterior motive to the filing of the petition. The petition fails independently on the ground....