2017 (5) TMI 1507 - Tri - Insolvency and Bankruptcy

Insolvency Resolution process against the Respondent / Corporate Debtor - petition as time barred - Held that - We are unable to appreciate the arguments advanced by the Ld. Counsel for Operational Creditor. The email dated 07.02.2014, no doubt acknowledges the debt, but extends the period of limitation by three years from that date. The argument that limitation would stand extended from the period when the corporate debtor received their own payments from Senbo Engineering Ltd. i.e. in February, 2015 is misconceived. In view of the above, we find that this petition which was filed on 26.04.2017 is time barred and therefore not a legally recoverable debt.

Summary

Issues:
1. Petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of insolvency resolution process against the Corporate Debtor.
2. Claim of the Operational Creditor for outstanding dues and interest.
3. Compliance with notice issuance under Section 8 of the Code.
4. Barred claim due to limitation period.
5. Interpretation of acknowledgment of debt and its impact on limitation period calculation.
6. Legality of the debt recovery petition.

Analysis:
1. The judgment pertains to a petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking the initiation of insolvency resolution process against the Corporate Debtor. The Petitioner, an Operational Creditor, claimed to have provided services to the Corporate Debtor and raised invoices for the same. The Corporate Debtor allegedly failed to clear the outstanding dues despite multiple invoices and notices.

2. The Operational Creditor raised bills for a total sum against the work order, with an outstanding balance and claimed interest on the dues. However, the Corporate Debtor only made a partial payment, leaving a substantial amount unpaid. The Operational Creditor sought legal intervention to recover the outstanding amount along with the accrued interest.

3. Despite compliance with the issuance of notice under Section 8 of the Code, the claim made by the Operational Creditor was found to be time-barred. The last payment received by the Operational Creditor and the last invoice raised indicated that the claim exceeded the limitation period. The Operational Creditor tried to extend the limitation period based on an email acknowledgment from the Corporate Debtor.

4. The Tribunal analyzed the arguments presented by the Operational Creditor's counsel regarding the extension of the limitation period based on the email acknowledgment. The email, dated 07.02.2014, acknowledged the debt but did not justify an extension of the limitation period as claimed by the Operational Creditor. The argument that the limitation period should be calculated from the date when the Corporate Debtor received payments from another entity was deemed misconceived.

5. Consequently, the Tribunal concluded that the petition filed by the Operational Creditor was time-barred as per the limitation period calculations. The petition was deemed not legally recoverable due to being outside the permissible timeframe for debt recovery. As a result, the petition was rejected by the Tribunal based on the findings related to the limitation period and the legality of the debt recovery claim.