2019 (5) TMI 1869 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Time Limitation - HELD THAT - It is pertinent to note the decision of Hon ble Supreme Court in the case of B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES 2018 (10) TMI 777 - SUPREME COURT where it was held that the Limitation Act applies to applications filed under section 7 and 9 of I B Code since the inception of the I B Code. Admittedly, the goods were supplied under separate purchase orders that are of different dates and relate to different work sites. Also, the last payment on which the petitioner is relying upon above is for the M.P. site. The said payment would extend the limitation period, under section 18 of Limitation Act, 1963 only for the default under an agreement relating to M.P. site and not the other agreements. Therefore, it is only the claim of ₹35,50,370/-, for goods provided to M.P. site, which is within limitation and not the entire claim of ₹64,70,071/- as claimed by the Petitioner in the Petition - the claim of the Petitioner is barred by limitation. The Petitioner has claimed a total amount of ₹64,70,071/- that includes the claim which is barred by limitation as well as the claim which may not be barred by limitation. The Petitioner cannot file a time-barred claim along with another claim that is within limitation period to make a defective claim as enforceable debt. Therefore, the claim made in the Petition as well as the Demand Notice is defective as part of it being barred by limitation and hence the Petition with a defective claim cannot be admitted - petitioner rejected.

Summary

Issues involved:
Company petition under section 9 of Insolvency & Bankruptcy Code, 2016 (I&B Code) for outstanding invoices; Time-barred claim; Application of Limitation Act to I&B Code applications; Filing a single petition for claims from different work orders.

Analysis:
1. The petition was filed by an Operational Creditor against the Corporate Debtor for outstanding invoices raised under four different work orders for various work sites. The total amount in default was detailed for each site, totaling to ?64,70,071. The Petitioner sent a Demand Notice under section 8 of I&B Code demanding the outstanding claim.

2. The Respondent argued that the claim was time-barred as the last payment for three sites was made before the petition was filed. The Petitioner contended that the claim was not barred by limitation, citing a payment made for the M.P. site in 2016. The Respondent also claimed that invoices raised from 2011 to 2015 were time-barred.

3. The Tribunal referred to a Supreme Court decision stating that the Limitation Act applies to applications under I&B Code, and the right to sue accrues when a default occurs. The Petitioner relied on a NCLAT order allowing a single petition for claims from different agreements under section 9 of I&B Code.

4. The Tribunal found that the claim was time-barred as the last payment relied upon by the Petitioner was for the M.P. site only, not for all agreements. The claim amounting to ?35,50,370 for goods provided to the M.P. site was within limitation, but the total claim of ?64,70,071 included time-barred amounts.

5. The Tribunal rejected the petition as the debt was barred by the law of limitation. It was emphasized that a time-barred claim cannot be combined with a claim within the limitation period to make a defective claim enforceable. The Petitioner was allowed to raise its claim before the competent authority unaffected by the rejection.

6. The Tribunal did not deliberate on the merit of the case due to the time-barred debt issue. The petition under section 9 of I&B Code against the Corporate Debtor was rejected, and the Registry was directed to communicate the order to the Operational Creditor promptly. A compliance report was to be submitted by the Designated Registrar.