2021 (1) TMI 1256 - 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 - The Operational Creditor filed this application under assumption that it will get the benefit of Section 18 of Law of Limitation to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor - Bare reading of provisions of Section 18, Law of Limitation shows that such acknowledgement of debt must be within three (03) years from the date, on which, such debt became due and payable. 5. In this case, the debt was due and payable in the year 2006, whereas, so called acknowledgement of the debt by the Corporate Debtor was made in 2015, i.e. beyond the period of three years. Considering the provisions of Law of Limitation, in Section 18 read with Article 137, it is held that this proceeding is not maintainable as it is filed beyond the period of limitation - application dismissed.

Summary

Issues: Limitation period for filing Corporate Insolvency Resolution Process (CIRP) application.

In the judgment delivered by the National Company Law Tribunal, Ahmedabad Bench, the issue at hand was whether the application filed by the Operational Creditor against the Corporate Debtor for initiating the Corporate Insolvency Resolution Process (CIRP) was within the limitation period. The Operational Creditor claimed that the Corporate Debtor had defaulted in paying operational debt amounting to Rs. 1,37,93,934=17. The Tribunal analyzed the evidence on record and noted that the application seemed to be filed beyond the limitation period.

The Operational Creditor had mentioned in the application that the debt was due and payable in 2006, but the application was filed in 2018. The Operational Creditor argued that a letter of acknowledgement dated 21.10.2015 by the Corporate Debtor served as an acknowledgment of the debt, allowing them to benefit from Section 18 of the Law of Limitation to initiate the CIRP. However, the Tribunal pointed out that as per Section 18 of the Law of Limitation, the acknowledgment of debt must be made within three years from the date on which the debt became due and payable.

The Tribunal observed that the debt was due in 2006, whereas the acknowledgment by the Corporate Debtor was made in 2015, which was beyond the three-year limitation period. Based on these facts and the provisions of the Law of Limitation, the Tribunal held that the proceeding was not maintainable as it was filed beyond the limitation period. Consequently, the Tribunal rejected the application (CP(IB) No.555/9/NCLT/AHM/2018) and disposed of the case. The Tribunal also directed the issuance of an urgent certified copy of the order to all concerned parties upon compliance with formalities.