2019 (7) TMI 1186 - AT - Insolvency and Bankruptcy

Admissibility of application - Section 9 of the Insolvency and Bankruptcy Code, 2016 - rejection on the ground that the claim is time barred - whether the claim is barred by limitation as observed by the Adjudicating Authority? - HELD THAT - In the present case, it is not in dispute that right to apply under Section 9 accrued to the Appellant on 1st December, 2016, when I B Code came into force. Therefore, we find that the application under Section 9 filed by the Appellant is within the period of three years from the date of right to apply accrued. The winding up petition was filed before the Hon ble High Court of Judicature at Madras which had not reached finality and in the meantime, as the I B Code came into force, the demand notice under Section 8(1) was issued on 14th November, 2017 for payment of outstanding amount along with the interest. Thus, as we find that there is continuous cause of action the claim is within the period of limitation. Case remitted to the Adjudicating Authority for admission of the case after notice to the parties - appeal allowed by way of remand.

Summary

Issues:
1. Whether the claim under Section 9 of the Insolvency and Bankruptcy Code, 2016 is time-barred.
2. Whether the Adjudicating Authority correctly rejected the application based on limitation.
3. Whether the claim of the Appellant is within the period of limitation.
4. Whether the claim of the Appellant is continuous and not barred by limitation.

Analysis:
Issue 1:
The Appellant, 'Sanghvi Movers Ltd.,' filed an application under Section 9 of the Insolvency and Bankruptcy Code against 'Tech Sharp Engineers Pvt. Ltd.' claiming a due amount. The Adjudicating Authority rejected the claim as time-barred, citing lack of confirmation or acknowledgment of debt by the Corporate Debtor after a single confirmation in 2013. The Authority referred to the B.K. Educational Services Pvt. Ltd. v. Parag Gupta and Associates judgment. The claim was dismissed based on limitation.

Issue 2:
The Appellant argued that the claim was not time-barred, emphasizing that the Authority did not consider relevant facts and reasons and solely relied on the B.K. Educational Services judgment. The Respondent also supported the Authority's decision based on the same judgment.

Issue 3:
The Appellant's claim was for unpaid services, with invoices raised and partial payments made by the Corporate Debtor. Legal notices were exchanged, and commitments to clear dues were made. The Appellant contended that the claim was not time-barred as the right to apply under Section 9 accrued within three years from the Code's enforcement.

Issue 4:
The Appellant's winding-up petition filed before the High Court was affected by the introduction of the Insolvency and Bankruptcy Code. Despite the winding-up proceeding, the Appellant issued a demand notice under Section 8(1) and subsequently filed under Section 9. The Tribunal found a continuous cause of action, ruling that the claim was not time-barred. The Adjudicating Authority's decision was set aside, and the case was remitted for admission after notice to the parties, allowing the Respondent to settle with the Appellant before admission.

In conclusion, the National Company Law Appellate Tribunal allowed the appeal, holding that the claim was not barred by limitation and remitting the case for further proceedings.