Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + AT Insolvency and Bankruptcy - 2021 (11) TMI AT This

  • Login
  • Cases Cited
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2021 (11) TMI 477 - AT - Insolvency and Bankruptcy


Issues Involved
1. Limitation Period for Filing the Application
2. Acknowledgment of Debt
3. Running Account Between Parties
4. Locus Standi of Proprietorship Firm to Initiate CIRP
5. Compliance with Section 8 of the Insolvency and Bankruptcy Code, 2016

Issue-Wise Detailed Analysis

1. Limitation Period for Filing the Application
The primary issue was whether the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation. The Adjudicating Authority dismissed the application, stating it was filed beyond the three-year limitation period from the date of default on the invoices, which ranged from 19.05.2015 to 09.12.2016. The Appellant argued that the limitation period should be calculated from 10.05.2018, the date of an email acknowledgment of debt from the Corporate Debtor, making the application timely.

2. Acknowledgment of Debt
The Appellant contended that the email dated 10.05.2018 from the Corporate Debtor, which included a statement of account, constituted an acknowledgment of debt under Section 18 of the Limitation Act, 1963. The Respondent countered that there was no express acknowledgment of debt, and the email could not be considered as such. The Tribunal found that the email and the part payment made on 17.05.2017 did indeed constitute an acknowledgment of debt, thereby extending the limitation period.

3. Running Account Between Parties
The Respondent argued that there was no running account between the parties, and the part payment made on 17.05.2017 should not be construed as payment towards the invoices. However, the Tribunal examined the ledger account and email communications, concluding that there were continuous transactions between the parties, establishing a running account.

4. Locus Standi of Proprietorship Firm to Initiate CIRP
The Respondent questioned the locus standi of the Appellant, a proprietorship firm, to initiate Corporate Insolvency Resolution Process (CIRP). The Tribunal referred to Section 2(f) of the Insolvency and Bankruptcy Code, which explicitly allows proprietorship firms to initiate CIRP proceedings, thereby confirming the Appellant's locus standi.

5. Compliance with Section 8 of the Insolvency and Bankruptcy Code, 2016
The Appellant issued a Demand Notice under Section 8 of the Code on 25.02.2019, which the Corporate Debtor did not reply to. The Tribunal noted that the Respondent did not deny receiving the notice and failed to provide any reasons for not replying. This non-response was seen as an implicit acknowledgment of the debt.

Assessment
The Tribunal concluded that the part payment made on 17.05.2017, coupled with the email dated 10.05.2018, extended the limitation period, making the application filed in November 2019 timely. The Tribunal also noted the lack of response to the Section 8 notice as further evidence of the debt's acknowledgment. Consequently, the Tribunal allowed the appeal, setting aside the Adjudicating Authority's order and directing it to proceed in accordance with the law.

 

 

 

 

Quick Updates:Latest Updates