2022 (3) TMI 416 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - application barred by time limitation or not - HELD THAT - It is well settled that on acknowledgment by Corporate Debtor of the debt limitation is extended as per Section 18 of the Limitation Act, 1963. Learned counsel for the Appellant submits that confirmation of account sent by the Corporate Debtor from 01.04.2010 to 31.05.2016 were on the record of the Adjudicating Authority where the debt of ₹ 30,27,622/- was mentioned while confirming the account by the Corporate Debtor. The last confirmation of account being issued on 31.05.2016 for the period 01.04.2016 to 30.05.2016, thus the Appellant can clearly claim the benefit of Section 18 of the Limitation Act and application having been filed within three years from the last letter of acknowledgment on 31.05.2016 the application was well within time. The Adjudicating Authority has not referred to the acknowledgment i.e. confirmation of accounts, which letters were issued by the Corporate Debtor and which were on the record of the Adjudicating Authority. The confirmation of account letters issued by the Corporate Debtor to the Operational Creditor clearly extend the period of limitation for the Appellant to file application under Section 9 - the Adjudicating Authority committed error in rejecting the application as barred by time - appeal allowed.

Summary

Issues Involved:
1. Appeal against rejection of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 as barred by time.

Analysis:
The Appellate Tribunal heard the appeal against the order dated 20.03.2020 passed by the Adjudicating Authority, where the application under Section 9 was rejected as time-barred. The application was filed on 04.06.2018 claiming a total debt due, comprising a principal amount and interest. The Adjudicating Authority dismissed the application citing it as barred by time due to the age of the invoices and lack of written communication acknowledging the debt within the limitation period. However, the Appellant argued that the Corporate Debtor had continuously acknowledged the debt each year, extending the limitation period under Section 18 of the Limitation Act, 1963. The confirmation of accounts by the Corporate Debtor from 01.04.2010 to 31.05.2016 was on record, with the last confirmation dated 31.05.2016. The Appellate Tribunal held that the acknowledgment letters clearly extended the limitation period, allowing the application to be filed within the prescribed time frame. The Adjudicating Authority erred in rejecting the application, and the order was set aside, reviving the application before the Adjudicating Authority for further proceedings. The Adjudicating Authority was directed to admit the application within six weeks from the date of the order, with the parties having the option to settle before that date. Consequently, the appeal was allowed.

This detailed analysis highlights the key arguments presented by the parties, the reasoning of the Adjudicating Authority, and the Appellate Tribunal's decision based on the acknowledgment of debt and the extension of the limitation period under the relevant legal provisions.