2024 (2) TMI 1472 - AT - IBC

Admission of section 9 application - time limitation - due date for the payment of the last invoice is 19.09.2014, whereas the application under Section 9 has been filed on 13.12.2018, beyond the period of three years as envisaged under Article 137 of the Limitation Act, 1963 - HELD THAT - There is no dispute that a Petition under Section 7 or 9 has to be filed within a period of three years in terms of Article 137 of the Act and the period of three years is to be counted from the date when the default had occurred. It is also not in dispute that the Appellant had not taken the defence either in their Reply dated 27.11.2018 filed to the Demand Notice dated 06.11.2018 or in the Reply filed to the application under Section 9. However, it is a well settled that the plea of Limitation can still be setup in Appeal in view of Section 3 of the Act which provides that subject to the provisions contained in Sections 4 to 24 (inclusive), every suit instituted, appeal preferred, and application made after the prescribed period shall be dismissed, although limitation has not been set up as a defence . The plea of Limitation can be setup in defence even in the Appeal if it is not setup before the Tribunal. Be that as it may, since the question of Limitation is a mixed question of law and fact, therefore, the Appellant was required to setup his defence. In this case, the Respondent has submitted that had the question of Limitation been setup by the Appellant in defence before the Tribunal, he would have led evidence to prove that the period of Limitation had not expired in view of the fact that he had made the payment to the Reliance Industries in the Year 2015 etc., and on the basis of which the Resolution is being sought about the aforesaid invoices. The other thing is that the Memo of dishonoured cheque is dated 18.12.2015. The issue of Limitation is to be decided after allowing both the Parties to lead their evidence, if any, it is just and expedient to set aside the impugned order and remand the case back to the Tribunal to decide the question of Limitation by affording the Parties an opportunity to lead evidence in support of their case, if any. Matter on remand.

Summary

Issues:
1. Whether the application filed under Section 9 is barred by Limitation?
2. Whether the defense of limitation can be raised in Appeal if not raised before the Tribunal?
3. Whether the case should be remanded back to the Tribunal for deciding the question of limitation?

Analysis:
1. The appeal was filed against the order passed by the National Company Law Tribunal, Mumbai Bench, admitting an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking resolution of a debt. The Appellant contended that the application was barred by limitation as it was filed beyond the three-year period prescribed under Article 137 of the Limitation Act, 1963. The Respondent had filed the application on 13.12.2018 for invoices dating back to 2014, beyond the limitation period. The Appellant also highlighted a cheque issued in 2015, arguing that even considering it, the application was still time-barred.

2. The Appellant raised the defense of limitation during the appeal proceedings, despite not mentioning it earlier in the Reply to the Demand Notice or the application under Section 9. The Respondent argued that since the Appellant did not raise the defense earlier, it should not be allowed to do so in the Appeal. However, the Tribunal noted that as per Section 3 of the Limitation Act, a plea of limitation can be raised in Appeal even if not raised before the Tribunal. The Tribunal emphasized the importance of allowing the defense of limitation to be raised at any stage.

3. The Tribunal observed that the issue of limitation involved a mixed question of law and fact. It noted that the Respondent had indicated that evidence could be provided to show that the application was within the limitation period. Considering the complexity of the issue and the need for evidence, the Tribunal decided to set aside the impugned order and remand the case back to the Tribunal for a decision on the question of limitation. Both Parties were directed to appear before the Tribunal on a specified date to present their evidence. The Tribunal clarified that its decision to remand the case did not imply an opinion on the merits of the case.

Additionally, a subsequent appeal, Comp. App. (AT) (Ins.) No. 219 of 2022, was dismissed as infructuous following the decision in the primary appeal.