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2021 (3) TMI 767 - AT - IBCMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Application rejected on the ground of Pre-Existing Dispute and Claims being time barred - HELD THAT - The law with respect to date of default and limitation under IBC has been clearly laid down by the Hon ble Supreme Court in a catena of Judgements. In VASHDEO R BHOJWANI VERSUS ABHYUDAYA CO-OPERATIVE BANK LTD AND ANR. 2019 (9) TMI 711 - SUPREME COURT , the Hon ble Supreme Court referring to B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES 2018 (10) TMI 777 - SUPREME COURT held that when the recovery certificate dated 24-12- 2001 was issued, this certificate injured effectively and completely the appellant's rights as a result of which limitation would have begun ticking. In the aforenoted Judgement it is clearly observed that the period of limitation for an Application seeking initiation of CIRP under Section 7 of the Code is governed by Article 137 of the Limitation Act and is, therefore three years from the date when the Right to Apply accrues. In the instant case, the material on record and the admitted invoices, evidence that the first unpaid debt is dated 12.03.2011 - It is significant to note that there is gap between 14.06.2012 and 02.04.2015 of almost three years. Be that as it may, the date of default is of relevance here. As the Code mandates, Section 9 Application is filed after the issuance of Demand Notice under Section 8(1) which contains the details of unpaid Operational Debt. It is also interesting to note that Part IV of the Application under Section 9 mentions the date of default as June 30, 2017 ; for an amount of ₹ 2,39,85,521.35/-. It is seen from the record that the date of first default is March 2011 and the cumulative amount claimed is ₹ 2,39,85,521.35/-. Section 9 Application emanates from the Demand Notice under Section 8(1). Both have to be read conjointly and the date of default cannot be construed to be different merely because it is differently mentioned as 2011 in Section 8 Notice and 2017 in Application under Section 9 - the argument of the Learned Counsel for the Operational Creditor that the period should be confined only from 2015 to 2017 cannot be sustained. The Tribunal cannot confine to one or other invoice if the Applicant has relied on all the invoices to arrive at the amount of ₹ 2,39,85,521.35/- in the Demand Notice under Section 8. We are of the view that the Tribunal does not have Jurisdiction in these Insolvency Proceedings to cut-short the invoices which would cause recurring dates of cause of action as it is not a suit for recovery. In the present case, the Operational Creditor failed to bring on record any acknowledgement in writing by the Corporate Debtor or its representative within three years of the date of the first default - the Application filed under Section 9 is barred by limitation. Pre-existing dispute between the parties - HELD THAT - In the instant case, Learned Counsel appearing for the Corporate Debtor drew our attention to pages 626 to 630 of Volume III, which is a part of the Reply filed before the Adjudicating Authority wherein the email correspondence between the parties dated 21.07.2012, 18.12.2013, 31.07.2015, 18.08.2015 is reproduced. It is seen from this correspondence that it pertains to the period between 2012 to 2015 and establish that they relate to regular day-to-day issues viz. projector having been switched off , shifting of the computers systems , the costs charged for the shifting , issue regarding DG set etc. It is noted that the last Complaint about the equipment or services rendered is dated 19.08.2015. It is pertinent to mention that nowhere in this correspondence any issue with respect to training or payment of ₹ 25/- Lakhs or any other breach of the clauses of the Master Licence Agreement has been raised. The material on record and the documentary evidence filed does not establish that there was any dispute prior to issuance of the Section 8 Demand Notice or that there was any assertion of facts supported by any evidence to establish existence of a dispute. The Demand Notice under Section 8(1) dated 08.08.2017 and the Reply which was filed one month later for the very first time raises these issues - though the Application is barred by limitation there is no Pre-Existing Dispute between the parties. Appeal dismissed.
Issues Involved:
1. Whether the Section 9 Application was barred by limitation. 2. Whether there was a ‘Pre-Existing Dispute’ prior to the issuance of the Demand Notice under Section 8(1) of the IBC. Issue-wise Detailed Analysis: 1. Limitation of Section 9 Application: The Appellant, an Operational Creditor, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) against the Corporate Debtor. The Adjudicating Authority rejected the application on grounds of 'Pre-Existing Dispute' and 'Claims being time-barred'. The Appellant raised 187 invoices during the period from March 12, 2011, to June 30, 2017, for a total amount of ?2,39,85,521.35, which remained unpaid. The Adjudicating Authority noted that the debt fell on various dates starting from October 2011 and there was no explanation for the delay on the part of the Appellant. The Hon’ble Supreme Court in B.K. Educational Services Pvt. Ltd. Vs. Parag Gupta and Associates held that the provisions of the Limitation Act apply to proceedings or appeals before NCLT/NCLAT. The right to sue accrues when a default occurs, and if the default occurred over three years prior to the filing of the application, it would be barred under Article 137 of the Limitation Act. In this case, the first unpaid debt was dated 12.03.2011, and the application was filed on 26.10.2017, beyond the three-year limitation period. The correspondence relied upon by the Appellant to establish 'Acknowledgement of debt' under Section 18 of the Limitation Act was dated 12.09.2015, beyond three years from the date of default. Therefore, the application was held to be barred by limitation. 2. Pre-Existing Dispute: The Corporate Debtor argued that there was a 'Pre-Existing Dispute' regarding the services provided by the Operational Creditor. The dispute included issues such as the failure to provide requisite support, faulty supplies, and non-adherence to advertising commitments. The Appellant contended that these disputes were fictitious and non-existent, raised only after the issuance of the Demand Notice under Section 8(1) of the IBC. The Hon’ble Supreme Court in Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited held that the existence of a real dispute must be pre-existing, i.e., it must exist before the receipt of the Demand Notice or invoice. The Tribunal observed that the correspondence between the parties from 2012 to 2015 pertained to regular day-to-day issues and did not establish any significant dispute regarding the services provided. The last complaint about the equipment or services was dated 19.08.2015, and no issues were raised about training or advertising commitments before the issuance of the Demand Notice on 08.08.2017. The Tribunal concluded that there was no 'Pre-Existing Dispute' between the parties prior to the issuance of the Demand Notice. However, since the application was barred by limitation, the appeal was dismissed. Conclusion: The Appellate Tribunal dismissed the appeal, agreeing with the Adjudicating Authority that the Section 9 Application was barred by limitation and there was no 'Pre-Existing Dispute' between the parties. The Tribunal emphasized that the date of default and the period of limitation are crucial and cannot be shifted or altered. The appeal was dismissed with no order as to costs.
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