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2021 (5) TMI 819 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - service of demand notice - HELD THAT - The date of default relied upon by the Operational Creditor is 29.11.2019 - In the instant case, the nature of transaction is such that it was necessary to annex the invoices for proving the existence of default. Since the invoices bearing no. 1056 to 1059 were not annexed by the Operational Creditor with the Demand Notice, its reliance on 29.11.2019 as the date of default is erroneous. This defect is of such a nature that it cannot be allowed to be rectified at this stage by exercising our power as stipulated under the Proviso to Section 9(5)(ii) of IBC 2016. The Hon'ble Supreme Court in B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES 2018 (10) TMI 777 - SUPREME COURT inter-alia, held that the Limitation shall be computed from the date of default. In the instant case as discussed earlier, the date of default relied upon by the Operational Creditor as 29.11.2019 has been found to be erroneous. Therefore, basing on the date of default of 29.11.2019, the question of computing of limitation does not arise. Whether a different date of default could be adopted basing on the other invoices and other dates relied upon by the Operational Creditor? - HELD THAT - From the perusal of the invoices, it is observed that the last invoice annexed in the petition is of 17.02.2014. If we assume 17.02.2014 as the date of default for calculating Limitation, it is contended by the Operational Creditor through its rejoinder that the present petition is not barred by Limitation since the Corporate Debtor has made a part payment of ₹ 5,00,000/- on 06.01.2017 through cheque and the Petition has been filed on 31.12.2019, which is within 3 years from the date of encashment of cheque. In the instant case, the Operational Creditor has relied upon the invoices pertaining to the period from 14.01.2014 to 11.11.2019 in its main Petition as well as in the demand notice under Section 8 of IBC, 2016 to compute the Operational Debt amounting to ₹ 63,76,9474/-. The details of the unpaid invoices are given in the Para 10 of this order. Therefore, in the light of the aforesaid Judgment, we cannot cut short invoices till 17.02.2014 for deriving a date of default for computing the period of limitation. The Demand Notice issued by the Operational Creditor under Section 8 of the IBC 2016 is defective. Further, this Tribunal does not have a discretion to cut short the invoices to derive a date of default for the purpose of computing the period of Limitation - Petition dismissed.
Issues Involved:
1. Validity of the date of default. 2. Whether the petition is barred by limitation. 3. The requirement of annexing invoices with the demand notice. 4. The impact of partial payment on the limitation period. Detailed Analysis: 1. Validity of the Date of Default: The Operational Creditor claimed multiple dates of default, with the last date being 29.11.2019. However, the tribunal noted that the invoices No. 1056 to 1059 were neither annexed with the petition nor sent with the demand notice. The tribunal emphasized that the nature of the transaction required the invoices to prove the existence of default. Therefore, relying on 29.11.2019 as the date of default was erroneous. The tribunal cited the judgment in Neeraj Jain Vs. Cloudwalker Streaming Technologies Private Limited, which emphasized the necessity of submitting relevant invoices with the demand notice. 2. Whether the Petition is Barred by Limitation: The tribunal examined whether the petition was barred by limitation. The Operational Creditor argued that the petition was within the limitation period due to a part payment of ?5,00,000 on 06.01.2017. However, the Corporate Debtor contended that the limitation period should be calculated from the date the cheque was drawn (28.12.2016), not when it was encashed. The tribunal referred to the judgment in Sivakumar Vs. Natrajan, which supported the Corporate Debtor's contention. Additionally, the tribunal noted that it could not adopt multiple dates of default, as per the judgment in M/s. Next Education India Private Limited Vs. M/s. K12 Techno Services Private Limited, which stated that the date of default is fixed and cannot be shifted. 3. Requirement of Annexing Invoices with the Demand Notice: The tribunal found that the Operational Creditor failed to annex the necessary invoices (No. 1056 to 1059) with the demand notice. This omission was critical because the invoices were essential to prove the debt and the amount in default. The tribunal cited the judgment in Neeraj Jain Vs. Cloudwalker Streaming Technologies Private Limited, which highlighted the importance of submitting invoices with the demand notice under Section 8(1) of the IBC. 4. Impact of Partial Payment on the Limitation Period: The Operational Creditor argued that the part payment extended the limitation period. However, the Corporate Debtor relied on the judgment in Bimalkumar Manubhai Savalia Vs. Bank of India, which stated that part payment does not extend the limitation period for applications under Sections 7 and 9 of the IBC. The tribunal agreed with the Corporate Debtor, noting that the limitation period should be calculated from the date the cheque was drawn, not when it was encashed. Conclusion: The tribunal concluded that the demand notice issued by the Operational Creditor was defective due to the failure to annex necessary invoices. Additionally, the tribunal determined that the petition was barred by limitation, as the date of default relied upon by the Operational Creditor was erroneous. The tribunal emphasized that it did not have the discretion to cut short invoices to derive a date of default for computing the period of limitation. Consequently, the petition was dismissed.
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