2022 (4) TMI 16 - SC - Insolvency and Bankruptcy

Initiation of CIRP - Period of limitation - NCLAT held that the debt arose during the period from 11.08.2013 to 02.09.2013 and that the six cheques purportedly issued towards part payment of the liability having been issued on 5.12.2017, will not save limitation - HELD THAT - There was no discussion at all about the letter dated 28.09.2015. According to the operational creditor, the six cheques in question were handed over along with the letter dated 28.09.2015. The cheque numbers and the bank on which the cheques were drawn, given in the letter dated 28.09.2015 tallied with the particulars of those six cheques allegedly lost by the corporate debtor in March 2017. It is needless to point out that the law relating to the applicability of Section 18 of the Limitation Act, 1963 is fairly well settled. In JIGNESH SHAH ANOTHER VERSUS UNION OF INDIA ANOTHER 2019 (9) TMI 1121 - SUPREME COURT , this Court pointed out that when time begins to run, it can only be extended in the manner provided in the Limitation Act. For holding so this Court made a reference to Section 18 of the Limitation Act. The law as it has developed on the applicability of Section 18 of the Limitation Act and the circumstances in which it would apply, have also not been examined by NCLAT. Therefore, the order of NCLAT is liable to be set aside and the matter liable to be remanded back for a fresh consideration - Appeal allowed by way of remand.

Summary

Issues:
- Appeal against NCLAT's order holding application under Section 9 of the Insolvency and Bankruptcy Code, 2016 as barred by limitation.

Analysis:
1. The appellant, an operational creditor, filed an application under Section 9 of the Code against a corporate debtor, claiming non-payment for fabrics sold. The NCLT admitted the application, citing acknowledgment of liability by the corporate debtor.
2. The NCLAT, on appeal, found that the debt arose in 2013, and the cheques issued in 2017 did not save limitation. The NCLAT reversed NCLT's decision, dismissing the application.
3. However, the NCLAT overlooked a crucial letter dated 28.09.2015, which contained details matching the allegedly lost cheques. The failure to consider this vital aspect led to the appeal being allowed.
4. The Supreme Court highlighted the settled law on the applicability of Section 18 of the Limitation Act, emphasizing the need for a fresh consideration by NCLAT based on established legal principles.
5. The Court referenced previous cases to clarify the application of Section 18, emphasizing the importance of examining all relevant circumstances. The lack of such examination by NCLAT necessitated setting aside their order for a fresh review.

In conclusion, the Supreme Court allowed the appeal, set aside NCLAT's order, and remanded the matter for a fresh consideration, stressing the need to analyze the applicability of Section 18 of the Limitation Act thoroughly.