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TMI Blog2020 (8) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case are as follows: The Operational Creditor "M/s Prabhat Steel Traders Private Limited" filed an Application under Section 9 of the I&B Code, 2016 for initiation of Corporate Insolvency Resolution Process against the Corporate Debtor "Shree Sai Industries India Private Limited" for a total debt amount Rs. 5,97,09,566/- which includes the principal amount of Rs. 2,05,28,636.00 and interest @ 21% p.a till 30th November 2018 amounting to Rs. 3,91,80,930.00/-. The Respondents/Applicant served the demand notice dated 09th June 2018, but when the Corporate Debtor did not repay the amount, the petition under Section 9 was filed. The Learned Adjudicating Authority has observed the following in the impugned order: "considering the totality of the facts and circumstances of the case, it is now ascertained that the goods were supplied on demand, however, without any reason the value of the goods have not been paid by the debtor. The invoices raised remained unpaid. As per the Ledger Account along with the Statement of Account the outstanding debt in question was duly acknowledged by the Corporate Debtor. As a consequence, this Bench of the view that this is a fit case of exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Corporate Debtor acknowledged the balance of Rs. 2,05,28,636.05 as on 01st April 2017. 8. The Appellant has challenged the admission order mainly on the ground of limitation. The Appellant contends that the Applicant/Operational Creditor has mentioned in its demand notice that 12th January 2012 is the date from which such debt fell due. Appellant further contends that last part payment was made on 30th May 2015; after that, the Corporate Debtor confirmed the outstanding dues through balance confirmation letter dated 01st April 2017. The alleged claim of the Operational Creditor is relating to the invoice dated 13th December 2011. 9. The Learned Counsel for the Appellant has further placed reliance on the case of B.K. Educational Services (P) Limited Vs. Parag Gupta & Associates (2018) SCC OnLine SC 1921 wherein Hon'ble the Supreme Court has laid down the law regarding applicability of the Limitation Act. 10. In case of "B.K. Educational Services (P) Ltd. v. Parag Gupta & Associates, (2019) 11 SCC 633: (2018) 5 SCC (Civ) 528: 2018 SCC OnLine SC 1921 at page 662 Hon'ble the Supreme Court of India held: "38. It will be seen from a reading of Section 8(2)(a) that the cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attracted. "The right to sue", therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the Application, the Application would be barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such Application." Therefore, the right to sue accrued from the moment default first occurred on 13th December 2011. Since the default has occurred over three years prior to the date of filing of the Application, it would be barred by limitation under Article 137 of the Limitation Act. 12. Hon'ble the Supreme Court in the case of Food Corporation of India Vs. Assam State Cooperative Marketing & Consumer Federation Limited (2004) 12 SCC 360 on page 366 has held: "14. According to Section 18 of the Limitation Act, an acknowledgement of liability made in writing in respect of any right claimed by the opposite party and signed by the party against whom such right is claimed made before the expiration of the prescribed period for a suit in respect of such right has the effect of commencing a fresh period of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court of India has reiterated the law laid down in the case of "B.K. Educational" (supra). The Learned Counsel for the Respondent has placed reliance on para 21 of the said judgment. "21. The aforesaid judgments correctly hold that a suit for recovery based upon a cause of action that is within limitation cannot in any manner impact the separate and independent remedy of a winding-up proceeding. In law, when time begins to run, it can only be extended in the manner provided in the Limitation Act. For example, an acknowledgment of liability under Section 18 of the Limitation Act would certainly extend the limitation period, but a suit for recovery, which is a separate and independent proceeding distinct from the remedy of winding up would, in no manner, impact the limitation within which the winding-up proceeding is to be filed, by somehow keeping the debt alive for the purpose of the winding-up proceeding." 16. In the above-mentioned case, Hon'ble the Supreme Court has clearly held that when the time for limitation begins to run, it can only be extended in the manner provided under the Limitation Act. For example, an acknowledgment of liability under Section 18 of the Limita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expiration of the prescribed period of limitation by the person liable to pay the debt, a fresh period of limitation shall be computed from the time when the payment was made. 21. In the instant case, the Operational Creditor claims that it has received last payment in lieu of debt from the Corporate Debtor on 30th May 2015. Alleged liability is on account of invoice dated 13th December 2011. Therefore, the limitation period cannot be extended, given the statutory provision under Section 19 of the Limitation Act as the Corporate Debtor has made part payment after expiration of the period of limitation. 22. The balance confirmation dated 01st April 2017 will also not have any impact on the computation of limitation period as it is made after the expiration of the limitation period, i.e. three years. 23. In this case, the Adjudicating Authority has passed the Order of admission under Section 9 of the Code, without even considering the statutory requirement of Section 9(3)(b) and 9(3)(c) of the Code. The Adjudicating Authority has even not considered the issue of limitation, though Section 3 of Limitation Act mandates to decide the issue of limitation. 24. The Adjudicating Autho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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