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TMI Blog2022 (5) TMI 1210X X X X Extracts X X X X X X X X Extracts X X X X ..... umbai Bench, Court-III (The Adjudicating Authority) in C.P. No. 3857/I&B/2019. By which Order, the Application being C.P. No. 3857/I&B/2019 filed by the Appellant under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'The Code') has been rejected as barred by time. 2. Brief facts of the case are as under: (i) The Appellant and Respondent-Corporate Debtor were engaged in providing Transport Services. The last payment was received by the Appellant-Operational Creditor from the Respondent-Corporate Debtor on 26.09.2016. Vide Email dated 10.10.2017, Corporate Debtor sought reconciliation of account in respect of the outstanding dues payable to the Appellant. A 'Demand Notice' under Section 8 of the Code date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is entered into the account. Thus the limitation period begins to run from 31st March, 2017 being the close of the financial year in which the last item is entered hence the Application filed on 24th October, 2019 was within three years from 31st March, 2017 and was not barred by limitation. There being mutual account between the parties, Article 1 of the Limitation Act is attracted and the Adjudicating Authority committed error in rejecting the Application as barred by time. 5. Learned Counsel for the Respondent refuting the submissions of Learned Counsel for the Appellant contends that before the Adjudicating Authority, claim were raised by the Appellant was only on the basis of 174 invoices which has been noticed by the Adjudicating Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hree years prior to filing of Section 9 Application hence the Application having been not filed within limitation, the same is rejected. 9. Learned Counsel for the Appellant in this Appeal sought to rely on Article 1 of the Limitation Act, 1963 for the purposes of Limitation of Section 9 Application. Article 1 of the Limitation Act provides as follows: "(Periods of limitations) [See sections 2(j) and 3] FIRST DIVISION - SUITS PART I-SUITS RELATING TO ACCOUNTS Description of Suit Period of limitation Time from which period beings to run 1. For the balance due on a mutual, open and current account, where there have been reciprocal demands between the parties Three years The close of the year in which the last item admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, it is Article 137 which is attracted. In Paragraph 42 of the Judgment, following has been laid down: "42. It is thus clear that since the Limitation Act is applicable to applications filed under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets 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." 13. Hon'ble Supreme Court in (2020) 15 SCC 1, 'Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at of actual non-payment by the corporate debtor when a debt has become due and payable; and (g) that if default had occurred over three years prior to the date of filing of the application, the application would be time-barred save and except in those cases where, on facts, the delay in filing may be condoned; and (h) an application under Section 7 of the Code is not for enforcement of mortgage liability and Article 62 of the Limitation Act does not apply to this application." 14. Learned Counsel for the Appellant in support of his submissions submits that there were mutual dealings between the parties and reliance has been placed on the Judgment of Hon'ble Supreme Court of India in 'Hindustan Forest Company Vs. Lal Chand and Ors.' (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record including the Bank Statement which clearly mentions that last payment received by the Appellant was on 26th September, 2016. From the last payment, the Application could have been filed within three years. Application under Section 9 filed by the Appellant was on the basis of 174 invoices as has been noticed by the Adjudicating Authority in the Impugned Order. We are satisfied that for the limitation for filing Section 9 application it is Article 137 of the Limitation Act, 1963 which is attracted. Under Article 137, time from which period begins to run is "when the right to apply accrues" the right to apply accrues when invoices issued by the Appellant to the Corporate Debtor were not paid. Invoices on the basis of which payment is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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