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TMI Blog2025 (1) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... which is a date of the last payment receipt. In the present case, last payment was admittedly made on 26.08.2019 i.e. within the period of three years and there is also acknowledgment by the Corporate Debtor in writing which is reflected from the reply to demand notice. When there is clear acknowledgment by the corporate debtor of last payment made on 26.08.2019 which payment was within the period of three years, the operational creditor was clearly entitled for the benefit of extension of limitation under Section 19 of the Limitation Act and both the conditions which are required to be fulfilled under Section 19 were fulfilled. There are no error in the order of the Adjudicating Authority rejecting the objection of the corporate debtor that application under Section 9 was barred by time. Giving the benefit of last date of payment on 26.08.2019, the application was well within limitation. Conclusion - Section 9 application was not barred by limitation, as the acknowledgment of the last payment extended the limitation period. Appeal is dismissed. - [ Justice Ashok Bhushan ] Chairperson And [ Barun Mitra ] Member ( Technical ) For the Appellant : Mr. Anil Kaushik, Sr. Advocate wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the claim of the Operational Creditor was based on invoices from January 2018 to August 2018 which invoices were to be paid within 3 days. It is submitted that the Operational Creditor has pleaded that the last payment extend the period of limitation which payment was made on 26.08.2019 whereas there being no running account between the parties the last payment cannot extend the limitation within the meaning of Section 19 of the Limitation Act. It is submitted that Section 19 of the Limitation Act requires two conditions to be fulfilled namely that payment was made within the prescribed period of limitation and it must be acknowledged by some form of writing. The last payment made cannot be held to be in accordance with Section 19 of the Limitation Act permitting extension of limitation. It is submitted that the claim based on invoices is covered by Article 137 of the Limitation Act and the last date of payment is not relevant and cannot be relied by the Adjudicating Authority for giving benefit of Section 19 of the Limitation Act. Counsel for the Appellant in support of his submissions placed reliance on judgment of the Hon ble Supreme Court in Shanti Conductors Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt. In paragraph 9(ii), following has been observed by the Adjudicating Authority:- ii. The second issue is whether the petition filed is within the period of limitation of three years. The Ld. Counsel for the Respondent has raised a preliminary objection that under Article 137 of the Limitation Act of 1963, the petition is time-barred as the invoices were raised between the time period 03.01.2018 to 16.08.2018 by the Operational Creditor and the petition was filed on 04.01.2024. Thus, the period of limitation for filing the petition based on the last invoice dated 16.08.2018 expired in July 2023. The period of limitation would commence when the default occurred. The Hon'ble NCLAT in the matter of In Style Fashion vs. Aditya Birla Fashion and Retail Limited, Company Appeal (AT) (Insolvency) No. 1679 of 2023, held that, 12. . In view of the last payment having been made on 28.04.2017 as noted above the fresh period of imitation would start from that date and the Operational Creditor was entitled for taking benefit of 3 years' period of limitation from the date of the last payment.... Thus, the period of limitation would begin to run from the date of default, which would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors Private Limited (supra). Shanti Conductors was a case where the Hon ble Supreme Court had occasion to examine Section 19 of the Limitation Act. Considering Section 19 of the Limitation Act, following was observed by the Hon ble Supreme Court in Paragraphs 15 and 16:- 15. Order 7 Rule 6 uses the words the plaint shall show the ground upon which exemption from such law is claimed . The exemption provided under Sections 4 to 20 of the Limitation Act, 1963 are based on certain facts and events. Section 19, with which we are concerned, provides for a fresh period of limitation, which is founded on certain facts i.e. (i) whether payment on account of debt or of interest on legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy, (ii) an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment. 16. We may notice the judgment of this Court dealing with Section 20 of the Limitation Act, 1908, which was akin to present Section 19 of the Limitation Act, 1963. In Sant Lal Mahton v. Kamla Prasad [Sant Lal Mahton v. Kamla Prasad, 1951 SCC 1008 : AIR 1951 SC 477] , this Court hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute of limitation, Order 7 Rule 6, Civil Procedure Code makes it his duty to state specifically in the plaint the grounds of exemption allowed by the Limitation Act, upon which he relies to exclude its operation; and if the plaintiff has got to allege in his plaint the facts which entitle him to exemption, obviously these facts must be in existence at or before the time when the plaint is filed; facts which come into existence after the filing of the plaint cannot be called in aid to revive a right of action which was dead at the date of the suit. To claim exemption under Section 20, Limitation Act the plaintiff must be in a position to allege and prove not only that there was payment of interest on a debt or part-payment of the principal, but that such payment had been acknowledged in writing in the manner contemplated by that section. 10. There can be no two opinions to the law declared by the Hon ble Supreme Court in the above judgment. Two conditions need to be fulfilled for extending the benefit of Section 19 of the limitation which are : (i) Whether payment on account of debt or of interest on legacy is made before the expiration of the prescribed period by the person liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions 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. 14. This Tribunal ultimately in paragraphs 15 and 16 held that Section 9 application is not to be governed by Article 1 of the Limitation Act rather limitation shall be computed as per Article 137. In paragraphs 15 and 16, following was held : - 15. In the present case, the Appellant has placed reliance on Article 1 of the Limitation Act which we have extracted above. A similar provision akin to Article 1 of the Limitation Act came for consideration before the Hon'ble Supreme Court in Hindustan Forest Company case. Article 1 is in Part-I of the Schedule of the Limitation Act dealing with suits, under the suit relating to accounts . The Application filed under Section 9 by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. 18. The next judgment relied by the Appellant is judgment of this Tribunal in Ramdas Dutta vs. IDBI Bank Ltd. Anr- 2023 SCC OnLine NCLAT 1306 . In the above case, this Tribunal noted the fact that the application under Section 7 was filed on 18.10.2019 whereas the date of default was 31.08.2013 and period of three years expired on 31.08.2016. The case of the Operational Creditor was based on date of default as 31.03.2013 and payment of Rs.2.75 lakhs on 29.03.2017. The argument was raised on the basis of payment of Rs.2.75 lakhs on 29.03.2017. 19. This Tribunal in Ramdas Dutta (supra) has held that no advantage can be given to the bank entry dated 29.03.2017. It is useful to notice paragraphs 20, 21 and 22 of the judgment which is as follows : - 20. In so far as, the issue regarding the payment of Rs. 2.75 lakhs on March 29, 2017 by the appellant in their account is concerned, it has now been well-settled by the three-Judge Bench of the hon'ble Supreme Court in the case of Shanti Conductors P. Ltd. v. Assam State Electricity Board [(2020) 2 SCC 677.] , that section 19 would come into play if the payment is acknowledged in the handwriting of, or in a writing signed by the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made within the period of limitation, it does not require that the acknowledgment should also be made within that period. To interpret the proviso in that way would be to import into it certain words which do not occur there. This is the view taken by almost all the High Courts in India and to us it seems to be a proper view to take (See Muhammad Moizuddin Mia v. Nalini Bala Devi [AIR 1937 Cal 284; ILR (1937) 2 Cal 137.] , Lal Singh v. Gulab Rai [ILR (1933) 55 All 280.] , Venkata Subbhu v. Appu Sundaram [ILR (1894) 17 Mad 92.] Ram Prasad Babu v. Mohan Lal Babu [AIR 1923 Nag 117.] and Vishwanath Raghunath Kale v. Mahadeo Rajaram Saraf [ILR (1933) 57 Bom 453.] ). 10 . If the plaintiff's right of action is apparently barred under the statute of limitation, Order 7, rule 6 of the Civil Procedure Code makes it his duty to state specifically in the plaint the grounds of exemption allowed by the Limitation Act, upon which he relies to exclude its operation; and if the plaintiff has got to allege in his plaint the facts which entitle him to exemption, obviously these facts must be in existence at or before the time when the plaint is filed; facts which come into existence after the fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as within time did not satisfy the threshold. Following was held in paragraph 6 : - 6. Having perused the material on record and after hearing the submissions of learned counsel for the appellant, we also do not find any document/agreement between the two parties which evidence running account payment underlying their business operations. In the absence of any documentary evidence which provides foundational basis to the claim of the appellant that there was a running account, the reliance placed on the judgment of this Tribunal in Abhinandan Jain v. Tanaya Enterprises P. Ltd. [2021 SCC OnLine NCLAT 102.] in Company Appeal (AT) (Insolvency) No. 1017 of 2020 does not come to the aid of the appellant. Furthermore, on perusal of the reply to the section 8 demand notice sent by the corporate debtor on January 7, 2020, as placed at pages 127 to 136 of appeal paper book it comes to our notice that it has been categorically denied that any operational debt was due qua the operational creditor. Moreover, it was also stated in the said reply that the operational creditor has failed to explain as to why he continued to supply material if his payment was pending for nearly 8 years. The same c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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