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2017 (3) TMI 1867 - NATIONAL COMPANY LAW TRIBUNAL, PRINCIPAL BENCH, NEW DELHIMaintainability 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 - HELD THAT:- In order to ascertain as to whether there is a default in making payment of the operational debt, the tribunal is required to examine that the claim made before it ¡s within time. In case of revenue recovery the limitation period is three years from the date on which the debt has fallen due or the claim has arisen. Law of limitation has to be applied with all its rigour and tribunal has no power to extend the period of limitation. A live claim after lapse of limitation period becomes a stale claim unenforceable in law. Accordingly it is to be seen whether the tribunal has been moved within the maximum period of three years prescribed under the indian Limitation Act, 1963 from the date on which the debt has fallen due or the claim has arisen. Admittedly the present claim arises in respect of supplies made by the petitioner to the respondent company during the year 2011-12 through various sales invoices all dated 30th March, 2011. Almost long six years have since passed. There is also no dispute that last part payment against the said supplies was made by respondent company on 29.08.2012 and there after it has stopped making any payment to the petitioner. The present application has been filed on 15.02.2017 much after the limitation period of three years. ‘Debt’ has been defined in the Insolvency and Bankruptcy Code, 2016 as a liability or obligation in respect of a claim which is due and includes a financial debt and operational debt. “Default” has been defined in the Code as non-payment of debt which has become due and payable. (Emphasis given) A debt which is not recoverable for any valid reason ceases to be an amount due and payable. Default arises for non-payment of an amount which could be recovered in law. Default is the event on the occurrence of which, the insolvency proceedings may be initiated under the Code - Claims which are time barred are not amount due and under law. Creditors have no right to recover claims of such due that become time barred. The debt in question has become more than three years old and was, therefore, not enforceable from respondent company in view of the law of limitation. Consequently in the present case, there has been no default for initiation of insolvency proceedings. In the absence of default, the application filed by M/s Prowess International Private limited to initiate corporate insolvency resolution process under Section 9 of the Insolvency and Bankruptcy Code, 2016 against M/s Action Ispat and Power Private Limited, is rejected.
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