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TMI Blog2020 (9) TMI 1188X X X X Extracts X X X X X X X X Extracts X X X X ..... the Corporate Debtor for Rs. 90 lakhs and that as per the invoice the said amount is required to be paid within 30 days from the date of the invoice. The Respondent herein made a payment of only Rs. 70 lakhs and the balance of Rs. 20 lakhs was due from the Respondent, however, after adjustment of TDS deducted and remitted on behalf of the Operational Creditor / Applicant by the Respondent to the Tax Authorities in a sum of Rs. 8,00,997/- balance amount of Rs. 11,99,003/- is due after the adjustment of the TDS payment. Thus the principal amount claimed is in a sum of Rs. 11,99,003/along with the interest @ 18% per annum which is due from the Respondent in relation to which a letter dated 17.07.2018 it is averred was sent demanding the payment and to the same the Respondent had aiso issued a reply dated 06.09.2018, denying the payment. 3. In the circumstances, the Applicant had issued a 'Demand Notice' dated 09.11.2018 for a sum of Rs. 24,13,675/- which includes interest @ 18% per annum from the date of 'Demand Notice' and to the said 'Demand Notice' the Respondent has chosen to send a reply dated 19.10.2018 denying the liability based on frivolous and vexati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment till date. It is also stated in the rejoinder that since the Director named therein was undergoing medical attention and because of treatments suffered, in effect due to severe chemo radiation and side effects, the Director was unable to pay attention to the business and approach this Tribunal within time. However, despite all these difficulties, on 17.07.2018, it is stated that the Applicant had chosen to send a letter dated 17.07.2018 as averred in the Application demanding the balance amount. On 06.09.2018, for the very first time, the Respondent denied to pay stating 'frivolous reasons'. 10. It is also contended that by applying Article - 137 of the Limitation Act, 1963, the period of three years is to be counted after the right of seeking adjudication accrues to the person? and since IBC, 2016 was put into effect from 1 st December 2016, the right to file an Application for initiating Corporate Insolvency Resolution Process accured to the Operational Creditor under Section 9 of IBC, 2016 from 1 st December 2016 and in the circumstances the main Company Petition cannot be rejected as barred by limitation. 11. Further it is averred in the Rejoinder that on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is submitted that even from the pleadings of the Petitioner, it is evident that the claim as made by the Applicant is hopelessly barred by limitation and in this regard points out that even as per the Statement made in the Application the invoice is stated to have been raised on 31.05.2015 for a sum of Rs. 90 lakhs and in the circumstances the limitation will commence from the said date or after the expiry of 30 days thereafter within which the payment is required to be made and not as contended by Learned Counsel for the Applicant or as sought to be projected in the Rejoinder averments to the effect that the limitation will commence from 01.12.2016 when IBC, 2016 was brought into force. 15. Further it is also submitted by Learned Counsel for Respondent that while filing an Application under Section '5' of the Limitation Act, 1963, the onus is placed on the Applicant, even by assuming that the Application is maintainable but not admitted, to explain each days delay and as to how the figure of 230 days has been computed by the Applicant. Nowhere in the Application nor in the rejoinder it has been explained as to how the figure of 230 days for which condonation is sought has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .06.2018 (date of amendment of insertion of Section 238-A coming into effect), Referring to the Report of the Insolvency Law Committee of March, 2018 in this regard and after extracting paragraph 28.1 to 28.3 of the said Report and highlighting that the Code (IBC, 2016) could not have been to give a new lease of life to debts which are time barred and has thereby gone to give a finding that the Limitation Act is applicable from the inception of the Code. In other words, even from the first date of commencement of IBC, 2016 in relation to any claim which is sought to be made as a ground for filing of Petition under Section 7 & 9 seeking for initiation of the CIRP it must pass muster and should have been filed within the period of limitation. In other words, the debt should not have been barred by limitation. Thus the judgment of the Hon'ble Supreme Court of India effectively nullifies the contentions made by Learned Counsel for Applicant that the period of limitation is required to be reckoned in the instant case only from 01.12.2016 and not when it actually accrued to the Applicant, namely, when the default occurred. 19. The reasons hence given in the Application that si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity and justice by long enjoyment or what may have been lost by a party's own inaction, negligence or latches". Though the Code is not a debt recovery law, the trigger being 'default in payment of debt' renders the exclusion of the law of limitation counter-intuitive. Second, it re-opens the right of claimants (pursuant to issuance of a public notice) to file timebarred claims with the IRP/RP, which may potentially be a part of the resolution plan. Such a resolution plan restructuring timebarred debts and claims may not be in compliance with the existing laws for the time being in force as per Section 30 (4) of the Code. 28.3 Given that the intent was not to package the Code as a fresh opportunity for creditors and claimants who did not exercise their remedy under existing laws within the prescribed limitation period, the Committee thought it fit to insert a specific section applying the Limitation Act to the Code. The relevant entry under the Limitation Act may be on a case to case basis. It was further noted that the Limitation Act may not apply to applications of corporate applicants, as these are initiated by the applicant for its own debts for the purpose of CIRP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Division Bench, however, each of Judges writing their independent Judgments. The following observations are significant of the Hon'ble Judges after consideration of the precedents then prevailing both for and against the proposition viz., Per REILLY J :. "Sec. 5 of the Limitation Act, as is well known, has no application to suits. It does not give the Court any power to extend the period of limitation for instituting a suit; but it does give the Court power on sufficient cause to extend the time for filing an appeal or an application in litigation which has already been properly instituted by suit. When a party has come to Court with his suit in time, then he or other parties to the suit, who are conducting their proceedings under the control of the Court, are allowed to ask for extension of time under Sect.5 of the Limitation Act, for sufficient cause, and the Court may grant such extensions at its discretion. But it is no part of the Limitation Act - indeed it is against the object of the Limitation Act - that the Court should have discretion to extend the periods of limitation for initiating suits. If the Court had power to do that, then one of the main objects of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of which, according to the assumption a period of limitation has been prescribed. Thus, it would seem that the Legislature had a purpose in the use of the words 'petition' and 'application' in the material sections of the Provincial Insolvency Act, and it is not open to Courts, in the absence of clear and cogent indications in the Act to the contrary, to ignore the distinction made by the Legislature. " 25. The portions underlined as above clearly indicate that the Petitions filed by the Creditors are to be considered substantially as 'Original Petitions' in the nature of plaints in relation to Provincial Insolvency Act, 1920 (5 of 1920). In the above decision referred to the Hon'ble High Court of Madras analysing the provisions of Provisional Insolvency Act, 1920 has drawn a distinction between an Application and a Petition as evident from the observations of Anantakrishna Ayyar J. extracted as above and in relation to a Petition filed under Section 9 IBC, 2016 by a Creditor, Section 5 of the Limitation Act has been held not to apply. A similar view had also been taken by the Hon'bie Rajasthan High Court in the matter of ShitaE Dass and Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation under Section 9 is required to be preferred. Taken together with Paragraph 28.2 and 28.3 of the Report of Insolvency Law Committee of March, 2018 which in effect echoes the observation of the Hon'ble High Court of Madras in the decision cited supra and also verbatim has reproduced paragraph '11' of the decision of the Hon'ble Supreme court of India rendered in Rajender Singh -Vs- Santa Singh (1973) 2 SCC 705 as extracted in B.K. Educational Services (supra) we are of the considered view that the answer can only be in the negative. 28. Further even on facts we find that the pleadings have failed to clearly bring out as to how the number of day's delay as stated in the Application of 230 days has been computed giving out clearly the start and end date. Even when the learned Counsel for the Respondent specifically raised the issue, Learned Counsel for the Applicant was not in a position to answer the issue. Curiously, even though the Applicant has tried to elicit the sympathy angle of this Tribunal by pleading in the Rejoinder as well as the Additional Affidavit that the deponent being a Director was suffering from serious sickness and also due to attendant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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