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Judgment
Per: Justice Rakesh Kumar Jain: (Oral)
This appeal is directed against the order dated 27.06.2022, passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench) by which a petition bearing C.P. (IB) No. 2212/MB/C-1/2019 filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (in short ‘Code’) by the Appellant has been dismissed on the ground of limitation.
Shorn of unnecessary details, application filed under Section 9 of the Code by the Appellant for the resolution of an amount of Rs. 45,91,751/- on 12.06.2019 was dismissed on the ground that the last invoice raised by the Appellant is dated 03.11.2013 and the retention amount became due on 03.11.2014 i.e. 12 months after the date of invoice raised and since the period of limitation is to be counted from 03.11.2014, in terms of the Article 137 of the Limitation Act, 1963 (in short ‘Act’) it would come to end on 03.11.2017 and the application under Section 9 having been filed on 12.06.2019 is clearly barred by limitation. It also observed that the case set up by the Appellant that there is an acknowledgement of debt, by referring a letter dated 29.01.2018, is also of no avail because the limitation would continue when the acknowledgment is made during the currency of the period of limitation and not when the limitation had already expired.
Counsel for the Appellant has argued that the Adjudicating Authority has committed a patent error in dismissing the application filed under Section 9 only on relying upon Section 18 of the Act whereas case of the Appellant is covered by Section 19 of the Act. In this regard, he has referred to a letter dated 29.01.2018. It is submitted that the said letter issued by none else then the Respondent herein who has admitted in para 3 of the letter that the amount of the Appellant, due on 09.12.2015 was Rs. 69,34,716.48 whereas the Respondent made various payments i.e. on 06.09.2016 of Rs. 6,01,887.04, on 09.12.2016 of Rs. 3,00,000.00, on 11.09.2017 of Rs. 08,41,078.92 and on 17.03.2017 of Rs. 6,00,000 total amounting of Rs. 23,42,965.96/-, therefore, after deducting the said amount which has already been paid out of Rs. 69,34,716.48, the outstanding amount remains Rs. 45,91,750.52/-. It is argued by the Appellant that once the Respondent has acknowledged its liability and made the payments from time to time and the last payment is made on 17.03.2017, the limitation would extend in view of Section 19 of the Act because the said payment has been made before the expiry of period of limitation of three years.
In response, Counsel for the Respondent has referred to part iv of the application filed under Section 9 and to the paragraph which read as
“pursuant to the negotiations and deliberations held between the parties, 24 work orders were issued by the company to the operational creditor which work orders were accepted by the operational creditor on the terms and conditions as contained therein. A list of the work orders alongwith the payment terms are set out in the tabular format and annexed and marked as Annexure B”. “Copies of the respective work orders as per the attached list is annexed and marked as Annexure C Colly.”
He has then referred to the email dated 20.01.2018 of the Appellant in response to which the letter dated 29.01.2018 was written by the Respondent. It is contended that the email has the reference to the work done by the Appellant in the year 2009 and there was a reference of receiving payments against the interest which was due. It is further submitted that the letter dated 29.01.2018 appended with the ground of appeal as Annexure A-6, is an only a reference to the email sent by the Appellant and there is no acknowledgement as such.
We have heard Counsel for the parties and perused the record with their able assistance.
The issue involved in this case is as to whether the application filed under Section 9 of the Code by the Appellant is beyond the period of limitation even if the payments have been made by the Respondent during the currency of the period of limitation and is covered by Section 19 of the Act?
In order to answer this question, it would be relevant to mention that the amount claimed by the Appellant is the amount which has been retained by the Respondent. In this regard, the Appellant has placed reliance upon the letter dated 29.01.2018 and particularly to paragraph 3 thereof. It would thus be relevant to refer to the email dated 20.01.2018 and the letter dated 29.01.2018 which are reproduced as under:-
Annexure A-6
SHETH
A House of Trust
Ref. No. NDP/2701/2018
SHETH DEVELOPERS LIMITED
Registered Office: 1st Floor, North 1st Floor, 2nd Floor, 3rd Floor, 4th Floor, 5th Floor, 6th Floor, 7th Floor, 8th Floor, 9th Floor, 10th Floor, 11th Floor, 12th Floor, 13th Floor, 14th Floor, 15th Floor, 16th Floor, 17th Floor, 18th Floor, 19th Floor, 20th Floor, 21st Floor, 22nd Floor, 23rd Floor, 24th Floor, 25th Floor, 26th Floor, 27th Floor, 28th Floor, 29th Floor, 30th Floor, 31st Floor, 32nd Floor, 33rd Floor, 34th Floor, 35th Floor, 36th Floor, 37th Floor, 38th Floor, 39th Floor, 40th Floor, 41st Floor, 42nd Floor, 43rd Floor, 44th Floor, 45th Floor, 46th Floor, 47th Floor, 48th Floor, 49th Floor, 50th Floor, 51st Floor, 52nd Floor, 53rd Floor, 54th Floor, 55th Floor, 56th Floor, 57th Floor, 58th Floor, 59th Floor, 60th Floor, 61st Floor, 62nd Floor, 63rd Floor, 64th Floor, 65th Floor, 66th Floor, 67th Floor, 68th Floor, 69th Floor, 70th Floor, 71st Floor, 72nd Floor, 73rd Floor, 74th Floor, 75th Floor, 76th Floor, 77th Floor, 78th Floor, 79th Floor, 80th Floor, 81st Floor, 82nd Floor, 83rd Floor, 84th Floor, 85th Floor, 86th Floor, 87th Floor, 88th Floor, 89th Floor, 90th Floor, 91st Floor, 92nd Floor, 93rd Floor, 94th Floor, 95th Floor, 96th Floor, 97th Floor, 98th Floor, 99th Floor
Dr. Nayan Chandra Srinivasan, M.Phil, M.Phil, M.Phil
Tel. 4260 2101, 4261 1400 Fax 4260 2102 www.sheth.com
CN146, 1245200001000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000
Date: 20th January, 2018
To:
Alumilia Architectural Ltd.
5th Floor, Dioric Chambers
9 H. S. Marg, Mumbai - 400 001.
Kind Attn: Mr. S. K. Damani.
Ref: Your Letter dated 20th January, 2018
Dear Sir,
We are in receipt of your letter dated 20th January, 2018 ("said letter") and in reply thereto we have to state as under:
1.At the outset we deny each and every avements, contentions, statement, claims and allegations made in the said letter under reply that is contrary to and/or inconsistent with claim in annexed hereto, though not specifically denied.
2.At the further outset, we state that as per our books of accounts, you are entitled to receive an amount of Rs. 45,91,750.52/- only and not an alleged amount of Rs. 69,34,716.18/- along with the interest of Rs. 4,57,034.04/- as claimed by you. We subsequently state that, as you never agreed to pay an interest amount as mentioned by you in the said letter and hence, your claim of Rs. 69,34,716.48/- along with the interest of Rs. 4,57,034.04/- is, therefore, afterthought and misconceived. Thus, we are not at all liable to pay the same.
3.Further, you have suppressed the relevant fact and figures in the table as shown in nonembereed paragraph no. 3 of the said letter. The true and correct figures we receive are for your kind perusal.
SR. NO. DATE TOTAL AMOUNT AMOUNT PAID BY US BALANCE OUTSTANDING AMOUNT 1 09.12.2015 69,34,716.48 - 2 06.09.2016 6,81,887.04 3 09.12.2016 1,80,000.00 4 11.09.2017 8,41,978.42 5 17.03.2017 6,00,000 TOTAL 69,34,716.48/- 23,42,965.96/- 45,91,750.52/- For Alumilia Architectural Ltd.
Authorised Signatory
TRUE COPY
SHETH DEVELOPERS PVT. LTD Regulatory Office: South House, West 10, Thames, Cheshire, Cheshire, Cheshire Tel: 0252 2455 4000 Fax: 0252 2455 4001 Fax: 0252 2455 4002
A. The following table is a table with the following table:
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The general right is based without prejudice to the right and without a right to the right.
Funds and Regents For South Development Pvt. Ltd.
Government Secretary
For Alumina Architectural Ltd. Author and Signatory
TRUE COPY
From: Alumilite Architecturalis [mailto:[email protected]]
Sent: Saturday, January 20, 2018 5:44 PM
To: Maulik Sheth
Cc: Vassan Damani
Subject: Balance Outstanding Payment of Principal Amount Against Aluminium Work
THROUGH REGISTERED A.D. / COURIER / MAIL
20th January, 2018
AAPL / 642
To,
Sheth Developers Pvt. Ltd.
Corporate Office, Gen. A.K. Vaidya Marg
Next to Dindoshi Fire-Station, Opp. Oberoi Mall,
Off. Western Express Highway, Malad ( East ), Mumbai-400 097.
Kind Attn : Mr. Maulik Sheth – Director
Sub : Balance Outstanding Payment of Principal Amount Against Aluminium Work
Dear Sir,
From the last 3 weeks we are trying to contact you on your mobile but there is no response at your end. As on 11.09.2017 we had received a payment of Rs. 8,41,078.92 against interest due on our outstanding amount for the work done in year 2009.
For Alumilite Architecturalis Ltd. Authorised Signatory
TRUE COPY
From the aforesaid letter, we have found that there is an admission on the part of the Respondent by making payment on 06.09.2016, 09.12.2016, 11.09.2017 and 17.03.2017 and since the last payment was made on 17.03.2017 and the application under Section 9 was filed on 12.06.2019, therefore, the case is fully covered by the provisions of Section 19 of the Act which is reproduced as under:-
“Section 19. Effect of payment on account of debt or of interest on legacy.
Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made:
Provided that, save in the case of payment of interest made before the 1st day of January, 1928, an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment.”
The Adjudicating Authority, in our considered opinion, has committed a patent error in only referring to Section 18 of the Act for the purpose of dismissing the application filed under Section 9 on the ground that the letter dated 29.01.2018 is of no use to the Appellant as the period of three years had already expired counting it from 03.11.2014 to 03.11.2017 whereas the case of the Appellant is fully covered by Section 19 of the Act because the last payment was made by the Appellant on 17.03.2017 and the application under Section 9 of the Code was filed on 12.06.2019.
In view of the aforesaid facts and circumstances, we are of the considered opinion that the impugned order is patently illegal and the same is hereby set aside. The application under Section 9 filed by the Appellant is restored to its original number. The parties are directed to appear before the Adjudicating Authority on 04th March, 2024.
It is made clear that we have not made any observation on the merits of this case.