National Products vs Lotte Electronics Ltd

Abni Ranjan Kumar Sinha, J

The present petition is filed under Section 9 of Insolvency and Bankruptcy Code, 2016 read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rule, 2016 by the Applicant/Operational Creditor, i.e. "M/s. National Products" for initiation of Corporate Insolvency Resolution Process against the Respondent/Corporate Debtor Company "M/s. Lotte Electronics Limited".

The Operational Creditor is a proprietorship concern of Shri Sanjeev Kumar Gupta and inter alia is engaged in the business of manufacturing and trading of various soldering producuts.

The Corporate Debtor were purchasing soldering products such as solder sticks, flux, and solder wire etc. on credit basis, from the Operational Creditor. As per the instructions/requirements of the Corporate Debtor, the Operational Creditor used to supply the above said goods/material to the Corporate Debtor at its Rudrapur plant and used to raise bills/invoice qua the said supplies.

As per the averments made by the Operational Creditor, as per bills and settled terms, the Corporate Debtor is to make payment of each bill within 30 to 45 days of the receipt of the material/supplies but the Corporate Debtor failed to make payment within the aforesaid period.

The total amount of purchase made by the Corporate Debtor is the sum of Rs. 5,83,479/-. The Corporate Debtor is liable to pay the total amount of Rs. 7,37,419/- as interest @24% till 15th April, 2019 to the Operational Creditor.

Demand Notice dated 18.04.2019 under the Insolvency and Bankruptcy Code, 2016 was sent to the Corporate Debtor. The Corporate Debtor in its reply to the demand notice dated 26.04.2019 alleging that the goods supplied by the Operational Creditor were defective.

Prior to the present petition, the Operational Creditor filed petition bearing No. IB-2641/ND/2019 u/s 9 of the IB Code, 2016 with respect to the non-payment of debt forming the subject matter of present petition and withdrew the same on 05.11.2019 on account of its inability/non-availability of material at that time for satisfying the Hon'ble Tribunal with respect to issue of limitation qua the operational debt in question.

We have heard the Ld. Counsel for the petitioner and perused the averments made in the application as well as the documents enclosed with the application. Ld. Counsel for the petitioner submitted that the last payment was made on 16.04.2014 which is evident from page No. 23 of the ledger account of petitioner. He further submitted that the last invoice was raised on 16.04.2014 which is evident from page 25 of the application. He further submitted that thereafter several correspondences were made through mail and last mail is at page 54 which shows that the office of the CD has demand the bank account details of the petitioner which is dated 14.12.2016. He further submitted that thereafter on 16.01.2017, another mail was also received from the office of CD which shows that the CD had acknowledged the dates and apart from mails, the petitioner also referred the mail which is prior to that. He further submitted that in view of Section 18 of the Limitation Act the acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment. He further submitted that the Demand Notice was also delivered to the CD and the reply was received by the petitioner on 26.04.2019. He further submitted that by sending reply to the notice, CD raised dispute regarding the quality of the goods which was never raised prior to delivery of Demand Notice. He further submitted that in view of the facts, the application filed by the petitioner is within time so notice may be issued to the CD.

Considering the submissions made on behalf of the petitioner, we have gone through the provisions of Section 18 of the Limitation Act and the same is quoted below:

"18. Effect of acknowledgment in writing.--

(1) Where, before the expiration of the prescribed period for a suit of application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.

(2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received. Explanation.--For the purposes of this section,--

(a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set-off, or is addressed to a person other than a person entitled to the property or right;

(b) the word "signed" means signed either personally or by an agent duly authorised in this behalf; and

(c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right".

Mere plain reading of Section 18 of Limitation Act shows that before the expiration of the prescribed period for a suit of application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed.

At this juncture, we would also like to refer the submissions made on behalf of the Ld. Counsel for the petitioner who in course of his arguments referred the explanation of Section 18 of the Limitation Act. We have gone through the explanation and we find that it is true that the acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such properly or right is claimed may be sufficient but at the same time we are of the view that there must be acknowledgment of the amount which is due within time prescribed under the law. At this juncture, we would also like to refer article 137 of the Limitation Act and the same is quoted below:-

Description of suit

Period of limitation

Time from which period begins to run

Any other application for which no period of limitation is provided elsewhere in this Division.

Three years

When the right to apply accrues

Now in light of the aforesaid provision, this Adjudicating Authority would like to consider the case in hand as whether the present application by the Operational Creditor is within the time prescribed under Article 137 of Limitation Act and whether the Operational Creditor has filed the application after three years.

Here in the case in hand, the last payment was made on 16.04.2014 and the last invoice was raised on 16.04.2014, whereas the present application was filed on 09.12.2019. In view of Section 18 of the Limitation Act, the acknowledgment if any, made within three years form the date when the right to apply accrues and in the light of the submissions, when we shall consider the case in hen then we are of the considered view that since the last payment was made on 16.04.2014, therefore, as per the Limitation Act, the petitioner must have filed an application by 03.04.2017 and the acknowledgment must be within that period.

At this juncture, we would also like to refer the arguments advanced on behalf of the Operational Creditor, who in course of arguments referred the correspondence made between the parties through e-mail and in course of arguments, he also referred the 4 e-mails, which are at page 46, 49, 54 & 55. Therefore, we have gone through those e-mails and on careful consideration of the same, we find that at page 46 the e-mail referred by the Operational Creditor is of dated 08.08.2014, e-mail referred at page 49 is of dated 23.06.2015, e-mail referred at page 54 is of dated 15.12.2016 and page 55 is of dated 16.01.2017. We carefully considered these e-mails and we find that the e-mail at page 46 sent by P K Bagchi to one Mr. Tiwari and e-mail at page 55 shows that that it is in respect of e-mail dated 16.01.2017 which shows that it is in respect of the supply of composition which is shown below and in pursuant to that composition of supply, the sender agreed to give the money within one or two days. Therefore, in our opinion this e-mail is not in response to the bills raised on behalf of the Operational Creditor for the period of September 2013 to April 2014. Similarly, e-mail dated 15.12.2016 shows that it is not for that invoices, which the Operational Creditor raised rather it is for other invoices. We further find that nowhere in the mail, the amount which the petitioner claimed is referred and therefore we are unable to accept the contention raised on behalf of the Ld. Counsel for the petitioner that the mail received by the petitioner by which the CD demanded the account number comes under the purview of acknowledgment of debt as required under Section 18 of the Limitation Act. Therefore, in our opinion by these two e-mails Operational Creditor fails to convince us that Corporate Debtor has acknowledged the debt as per Section 18 of Limitation Act. We have gone through the mails referred by the Ld. Counsel for the petitioner. Hence, we are of the considered view that the present application is barred by limitation. Accordingly, we hereby dismiss the present application as it is barred by limitation.