Alumilite Architecturals Limited vs Seth Developers Private Limited

Comp. App. (AT) (Ins) No. 1041 of 2022 & I.A. No. 3021 of 2022

IN THE MATTER OF: Alumilite Architecturals Ltd. ...Appellant

Versus

Sheth Developers Pvt. Ltd. ...Respondent

Present:

For Appellant : Mr. Ashim Sood, Ms. Rachitta Rai, Mr. Kuber Bajaj, Adv.

For Respondent : Mr. Vikramaditya Deshmukh, Mr. Dhawal Mohan, Mr. Vatsal Shah, Mr. Pranav Parikh, Advocates

ORDER

Per: Justice Rakesh Kumar Jain: (Oral)

13.02.2024 : 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.

2. 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.

3. 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.

4. 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."

5. 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.

6. We have heard Counsel for the parties and perused the record with their

able assistance.

7. 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?

8. 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:-

9. 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."

10. 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.

11. 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.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

Sheetal/Ravi