B. S. E. Ltd vs Neo Corp International Ltd
- CitationCompany Appeal (AT) (Insolvency) No. 472 of 2018
Ratio decidendi
The rule this decision rests on
Where an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 is filed in respect of an operational debt, Part II of the Schedule to the Limitation Act, 1963 (Article 137, three years from when the right to apply accrues) governs the limitation period, by virtue of Section 238A of the Code. The right to apply under Section 9 accrues on the date of the invoice raised for the operational debt, so a later invoice for a fresh period of dues defeats a plea that the application is time-barred by reference to an earlier unpaid fee. A corporate debtor cannot resist a claim on the ground that the debt is time-barred where a suit on the same claim, if filed, would not be barred by limitation; the limitation defence under Part I of the Schedule is therefore not available in that situation. Where the corporate debtor fails to appear despite notice (including substituted service by newspaper publication) and raises no pre-existing dispute, and the Section 9 application is otherwise complete, the Adjudicating Authority should admit the application rather than reject it on limitation grounds, and initiate the Corporate Insolvency Resolution Process.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
B.S.E. Ltd. ...Appellant
Vs
Neo Corp International Ltd. ....Respondent
Present: For Appellant: Ms. Surekha Raman, Advocate. For Respondent: None.
ORDER
05.04.2019: The Appellant - 'Bombay Stock Exchange Limited.' (hereinafter
referred to as 'BSE Ltd.') filed application under Section 9 of the Insolvency and
Bankruptcy Code, 2016 (for short 'I&B Code') for initiation of Corporate
Insolvency Resolution Process against 'Neo Corp International Ltd.' (Corporate
Debtor). The Adjudicating Authority (National Company Law Tribunal), Mumbai
Bench by impugned order dated 26th June, 2018 rejected the application under
Section 9 on the ground that the Corporate Debtor defaulted in making payment
of Rs.5,37,939 towards annual listing fee as on 1st April, 2014 and thereby the
application is barred by limitation.
2. Learned counsel for the Appellant relied on Form-5, the application under
Section 9 of the I&B Code wherein particulars of operational debt of
Rs.5,57,959/- have been shown due since 1st April, 2014 till the date of filing.
Company Appeal (AT) (Insolvency) No. 472 of 2018 -2-
3. From the record we find that invoices were also issued on 1st April, 2017,
which shows the total amount payable including service tax for the year 2017-
18, Swachh Bharat Cess and Krishi Kalyan Cess, totalling Rs.5,57,959/-. It
appears that the Adjudicating Authority failed to consider the aforesaid
documents attached with Form-5 and came to a wrong conclusion that the
application under Section 9 is barred by limitation.
4. It is true that Limitation Act, 1963 is applicable in terms of Section 238A
of the I&B Code. For the purpose of filing application under Section 9, Part II of
the Schedule of Limitation Act, 1963 will apply, which reads as under:-
PART II - OTHER APPLICATIONS
Description of Period of Time from which application Limitation period begins to run
137. Any other Three years When the right to application for apply accrues.
which no period of limitation is provided elsewhere in this division.
5. As in the present case, the right to apply accrues on 1st April, 2017, we
hold that the application under Section 9 was not barred by limitation.
Company Appeal (AT) (Insolvency) No. 472 of 2018 -3-
6. Part I of the Schedule relates to filing of suits, money suits, etc. If the claim
is barred by limitation then a person can take plea that "there is no debt payable
in law". In the present case, as we find that the invoice raised on 1st April, 2017
is more than Rupees One Lakh and a suit if filed will not be barred by limitation,
the Corporate Debtor cannot take plea that the amount is barred by limitation.
7. The Adjudicating Authority before passing the impugned order dated 26th
June, 2018 had issued notice to the Corporate Debtor but the Corporate Debtor
failed to appear. In the present case also, the notice on Corporate Debtor having
returned undelivered, we directed the Appellant to take publication of notice in
the Newspapers intimating the Corporate Debtor the next date of hearing.
Inspite of publication of notice in two newspapers namely 'Times of India'
(English), Mumbai Edition and 'Loksatta' (Marathi), Mumbai Edition, the
Corporate Debtor failed to appear before this Appellate Tribunal and has not
raised any objection that there is a pre-existing dispute. In the circumstance,
we are of the opinion that the application under Section 9 being complete, the
Adjudicating Authority should have admitted the application under Section 9
instead of rejecting it on the ground of limitation.
8. In view of the aforesaid finding, we set aside the impugned order dated
26th June, 2018 and remit the matter to the Adjudicating Authority (National
Company Law Tribunal), Mumbai Bench to admit the application under Section
9 after notice to the Corporate Debtor to enable the Corporate Debtor to settle
Company Appeal (AT) (Insolvency) No. 472 of 2018 -4-
the matter in the meantime. However, in case, the Corporate Debtor fails to
appear inspite of notice, as we have noticed earlier, the Adjudicating Authority
will admit the application under Section 9 and initiate the Corporate Insolvency
Resolution Process immediately. The appeal is allowed with aforesaid
observations and directions. No costs.
[Justice S. J. Mukhopadhaya] Chairperson
[Justice A. I. S. Cheema] Member (Judicial)
am/sk
Company Appeal (AT) (Insolvency) No. 472 of 2018
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