Kc Industries vs Prasol Chemicals Pvt Ltd
- CitationCompany Appeal (AT) (Insolvency) No. 213 of 2021
Ratio decidendi
The rule this decision rests on
A claim for corporate insolvency resolution under Section 9 of the Insolvency and Bankruptcy Code, 2016 is subject to the limitation period prescribed by Article 137 of the Limitation Act, 1963, which runs from the date of the last invoice and not from the date of default in payment. An appeal under Section 61(2) of the Insolvency and Bankruptcy Code, 2016 must be filed within thirty days of the impugned order, extendable by a further fifteen days on sufficient cause being shown; the period during which the Supreme Court's suo motu orders excluded limitation (from 23 March 2020 until 18 March 2021) may be excluded in computing that period. A party that was the applicant before the Adjudicating Authority, and which knew of the dismissal of its application, cannot establish sufficient cause for delay in appealing merely because it was not supplied a free copy of the impugned order, where it did not apply for even a certified copy.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
K.C. Industries ...Appellant
Versus
Prasol Chemicals Pvt. Ltd. ...Respondent
Present: For Appellant: Mr. Tushar Gujjar, Mr. Mayur Khandeparkar and Mr. Darpan Sachdeva, Advocates. For Respondent:
ORDER
(Through Virtual Mode)
23.03.2021: This appeal is preferred against order of dismissal of application
filed by the Appellant - Operational Creditor under Section 9 of the Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as 'I&B Code'). In terms of
impugned order dated 20th December, 2019, the Adjudicating Authority (National
Company Law Tribunal) Mumbai Bench dismissed the Appellant - Operational
Creditors application on the ground that the claim was hit by the law of limitation
and even on merit the application did not lie as in the event of set off being given
to sales tax dues of the Appellant which exceeds its claim, nothing was payable by
the Corporate Debtor to the Appellant - Operational Creditor, such payment being
payable to the Sales Tax Authorities.
Cont'd....../ -2-
2. Learned counsel for the Appellant submits that the claim of Appellant is not
hit by limitation. It appears that the last invoice was raised by the Appellant on
13th August, 2013 whereas the application under Section 9 was filed on 16th April,
2019 which is clearly beyond the period of three years prescribed as limitation
period under Article 137 of the Limitation Act governing application under Section
9 of the I&B Code.
3. That apart, there has been a dispute in regard to the liability as the amount
due to the Sales Tax Authorities from Appellant is admittedly Rs.70.42 Crores
whereas its claim is slightly in excess of Rs.31 Lakh and with the set off given to
sales tax dues, nothing remains payable by the Corporate Debtor to the Appellant.
Learned counsel for the Appellant submits that the amount of sales tax dues has
not been paid by the Corporate Debtor to the Sales Tax Authorities. We are of the
view that the dispute raised in regard to the liability on this score cannot be said
to be illusory or a moonshine.
4. Even the appeal is not filed within the prescribed period of limitation in terms
of the provisions of Section 61(2) of I&B Code. The ordinary period of limitation
prescribed is 30 days, which can be extended by 15 days on sufficient cause being
assigned for not filing the appeal within 30 days. The Appellant has filed I.A. No.
Company Appeal (AT) (Insolvency) No. 213 of 2021 -3-
489 of 2021 seeking condonation of delay of 411 days in filing the present appeal.
The period of lockdown and extension granted in terms of order passed in suo moto
jurisdiction effective from 23rd March, 2020 in the wake of outbreak of COVID 19,
which ceased to operate on 18th March, 2021, being taken into consideration for
the purposes of exclusion, the question for consideration would be whether the
appeal has been preferred even within extended period of limitation. Admittedly,
the Appellant- Operational Creditor was the Applicant before the Adjudicating
Authority. The impugned order came to be passed on 20th December, 2019.
Reckoned from such date till the imposition of lockdown and commencement of
period of exclusion viz. 23rd March, 2020, the period comes to 93 days, which far
exceeds the extended period of limitation of 45 days.
5. Admittedly, Appellant has not even applied for certified copy of the impugned
order and even if the contention of not being provided with free copy of impugned
order is accepted, it being the Applicant before the Adjudicating Authority and
having knowledge of passing of impugned order dismissing its application and not
choosing to apply for even a certified copy cannot be heard to say that there is
sufficient cause preventing it from preferring the appeal within the prescribed
period of limitation or extended period of 45 days.
Company Appeal (AT) (Insolvency) No. 213 of 2021 -4-
6. Having conspectus of all relevant factors, we find that the instant appeal is
barred by limitation. Even on merit, we do not find any flaw in the impugned order.
The appeal is accordingly dismissed. I.A. No. 489 of 2021 also stands dismissed.
[Justice Bansi Lal Bhat] Acting Chairperson
[Dr. Ashok Kumar Mishra] Member (Technical) am/gc
Company Appeal (AT) (Insolvency) No. 213 of 2021
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