Sagar Business Private Limited vs Sidhartha Construction & Trading ...

Sagar Business Pvt. Ltd. ...Appellant

Versus

Sidhartha Construction & Trading Pvt. Ltd. ...Respondent

Present: For Appellant: Mr. Dhananjay Bhaskar Ray, Advocate For Respondent:

ORDER

(Hybrid Mode)

Per: Justice Rakesh Kumar Jain (Oral)

10.09.2024: This appeal is directed against the order dated

26.07.2022 passed by the Ld. National Company Law Tribunal, Cuttack

Bench by which an application filed by the appellant under Section 9 of

the Insolvency & Bankruptcy Code, 2016 (in short 'Code') r/w Rule 6 of

the Insolvency and Bankruptcy Rules, 2016 (Application to Adjudicating

Authority) to initiate Corporate Insolvency Resolution Process (CIRP)

against the Corporate Debtor, namely, 'Sidhartha Construction and

Trading Pvt. Ltd.' has been dismissed on the ground of limitation.

2. Shorn of unnecessary details, the Tribunal framed three issues

while deciding the application of the appellant. The third issue is as to

Cont'd..../ -2-

whether the petition filed by the appellant is within the period of

limitation? The Ld. Tribunal recorded the following finding while deciding

the issue of limitation against the Appellant:-

"The case of the petitioner is the petitioner company engaged in

a business of supplying iron and steel products like iron wires,

coils, pipes etc. The petitioner supplied goods to the respondent

from 06.04.2015 to 14.06.2015, the payment to the supplied

goods to be paid within thirty days from the date of delivery. In

this regard invoices were issued, according to invoices a sum of

Rs. 14,46,352/- is due. As per invoice condition respondent is

liable to pay 18% interest per annum on late payment. The

respondent not paid the amount hence a sum of Rs.

14,46,352/- is due towards principal and a sum of Rs.

18,99,474/ is due towards interest. In the ledger of petitioner,

transaction of supply of goods for the period between

06.04.2015 and 14.06.2015 involves in this petition and due

amount payable there on are not reflected. As already stated

default date is not mentioned in column No. IV of petition there

date of demand notice is mentioned, but in the demand notice it

is specifically mentioned that the date of default is 06.05.2015

i.e. one month from the date of invoice. In the petition, petitioner

also stated that after delivery of goods the applicant never

Company Appeal (AT) (Ins) No. 1320 of 2022 -3-

received any payment from the corporate debtor till the date of

filing of this petition. In the demand notice also it is mentioned

that interest @18% payable from 06.05.2015 to 20.08.2018 on

Rs.14,46,352/- it comes at Rs.4,33,122/- The present

contention of the petitioner that a sum of Rs.2,00,000/- was

paid on 22.11.2016 as per their ledger, but the said payment of

Rs.2,00,000/- was not given credit either on the principal

amount or on the accrued interest amount, instead interest is

calculated on the balance amount of Rs. 14,46,353/- from

06.05.2015 till 20.08.2018 without any break, this falsify the

contention of the petitioner that in between period respondent

had paid Rs.2,00,000/-. Thus, from the own contention of the

petitioner the petition filed on 01.11.2019 for the default dated

06.05.2015 is barred by limitation."

3. Counsel for the appellant has submitted that though the appellant

has mentioned the date of default as 06.05.2015 in the notice under

Section 8 and had filed the application under Section 9 on 01.11.2019

but during this period the Corporate Debtor has made certain payments

towards the invoices in question. In this regard, he has drawn our

attention to the Annexure 8 (the ledger of the Respondent) in which it is

shown that the respondent has made the payments to the appellant on

Company Appeal (AT) (Ins) No. 1320 of 2022 -4-

22.11.2016 of Rs. 2 lakhs, 24.11.2016 of Rs. 4,71,385/- and 25.11.2016

of Rs. 9,75,000/-. However, it is submitted that the cheques dated

24.11.2016 of Rs.4,71,385/- and 25.11.2016 of Rs.9,75,000/- were

bounced. It is however submitted that the amount of Rs. 2 lakhs paid by

the appellant by way of cheque dated 22.11.2016 has been duly credited.

Therefore, in view of Section 19 of the Limitation Act, 1963 (in short 'Act')

payment made by the respondent to discharge the debt restarted the

period of limitation from 22.11.2016.

4. In this case, the respondent was proceeded against ex-parte on

20.05.2024 and the following order was passed:

"20.05.2024: Since the Respondent was not appearing in the case,

on the last date of hearing, on the request of Counsel for the

Appellant, substituted service was ordered to be effected.

Learned counsel for the Appellant has submitted that the

substituted service has been effected in the Newspapers and

Affidavit of service has been filed.

The service being effected case has been called but no one put in

appearance for the Respondent. Hence Respondent is proceeded

against ex-parte.

List this Appeal on 22.07.2024 for ex-parte arguments."

Company Appeal (AT) (Ins) No. 1320 of 2022 -5-

5. Today, also no effort has been made on behalf of Respondent (the

Corporate Debtor) to join the proceedings by moving an appropriate

application.

6. Hence, we have heard ex-parte argument of the counsel for the

appellant.

7. The argument raised by the appellant is that by virtue of the

payment received/made by the respondent on 22.11.2016, the date of

limitation was extended from that date as the said payment was made

within the period of limitation.

8. It is further submitted that if the period of limitation is to be

counted from 22.11.2016 then it would come to an end on 22.11.2019

whereas the application under Section 9 was filed on 01.11.2019 which

is within the period of limitation.

9. We have considered the argument of the counsel for the appellant

and are of the considered opinion that the argument raised by the

appellant with the aid of Section 19 of the act establishes that the

limitation to file the application would expire on 22.11.2019 as it has to

be counted from 22.11.2016 because the amount of Rs. 2 lakhs was paid

by the Corporate Debtor to the appellant in discharge of its debt.

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10. In view of aforesaid facts and circumstances, the present appeal

deserves to be allowed and the impugned order is set aside.

11. The application filed under Section 9 bearing CP (IB) No.

142/CTB/2019 is hereby restored and the matter is remanded back to

the National Company Law Tribunal, Cuttack Bench to decide the same

in accordance with law.

12. Parties are directed to appear before the Tribunal on 30.09.2024.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

[Mr. Indevar Pandey] Member (Technical)

sa/rr

Company Appeal (AT) (Ins) No. 1320 of 2022