Super Floorings Private Limited vs Napin Impex Limited

Super Floorings Pvt. Ltd. ...Appellant

Vs.

Napin Impex Ltd. ...Respondent

For Appellant: Mr. Anil Kaushik, Sr. Advocate with Mr. Uttam Datta, Ms. Sonakshi Singh, Mr. Kumar Bhaskar, Mr. Vishal Bansal, Advocates.

For Respondent: Mr. Avneesh Arputham, Mr. Ankit Sharma, Advocates.

JUDGMENT

(3rd January, 2025)

Ashok Bhushan, J.

This Appeal by a Corporate Debtor has been filed challenging the

order dated 05.07.2024 passed by the Adjudicating Authority (National

Company Law Tribunal) Chandigarh Bench (Court-I), Chandigarh in CP (IB)

No.23/Chd/Hry/2024. By the impugned order, the Adjudicating Authority

has rejected the preliminary objections raised by the Corporate Debtor that

application under Section 9 filed by the Operational Creditor is barred by

time. The Corporate Debtor aggrieved by the order has come up in this

Appeal.

2

2. Brief facts of the case necessary to be noticed for deciding the Appeal

are:-

2.1. The Operational Creditor is a manufacturer and exporter of all types

of PVC vinyl floorings, multipurpose sheets and other insulation products

for automotive and other industries. Various items were supplied by the

Operational Creditor- Napin Inpex Limited (Respondent herein) to the

Corporate Debtor during the period from 03.01.2018 to 16.08.2018. The

payments were made by the Corporate Debtor on different dates. Last

payment of Rs.3 Lakhs was made on 26.08.2019 by bank transfer. The

notice under Section 8 dated 16.09.2022 was given by the Operational

Creditor to the Corporate Debtor claiming an amount of Rs.2,14,16,735/-.

Reply to demand notice was issued by the Corporate Debtor on 28.09.2022.

Section 9 application was filed on 29.11.2023. When the application came

for consideration, Corporate Debtor raised preliminary objection on the

point of limitation. The Adjudicating Authority heard both the parties and

directed parties to file notes on point of limitation. Both the parties filed

their notes on point of limitation and Adjudicating Authority after hearing

both the parties, by impugned order held that petition under Section 9 is

within the limitation and the preliminary objection was rejected. Aggrieved

by the said order, this Appeal has been filed.

3. We have heard Shri Anil Kaushik, Learned Senior Counsel for the

Appellant and Shri Avneesh Arputham, Learned Counsel for the

Respondent.

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 3

4. Learned Senior Counsel for the Appellant challenging the impugned

order submits that the Adjudicating Authority committed error in holding

that Section 9 application is not barred by limitation. It is submitted that

the claim of the Operational Creditor was based on invoices from January

2018 to August 2018 which invoices were to be paid within 3 days. It is

submitted that the Operational Creditor has pleaded that the last payment

extend the period of limitation which payment was made on 26.08.2019

whereas there being no running account between the parties the last

payment cannot extend the limitation within the meaning of Section 19 of

the Limitation Act. It is submitted that Section 19 of the Limitation Act

requires two conditions to be fulfilled namely that payment was made within

the prescribed period of limitation and it must be acknowledged by some

form of writing. The last payment made cannot be held to be in accordance

with Section 19 of the Limitation Act permitting extension of limitation. It is

submitted that the claim based on invoices is covered by Article 137 of the

Limitation Act and the last date of payment is not relevant and cannot be

relied by the Adjudicating Authority for giving benefit of Section 19 of the

Limitation Act. Counsel for the Appellant in support of his submissions

placed reliance on judgment of the Hon'ble Supreme Court in "Shanti

Conductors Private Limited vs. Assam State Electricity Board and

Ors.- (2019) 19 SCC 529" and four judgments of this Tribunal.

5. Learned Counsel for the Respondent refuting the submissions of the

Appellant submits that the period of limitation would begun to run from the

date of default which would be 26.08.2019 when the last payment was

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 4

made by the Corporate Debtor to the Operational Creditor. It is submitted

that it is an admitted fact that the last payment was made by the Corporate

Debtor on 26.08.2019 by bank transfer. The last payment was well within

the period of limitation and there is acknowledgment by the Corporate

Debtor which is reflected in the reply dated 28.09.2022 to the demand

notice. It is submitted that both the conditions under Section 19 of the

Limitation Act are fulfilled in the present case. The payment by bank

transfer is also made on instructions by the Corporate Debtor, hence, the

bank transfer which is on the instructions of the Corporate Debtor is also

an acknowledgment within the meaning of Section 19 and any view of the

matter acknowledgment in writing by the Corporate Debtor is reflected in

the reply to the demand notice and it is well settled that acknowledgment

which was subsequently made can also be relied for purposes of Section 19

of the Limitation Act. Section 9 application was filed on 29.11.2023 and

giving the benefit of suo motu order of the Hon'ble Supreme Court in Suo

Moto Writ Petition (C) No.3 of 2020, the period of limitation for filing Section

9 would have expired on 13.08.2024 and the application filed within the

said time is valid.

6. We have considered the submissions of the Counsel for the parties

and perused the record.

7. It is an admitted fact between the parties that invoices were raised

from January, 2018 to August 2018. The copy of ledger has also been

brought on the record which indicates that payments were made by the

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 5

Corporate Debtor from time to time. As per ledger, last payment was

received by the Operational Creditor on 26.08.2019 through bank receipt.

The only question which needs consideration is as to whether the

Operational Creditor was entitled for the benefit of Section 19 of the

Limitation Act to enable it to seek extension of time from 26.08.2019 i.e. the

last date of receipt of the payment. The Adjudicating Authority has treated

the date of default as 26.08.2019 which is a date of the last payment

receipt. In paragraph 9(ii), following has been observed by the Adjudicating

Authority:-

"ii. The second issue is whether the petition filed is within the period of limitation of three years.

The Ld. Counsel for the Respondent has raised a preliminary objection that under Article 137 of the Limitation Act of 1963, the petition is time-barred as the invoices were raised between the time period 03.01.2018 to 16.08.2018 by the Operational Creditor and the petition was filed on 04.01.2024. Thus, the period of limitation for filing the petition based on the last invoice dated 16.08.2018 expired in July 2023.

The period of limitation would commence when the default occurred. The Hon'ble NCLAT in the matter of In Style Fashion vs. Aditya Birla Fashion and Retail Limited, Company Appeal (AT) (Insolvency) No. 1679 of 2023, held that,

"12. .......... In view of the last payment having been made on 28.04.2017 as noted above the fresh period

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 6

of imitation would start from that date and the Operational Creditor was entitled for taking benefit of 3 years' period of limitation from the date of the last payment...."

Thus, the period of limitation would begin to run from the date of default, which would be 26.08.2019 when the last payment was made by the Corporate Debtor to the Operational Creditor.

In view of the Hon'ble Supreme Court's verdict in M.A. No. 21 of 2022 in MA No. 665 of 2021 in Suo Moto Writ petition (C) No. 3 of 2020 titled as "In Re:

Cognizance for Extension of Limitation" wherein the Hon'ble Supreme Court settled the law of limitation for all types of proceedings explicitly excluded the period from 15.03.2020 to 28.02.2022 for the purposes of calculation of any limitation period, for all cases irrespective of the type of case. In respect of the present matter, the petition could have been filed within a period of 1095 days beginning from the date of default i.e. 26.08.2019; out of which a total no. of 202 days has expired from 26.08.2019 till 15.03.2020. From 01.03.2022, the petitioner would get the remaining balance of 893 days, and the new date of expiration of the limitation would be 10.08.2024, which is calculated as below:

Date of default 26.08.2019 Extent of 202 days limitation expired till 15.03.2020 Exclusion period 15.03.2020- 28.02.2022 Balance limitation 893 days as available on

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 7

01.03.2022 893 days w.e.f. 10.08.2024 01.03.2022

8. The submission which has been pressed by Shri Kaushik is that the

condition for extension of limitation as statutory prescribed under Section

19 of the Limitation Act are not attracted in the present case. Section 19 of

the Limitation Act provides as follows:-

"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. Explanation.--For the purposes of this section,--

(a) where mortgaged land is in the possession of the mortgagee, the receipt of the rent or produce of such land shall be deemed to be a payment;

(b) "debt" does not include money payable under a decree or order of a court."

9. Counsel for the Appellant has relied on the judgment of the Hon'ble

Supreme Court in "Shanti Conductors Private Limited" (supra). Shanti

Conductors was a case where the Hon'ble Supreme Court had occasion to

examine Section 19 of the Limitation Act. Considering Section 19 of the

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 8 Limitation Act, following was observed by the Hon'ble Supreme Court in

Paragraphs 15 and 16:-

"15. Order 7 Rule 6 uses the words "the plaint shall show the ground upon which exemption from such law is claimed". The exemption provided under Sections 4 to 20 of the Limitation Act, 1963 are based on certain facts and events. Section 19, with which we are concerned, provides for a fresh period of limitation, which is founded on certain facts i.e. (i) whether payment on account of debt or of interest on legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy, (ii) an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment.

16. We may notice the judgment of this Court dealing with Section 20 of the Limitation Act, 1908, which was akin to present Section 19 of the Limitation Act, 1963. In Sant Lal Mahton v. Kamla Prasad [Sant Lal Mahton v. Kamla Prasad, 1951 SCC 1008 : AIR 1951 SC 477] , this Court held that for applicability of Section 20 of the Limitation Act, 1908, two conditions were essential that the payment must be made within the prescribed period of limitation and it must be acknowledged by some form of writing either in the handwriting of the payer himself or signed by him. This Court further held that for claiming benefit of exemption under Section 20, there has to be pleading and proof. In paras 9

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 9

and 10, the following has been laid down : (AIR p.

479) "9. It would be clear, we think, from the language of Section 20, Limitation Act, that to attract its operations two conditions are essential : first, the payment must be made within the prescribed period of limitation and secondly, it must be acknowledged by some form of writing either in the handwriting of the payer himself or signed by him. We agree with the Subordinate Judge that it is the payment which really extends the period of limitation under Section 20, Limitation Act; but the payment has got to be proved in a particular way and for reason of policy the legislature insists on a written or signed acknowledgment as the only proof of payment and excludes oral testimony. Unless, therefore, there is acknowledgment in the required form, the payment by itself is of no avail. The Subordinate Judge, however, is right in holding that while the section requires that the payment should be made within the period of limitation, it does not require that the acknowledgment should also be made within that period. To interpret the proviso in that way would be to import into it certain words which do not occur there. This is the view taken by almost all the High Courts in India and to us it seems to be a proper view to take. (See Mohd. Moizuddin Mia v. Nalini Bala Devi [Mohd. Moizuddin Mia v. Nalini Bala Devi, 1937 SCC OnLine Cal 20 : AIR 1937 Cal 284 : ILR (1937) 2 Cal 137] ; Lal Singh v. Gulab Rai [Lal Singh v. Gulab Rai, 1932 SCC OnLine All 265 : ILR (1933) 55 All 280] , Venkata Subbhu v. Appu

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 10

Sundaram [Venkata Subbhu v. Appu Sundaram, ILR (1894) 17 Mad 92] , Ram Prasad Babu v. Mohan Lal Babu [Ram Prasad Babu v. Mohan Lal Babu, 1922 SCC OnLine MP 10 : AIR 1923 Nag 117] and Vishwanath Raghunath Kale v. Mahadeo Rajaram Saraf [Vishwanath Raghunath Kale v. Mahadeo Rajaram Saraf, 1933 SCC OnLine Bom 3 : ILR (1933) 57 Bom 453] .)

10. ... If the plaintiff's right of action is apparently barred under the statute of limitation, Order 7 Rule 6, Civil Procedure Code makes it his duty to state specifically in the plaint the grounds of exemption allowed by the Limitation Act, upon which he relies to exclude its operation; and if the plaintiff has got to allege in his plaint the facts which entitle him to exemption, obviously these facts must be in existence at or before the time when the plaint is filed; facts which come into existence after the filing of the plaint cannot be called in aid to revive a right of action which was dead at the date of the suit. To claim exemption under Section 20, Limitation Act the plaintiff must be in a position to allege and prove not only that there was payment of interest on a debt or part-payment of the principal, but that such payment had been acknowledged in writing in the manner contemplated by that section."

10. There can be no two opinions to the law declared by the Hon'ble

Supreme Court in the above judgment. Two conditions need to be fulfilled

for extending the benefit of Section 19 of the limitation which are:

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 11

(i) Whether payment on account of debt or of interest on legacy is

made before the expiration of the prescribed period by the person

liable to pay the debt or legacy;

(ii) an acknowledgment of the payment appears in the handwriting

of, or in a writing signed by, the person making the payment.

11. In the present case, there is no dispute regarding fulfilment of

condition (i) as noted above. Invoices were from January 2018 to August

2018 and last payment was made on 26.08.2019 i.e. well within period of 3

years from date when payment under invoices fell due. The bone of

contentions between the parties is regarding fulfilment of condition (ii) i.e.

whether there is an acknowledgment of the payment appears in the

handwriting of, or in writing signed by, the person making the payment.

12. We look into the ledger which is part of the demand notice dated

16.09.2022 with regard to payment dated 26.08.2019 particulars mentioned

are "bank receipt". The demand notice was replied by the Corporate Debtor

vide reply dated 28.09.2022. In paragraph 3 of the reply, the factum of last

payment on 26.08.2019 is admitted fact. In paragraph 3, following has been

stated:-

"3. In any event, last transaction involving supply of goods had taken place on 16.08.2018, while the last payment towards price of goods was made on 26.08.2019"

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 12

13. We also need to notice judgments of this Tribunal which have been

relied by the Appellant. Appellant has placed reliance on the judgment of

this Tribunal on "S.M. Ghogbhai vs. Schedulers Logistics India Pvt.

Ltd.- 2022 SCC OnLine NCLAT 216". In the above case, the question of

limitation for filing Section 9 application came for consideration. The

Operational Creditor in the above case has claimed that both the parties

were maintaining a running account, hence, the limitation shall be governed

by Article 1 of the Limitation Act, 1963. The question which came for

consideration has been noticed in paragraph 12 of the judgment which is as

follows:-

"12. The question to be considered in the present case is as to whether Appellant can take benefit of Article 1 of the Limitation Act, 1963. Hon'ble Supreme Court in the matter of 'B.K. Educational Services Pvt. Ltd. v. Parag Gupta' (2019) 11 SCC 633 after considering the provisions of IBC and the Limitation Act had laid down that for filing application under Section 7 and 9, it is Article 137 which is attracted. In Paragraph 42 of the Judgment, following has been laid down:

"42. It is thus clear that since the Limitation Act is applicable to applications filed under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted. "The right to sue", therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 13

and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application."

14. This Tribunal ultimately in paragraphs 15 and 16 held that Section 9

application is not to be governed by Article 1 of the Limitation Act rather

limitation shall be computed as per Article 137. In paragraphs 15 and 16,

following was held:-

"15. In the present case, the Appellant has placed reliance on Article 1 of the Limitation Act which we have extracted above. A similar provision akin to Article 1 of the Limitation Act came for consideration before the Hon'ble Supreme Court in Hindustan Forest Company case. Article 1 is in Part-I of the Schedule of the Limitation Act dealing with suits, under the "suit relating to accounts". The Application filed under Section 9 by the Appellant cannot be said to be a suit relating to accounts.

16. We have noticed the contents of the Application under Section 9 which have been brought on record. The Ledger of Operational Creditor has been brought on record including the Bank Statement which clearly mentions that last payment received by the Appellant was on 26th September, 2016. From the last payment, the Application could have been filed within three years. Application under Section 9 filed by the Appellant was on the basis of 174 invoices as has been noticed by the Adjudicating Authority in the Impugned Order. We are satisfied that for the limitation for filing Section 9 application it is Article

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 14

137 of the Limitation Act, 1963 which is attracted. Under Article 137, time from which period begins to run is "when the right to apply accrues" the right to apply accrues when invoices issued by the Appellant to the Corporate Debtor were not paid. Invoices on the basis of which payment is claimed are more than three years earlier from the date of filing of Section 9 Application which is the basis for rejection of the Application of the Appellant by the Adjudicating Authority. We are not persuaded with the submissions of Learned Counsel for the Appellant that present is the case where Article 1 is applicable and limitation should be counted from 31st March, 2017. Limitation as per Article 137 will begin to run from the date when the right to apply accrues and the Application filed on the basis of 174 invoices and all invoices being prior to much before three years period from filing of Section 9 Application, the Adjudicating Authority has rightly rejected the Application. We do not find any merit in the Appeal, the Appeal is dismissed."

15. It is further relevant to notice that in the above judgment of this

Tribunal in paragraph 16 has held:-

".......From the last payment, the Application could have been filed within three years."

16. Thus, the above observations do support the application to have been

filed within three years from the last payment.

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 15

17. In the present case, the question as to whether Article 1 or Article

137 of the Limitation Act shall governed Section 9 application has been

answered by the Adjudicating Authority in paragraph 9(i) holding that

Section 9 application shall be governed by Article 137 hence, the above

judgment of this Tribunal does not help the Appellant in the present case.

18. The next judgment relied by the Appellant is judgment of this

Tribunal in "Ramdas Dutta vs. IDBI Bank Ltd. & Anr- 2023 SCC OnLine

NCLAT 1306". In the above case, this Tribunal noted the fact that the

application under Section 7 was filed on 18.10.2019 whereas the date of

default was 31.08.2013 and period of three years expired on 31.08.2016.

The case of the Operational Creditor was based on date of default as

31.03.2013 and payment of Rs.2.75 lakhs on 29.03.2017. The argument

was raised on the basis of payment of Rs.2.75 lakhs on 29.03.2017.

19. This Tribunal in "Ramdas Dutta" (supra) has held that no advantage

can be given to the bank entry dated 29.03.2017. It is useful to notice

paragraphs 20, 21 and 22 of the judgment which is as follows:-

"20. In so far as, the issue regarding the payment of Rs. 2.75 lakhs on March 29, 2017 by the appellant in their account is concerned, it has now been well- settled by the three-Judge Bench of the hon'ble Supreme Court in the case of Shanti Conductors P. Ltd. v. Assam State Electricity Board [(2020) 2 SCC

677.] , that section 19 would come into play if the payment is acknowledged in the handwriting of, or in

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 16

a writing signed by the person making the payment. In this regard, paragraphs 15 and 16 of the judgment is reproduced as under (see page 684 of [2020] 2 SCC):

"15. Order 7, rule 6 uses the words 'the plaint shall show the ground upon which exemption from such law is claimed'. The exemption provided under sections 4 to 20 of the Limitation Act, 1963 are based on certain facts and events. Section 19, with which we are concerned, provide for a fresh period of limitation, which is founded on certain facts, i.e., (i) whether payment on account of debt or of interest on legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy,

(ii) an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment.

16. We may notice the judgment of this court dealing with section 20 of the Limitation Act, 1908, which was akin to present section 19 of the Limitation Act, 1963. In Sant Lal Mahton v. Kamla Prasad [1951 SCC 1008 : AIR 1951 SC 477.] , this court held that for applicability of section 20 of the Limitation Act, 1908, two conditions were essential that the payment must be made within the prescribed period of limitation and it must be acknowledged by some form of writing either in the handwriting of the payer himself or signed by him. This court further held that for claiming benefit of exemption under section 20, there has to be pleading and proof. In paragraphs 9 and 10, following has been laid down:

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 17

'9. It would be clear, we think, from the language of section 20 of the Limitation Act, that to attract its operation two conditions are essential : first, the payment must be made within the prescribed period of limitation and secondly, it must be acknowledged by some form of writing either in the handwriting of the payer himself or signed by him. We agree with the subordinate judge that it is the payment which really extends the period of limitation under section 20 of the Limitation Act; but the payment has got to be proved in a particular way and for reason of policy the Legislature insists on a written or signed acknowledgment as the only proof of payment and excludes oral testimony. Unless, therefore, there is acknowledgment in the required from, the payment by itself is of no avail. The subordinate judge, however, is right in holding that while the section requires that the payment should be made within the period of limitation, it does not require that the acknowledgment should also be made within that period. To interpret the proviso in that way would be to import into it certain words which do not occur there. This is the view taken by almost all the High Courts in India and to us it seems to be a proper view to take (See Muhammad Moizuddin Mia v. Nalini Bala Devi [AIR 1937 Cal 284; ILR (1937) 2 Cal 137.] , Lal Singh v. Gulab Rai [ILR (1933) 55 All 280.] , Venkata Subbhu v. Appu Sundaram [ILR (1894) 17 Mad

92.] Ram Prasad Babu v. Mohan Lal Babu [AIR 1923 Nag 117.] and Vishwanath Raghunath Kale v. Mahadeo Rajaram Saraf [ILR (1933) 57 Bom

453.] ).

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 18

10.... If the plaintiff's right of action is apparently barred under the statute of limitation, Order 7, rule 6 of the Civil Procedure Code makes it his duty to state specifically in the plaint the grounds of exemption allowed by the Limitation Act, upon which he relies to exclude its operation; and if the plaintiff has got to allege in his plaint the facts which entitle him to exemption, obviously these facts must be in existence at or before the time when the plaint is filed; facts which come into existence after the filing of the plaint cannot be called in aid to revive a right of action which was dead at the date of the suit. To claim exemption under section 20 of the Limitation Act, the plaintiff must be in a position to allege and prove not only that there was payment of interest on a debt or part payment of the principal, but that such payment had been acknowledged in writing in the manner contemplated by that section...."

21. Therefore, no advantage can be given to the bank of the entry dated March 29, 2017.

22. As regards the one-time settlement, it has come on record that the one-time settlement has occurred much after the expiry of period of limitation, therefore, it cannot be taken into consideration for the purpose of section 18 to extend the period of limitation."

20. Counsel for the Appellant has relied on the judgment of this Tribunal

in "Laxmi Trading Corporation vs. Hindustan Construction Company

Ltd.- 2024 SCC OnLine NCLAT 282". The above was a case where this

Tribunal rejected the argument that for Section 9 application, Article 1 of

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 19

the Limitation Act shall not be applicable. In paragraph 22 of the judgment,

following was held:-

"22. It is well settled that the period of limitation for application under Section 9 of the IBC, would be governed by Article 137 of the Limitation Act, 1963. The claim of the Operational Creditor that they were having running account and are covered under Article 1 of the Limitation Act cannot be accepted. Since their claim of a running account cannot be accepted, therefore, the limitation does not get extended as claimed. Accordingly, the time from which period of limitation begins is when the right to apply accrues and right to apply accrues when the invoices were to be paid. In the instant case in most of the claims, as noted by the Adjudicating Authority they are time barred. Specifically, out of 234 invoices 224 are ex- facie time barred and for the remaining 10 invoices the total does not make it more than the threshold of Rupees one crore and therefore the claims of the Operational Creditor cannot be accepted. Accordingly, the Appeal is dismissed. No orders as to the cost."

21. Another judgment relied by the Appellant is "Murphy Steel vs.

Gujarat Wedge Wire Screens Ltd.- (2024) SCC OnLine NCLAT 290" was

a case where this Tribunal held that invoices were more than three years old

and therefore, time barred except one invoice which was within time did not

satisfy the threshold. Following was held in paragraph 6:-

"6. Having perused the material on record and after hearing the submissions of learned counsel for the

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 20

appellant, we also do not find any document/agreement between the two parties which evidence running account payment underlying their business operations. In the absence of any documentary evidence which provides foundational basis to the claim of the appellant that there was a running account, the reliance placed on the judgment of this Tribunal in Abhinandan Jain v. Tanaya Enterprises P. Ltd. [2021 SCC OnLine NCLAT 102.] in Company Appeal (AT) (Insolvency) No. 1017 of 2020 does not come to the aid of the appellant. Furthermore, on perusal of the reply to the section 8 demand notice sent by the corporate debtor on January 7, 2020, as placed at pages 127 to 136 of appeal paper book it comes to our notice that it has been categorically denied that any operational debt was due qua the operational creditor. Moreover, it was also stated in the said reply that the operational creditor has failed to explain as to why he continued to supply material if his payment was pending for nearly 8 years. The same contention has been reiterated by the corporate debtor in their reply affidavit to section 9 application that the invoices were more than three years old and therefore time- barred except for one invoice dated January 7, 2017 which carried invoice value of Rs. 8,849 only which did not satisfy the threshold limit of Rs. 1 lakh as prescribed under section 4 of the Insolvency and Bankruptcy Code to trigger the corporate insolvency resolution proceedings. We thus do not find any merit in the argument advanced by learned counsel for the appellant that since the last invoice did not attract

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 21

limitation, the other 26 invoices which have been submitted along with it also escapes the bar of limitation on the unsubstantiated pretext of running account of payments."

22. The above judgment does not help the Appellant in the present case.

23. The judgment of the Hon'ble Supreme Court in "Shanti Conductors

Private Limited" (supra) which we have noted above where the Hon'ble

Supreme Court has noted with approval the earlier law laid down by the

Hon'ble Supreme Court in AIR 1951 SC 477- "Sant Lal Mahton vs. Kamla

Prasad" in which judgment the Hon'ble Supreme Court held that while

requirement is that payment should be made within the period of limitation.

However, it does not require that acknowledgment should also be made

within that period.

24. In the present case, last payment was admittedly made on 26.08.2019

i.e. within the period of three years and there is also acknowledgment by the

Corporate Debtor in writing which is reflected from the reply to demand

notice as noted above. When there is clear acknowledgment by the corporate

debtor of last payment made on 26.08.2019 which payment was within the

period of three years, we are of the view that the operational creditor was

clearly entitled for the benefit of extension of limitation under Section 19 of

the Limitation Act and both the conditions which are required to be fulfilled

under Section 19 were fulfilled. We, thus, do not find any error in the order

of the Adjudicating Authority rejecting the objection of the corporate debtor

that application under Section 9 was barred by time. Giving the benefit of

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024 22

last date of payment on 26.08.2019, the application was well within

limitation. We do not find any merit in the Appeal. The Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical) New Delhi

Anjali

Company Appeal (AT) (Insolvency) No. 1928 of 2024 & I.A. No.7115 of 2024