Tudor India Private Limited vs Servotech Power Systems Limited

IN THE MATTER OF: Tudor India Pvt. Ltd. ...Appellant

Versus

Servotech Power Systems Pvt. Ltd. ...Respondent

Present: For Appellant: Mr. Varun Kumar, Mr. Kushal Bansal, Mr. Yashish Chandra and Mr. Ramakant Rai, Advocates. For Respondent:

ORDER

(Virtual Mode)

16.02.2022: Heard learned counsel for the Appellant. This Appeal has

been filed against judgment and order dated 24.12.2021 by which the

Adjudicating Authority (National Company Law Tribunal), New Delhi Bench

has dismissed the application filed by the Appellant under Section 9 of the

Code.

2. The Appellant's case is that he was an Operational Creditor and there

was unpaid amount pertaining to five invoices dated 10.01.2014, 29.10.2013,

29.10.2013, 31.10.2013 and 01.11.2013. The payment of last invoice was due

on 10.04.2014. In Application under Section 9 an aggregate amount of

Rs.87,97,700/- was claimed. The Appellant received the last payment on

31.03.2014. The Application under Section 9 was filed on 26.03.2021. The

Adjudicating Authority took the view that unpaid invoices claimed is on

10.04.2014 and last date of payment is 31.03.2014 from which limitation

expired on 30.03.2017 and there are no events has been placed to claim any -2-

further extension of limitation. The learned Adjudicating Authority rejected

the application as barred by time.

3. Learned counsel for the Appellant, Mr. Varun Kumar challenging the

order of the Adjudicating Authority contends that the present was the case

which ought not to have been dismissed on the ground of limitation. He

submits that a legal notice dated 25.04.2014 was sent to the Corporate Debtor

for outstanding dues for sale of solar batteries where it was stated that

payment may be made within seven days from the date of legal notice failing

which they will not be left with no other alternative but to take legal recourse

of recovery of the said amount. It is submitted that in the Reply to the legal

notice which was sent on 26.05.2014 it was mentioned that Appellant should

furnish a Bank Guarantee of the 10% of the total sales and in the event bank

guarantee is not furnished same will be defended upon the cost of the

Appellant, if any legal action is taken. It is submitted that in view of the

aforesaid Reply, the Appellant waited for warranty period of three years and

thereafter issued notice under Section 8 and filed application under Section 9.

4. It is submitted that there were sufficient reasons for condonation of

delay and the Adjudicating Authority erred in observing that limitation benefit

under Section 5 cannot be granted since no application has been filed for

condonation of delay. It is submitted that Section 5 benefit should have been

granted even if no application has been filed.

5. We have considered submissions of learned counsel for the Appellant

and perused the record.

Company Appeal (AT) (Insolvency) No. 148 of 2022 -3-

6. The Part IV of the application under Section 9 mentions the details of

the unpaid invoices and the payment due date. It is useful to extract part of

the column 1 of the Part IV, which is to the following effect:-

"Date from which the debt fell due:

The debt in respect of each Unpaid Invoice fell due on the

following dates:

S. No. Invoice No. Payment due date 1. 13002001 27.01.2014 2. 13002002 27.01.2014 3. 13002024 29.01.2014 4. 13002043 30.01.2014 5. 13000115 28.02.2014 6. 13000657 10.04.2014

7. Payment due date of the last invoice is 10.04.2014 and admittedly no

payment has been made after 10.04.2014. The right to sue accrued to the

Appellant from the last payment made i.e. 31.03.2014. At best the limitation

will be three years thereafter. The submission of the learned counsel for the

Appellant that since response to the legal notice, which was issued by he

Appellant, they have asked for 10% bank guarantee it shall auto extend the

limitation does not commend us. Legal notice has been brought on record at

Annexure 10. Para 8 of the notice is to the following effect:-

"(8) Our client may also bring to your notice that only

the condition which was attached to supply of solar

batteries to you is about payment terms in accordance with

Company Appeal (AT) (Insolvency) No. 148 of 2022 -4-

which you were obliged to make payment within 30 days

and since you have difficult time, our client co-operated with

and kept supporting you and now when final payments is

to be made, you have sought to take the help of lame excuse

providing Bank Guarantee, which is not acceptable to our

client. It was never a part of agreement between you and

our client and our client has again instructed us to require

you to make payment standing at the foot of account as

stated above within 7 days from the date hereof, failing

which our client will be left with no other alternative, but to

take legal recourse for recovery of the said amount with

interest as stated above, which please note."

8. The said notice was responded by the Corporate Debtor on 26.05.2014

and in the last portion of the Reply following has been stated:-

"Hence, as my client is an honest businessman/entity and

does not want to get indulged in any sort of litigation,

hereby suggest your client to furnish a Bank Guarantee of

10% of the total sales as orally committed to my client and

do not pull my client in any sort of frivolous litigation. If, in

case, your client do so then it is needless to mention that the

same will be defended upon the cost of your client."

9. The mere fact that the Corporate Debtor has asked to submit 10% Bank

Guarantee shall not in any manner arrest running of limitation which began

when amount became due and payable and not paid.

Company Appeal (AT) (Insolvency) No. 148 of 2022 -5-

10. In the present case, according to own documents filed by the Appellant,

that amount became due on 10.04.2014, which is mentioned in the Column

1 Form IV of the Application which was filed by the Appellant itself. There are

no materials on the record, as has been rightly observed by the Adjudicating

Authority, for granting any extension of limitation. The submission of the

learned counsel for the Appellant is that there being no application for

condonation of delay under Section 5, the court has powers to condone delay

in appropriate case there being sufficient cause. The Appellant has not

brought on record any material or made a case to show sufficient cause for

condonation of delay within Section 5. We fail to see any relevant material to

exercise our jurisdiction under Section 5 of the Limitation Act for condoning

the delay. The Application under Section 9 filed by the Appellant was rightly

rejected by the Adjudicating Authority as barred by time. We see no reason to

take any other view. The Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Dr. Ashok Kumar Mishra] Member (Technical) Archana/nn

Company Appeal (AT) (Insolvency) No. 148 of 2022