MCC Concrete Vs Northway Spaces Ltd. - Extension of Limitation under Section 19 of The Limitation Act, 1963.

NCLAT (22.01.2021) in MCC Concrete Vs Northway Spaces Ltd. [Company Appeal (AT) (Ins) No. 527 of 2020] held that;

• The ledger account is a running account which shows that on 05/11/2015, the respondent has made payment of Rs. 12 lacs to appellant and from this date of acknowledgement within three years, that is on 15/01/2018 the application is filed. Thus, the application is within period of limitation. We agree with the finding of the Adjudicating Authority that the application is filed within the period of limitation.

Excerpts of the order;

This Appeal has been preferred by the Appellant M/s MCC Concrete (Operational Creditor) against the order dated 12/02/2020 passed by the Adjudicating Authority (National Company Law Tribunal), Ahmadabad Bench, Ahmadabad. Whereby the Application preferred by the Appellant under Section 9 of the Insolvency and Bankruptcy Code (In Short I&B Code) has been rejected.

# 2. Brief facts of this case are that the Operational Creditor (Appellant herein) has supplied ready MCC Concrete at various sites of the Corporate Debtor (Respondent herein) upon placing purchase order by the Corporate Debtor. Pursuant thereto the Operational Creditor had issued invoices upon the Corporate Debtor along with delivery challans. The delivery challans are signed and stamped by the Corporate Debtor. The Corporate Debtor was earlier known as Mayfair Spaces Ltd. Hence, all the invoices and delivery challans were issued in the name of Mayfair Spaces Ltd. As per ledger account the Operational Creditor has supplied goods to the Corporate Debtor for the total sum of Rs. 02,29,94,288/-. Whereas, the Corporate Debtor has made part payment of Rs. 02,09,30,948/-. Even after several email communications, the Corporate Debtor has not made any payment for balance amount of Rs. 20,63,340/-. Therefore on 11/02/2017 the Operational Creditor has sent a demand notice to the Corporate Debtor. Despite receipt of the notice, the Corporate Debtor has neither replied to the notice nor made any payment. Therefore, the Operational Creditor has filed an Application under Section 9 of the I&B Code before the Adjudicating Authority for initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor.

# 4. After hearing the parties, Ld. Adjudicating Authority held that Operational Creditor is maintaining a running account of the Corporate Debtor and as per the ledger account, the last payment of Rs. 12 lacs were made by the Corporate Debtor on 05/11/2015 and the Application is filed on 15/01/2018. Thus, the application is within limitation. Ld. Adjudicating Authority held that on 15/07/2013 and 18/10/2013 no order was placed by the Corporate Debtor, therefore, the invoices dated 15/07/2013 and 18/10/2013 bearing nos. 661 and 360 have been issued erroneously. Therefore, the Corporate Debtor vide its letter dated 16/10/2013 and 21/10/2013 sent back the invoices stating that the Corporate Debtor has no connection with Mayfair Corporate Park to whom the goods were delivered. On this basis it is held that there is pre-existing dispute regarding the goods supplied and invoices raised thereof. Hence, rejected the application.

# 9. The Hon’ble Supreme Court in Mobilox Innvations Pvt. Ltd. Vs. Kirussa Software Pvt. Ltd. 2017 1 SCC Online SC 353 held as to what are facts to be examined by the Adjudicating Authority while examining an Application under Section 9 of I & B Code which is as follows: -

• “34. Therefore, the adjudicating authority, when examining an application under Section 9 of the Act will have to determine: 

- (i) Whether there is an “Operational Debt” as defined exceeding Rs. 1 Lakh? (See Section 4 of the Act) 

- (ii) Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid? And

- (iii) Whether there is existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute? 

• If any one of the aforesaid conditions is lacking, the application would have to be rejected. Apart from the above, the adjudicating authority must follow the mandate of Section 9, as outlined above, and in particular the mandate of Section 9(5) of the Act, and admit or reject the Application, as the case may be, depending upon the factors mentioned in Section 9(5) of the Act.”

# 17. From the above referred ledger account maintained by the respondent we hold that as on 31/03/2017, operational debt Rs. 19,89,130/- was due and payable and has not yet been paid.

# 21. As we have noted that the appellant is relying on the ledger account maintained by the respondent. In this ledger account the amount of disputed invoices are not shown. Therefore, we hold that there is no dispute between the parties in regard to the aforesaid invoices. Thus, we do not agree with the finding of ld. Adjudicating Authority that there is a pre-existing dispute

between the parties.

# 22. Now, we have considered the objection of ld. counsel for the respondent that the claim is barred by limitation. The ledger account is a running account which shows that on 05/11/2015, the respondent has made payment of Rs. 12 lacs to appellant and from this date of acknowledgement within three years, that is on 15/01/2018 the application is filed. Thus, the application is within period of limitation. We agree with the finding of the Adjudicating Authority that the application is filed within the period of limitation.

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The Limitation Act, 1963.

• # Section19. 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.

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Rajkumar Brothers And Production Private Limited Vs Harish Amilineni Shareholder and erstwhile Director of Amilionn Technologies Private Limited & Anr. - Insolvency Application rejected by NCLAT, CIRP cost to be borne by applicant

Supreme Court of India (22.01.2021) in Rajkumar Brothers And Production Private Limited Vs Harish Amilineni Shareholder and erstwhile Director of Amilionn Technologies Private Limited & Anr. [Civil Appeal No.4044 of 2020] upheld the orders of NCLAT and observed as under;

• The direction is in the nature of costs of the proceedings under Section 7 of the IBC, which have been found to be unsustainable in law. The Respondent having succeeded, cannot be saddled with the costs of the Corporate Insolvency Resolution Process (CIRP) initiated at the behest of the Appellant or with the fees of the Interim Resolution Professional (IRP). The direction does not warrant interference in appeal.

Excerpts of the order;

# 1. This appeal under Section 62 of the Insolvency and Bankruptcy Code, 2016 is against an order dated 10th August, 2020 passed by the National Company Law Appellate Tribunal (NCLAT), New Delhi allowing Company Appeal (AT) (Insolvency) No.212 of 2020 filed by the Respondent. 

# 2. The Appellant had filed a petition under Section 9 of the IBC before the National Company Law Tribunal (NCLT) Hyderabad, being CP(IB) No.737/9/HDB/2019. Notice on the said petition was issued by the NCLT on 21st November, 2019.

# 3. By an Order dated 9th January, 2020, the NCLT admitted the petition observing that the claim of the Appellant was undisputed. Aggrieved by the order dated 9th January, 2020, the Respondent filed above mentioned appeal before the NCLAT. By the order impugned in this appeal, the NCLAT has set aside the order of the NCLT, holding that there were pre-existing disputes between the Respondent and the Appellant. The aforesaid finding is based on various documents.

# 4. The NCLAT set aside the impugned order of the NCLT and dismissed the application of the appellant under Section 9 of the IBC. The Appellant has challenged the impugned order only to the extent of the direction in paragraph 8(C) thereof, which reads as follows:

• “The IRP/RP will place particulars regarding CIRP costs and fees before the Adjudicating Authority and the Adjudicating Authority after examining the correctness of the same will direct the Operational Creditor to pay the same in time to be specified by the Adjudicating Authority.”

# 5. The direction is in the nature of costs of the proceedings under Section 7 of the IBC, which have been found to be unsustainable in law. The Respondent having succeeded, cannot be saddled with the costs of the Corporate Insolvency Resolution Process (CIRP) initiated at the behest of the Appellant or with the fees of the Interim Resolution Professional (IRP). The direction does not warrant interference in appeal.

# 6. We find no grounds to interfere with the order dated 10th August, 2020 passed by the National Company Law Appellate Tribunal in Company Appeal (AT) (Insolvency) No.212 of 2020.

# 7. The Civil Appeal is accordingly dismissed.

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Ranjit Das & Ors. Vs. MSX Mall Pvt. Ltd - Delay in filing of claim during CIRP & Collection of rent by CD

NCLAT (07.01.2019) in Ranjit Das & Ors. Vs. MSX Mall Pvt. Ltd. [Company Appeal (AT) (Insolvency) No. 07 of 2019] held that;

• Another application CA 709/2018 has been filed by the RP praying for directions to entertain claims received late i.e. beyond the period of 90 days. This Bench is of the view that receipt of the late claims beyond the period of 90 days would not entitle the claimant to be part of the COC. However, a legitimate claim of an investor or creditor cannot be turned out or rejected till it is a point of no return. In our considered view this situation shall arise only after disbursal of the liquidated estate of the Corporate Debtor as even at the state of liquidation claims are invited.” 

Excerpts of the order;

07.01.2019─ The Appellant- ‘Resolution Professional’ has challenged the order dated 26th November, 2018 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench, which reads as follows:

• “Order

• Reply has been filed by the RP to CA 615/2018. The grievance stems from the fact that commercial space was rented out to Haldiram. This area was subsequently allotted to various buyers on receipt of full payment. The Corporate Debtor would then distribute the proportional rent to the various allottees/owners in possession in respect of their individual units from the total area of 9857.70 sq. feet leased out to Haldiram. The RP has collected the names of all the allottees/ owners in possession whose units are under lease to Haldiram. Since legally this is an amount of rent to be paid to the owners, for their units under lease to Haldiram It is prayed that the rent due to the various owners be kept outside the purview of the moratorium.

• We find merit in the arguments advanced by the lad. Counsel. The rent due from a lessee to the actual owner should not be a subject matter of resolution as the Corporate Debtor is only collecting it on behalf of the allottees who have paid full payment. Such an act, if permitted, would neither be legal nor just and equitable to the allottees who have invested in commercial properties to supplement their monthly income. It is therefore directed that any rent received from Haldiram or any other lessee which the Corporate Debtor has allotted for a purchase consideration will be out of the purview of Section 14(2) of the Code. The RP shall ensure that this amount is not used in any CIR process, but is kept for the time being in an escrow account maintained with a bank. After ascertaining the rent due to each allottees, the same shall be disbursed by the RP to them after prior approval of this Bench. 

• CA 615/2018 stands disposed off in terms of the above.

• Another application CA 709/2018 has been filed by the RP praying for directions to entertain claims received late i.e. beyond the period of 90 days. This Bench is of the view that receipt of the late claims beyond the period of 90 days would not entitle the claimant to be part of the COC. However, a legitimate claim of an investor or creditor cannot be turned out or rejected till it is a point of no return. In our considered view this situation shall arise only after disbursal of the liquidated estate of the Corporate Debtor as even at the state of liquidation claims are invited.” 

# 2. On hearing learned counsel for the parties, we find that the amount generator does not belong to the ‘Corporate Debtor’ which was collecting it on behalf of the others and, therefore, if the Adjudicating Authority has asked to release it to the concerned person, we are not inclined to interfere with the same. 

# 3. So far as the pending arbitration proceeding is concerned, the arbitration proceedings, if so pending may continue but the award, if any,passed by the Arbitral Tribunal against the ‘Corporate Debtor’ be not given effect during the period of ‘Moratorium’.

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SCI (15.11.2019) in CoC of Essar Steel India Limited vs. Satish Kumar Gupta & Ors.(Civil Appeal No. 8766-67 OF 2019) On delay in filing of a claim Hon’ble SCI observed as under; 

• # 67. For the same reason, the impugned NCLAT judgment in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority / Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. A successful resolution applicant cannot suddenly be faced with “undecided” claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove. For these reasons, the NCLAT judgment must also be set aside on this count.

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Supertech Township Project Ltd. Vs Inderpal Singh Khandpur HUF - CD to provide information about allottees for initiating class action.

 NCLAT (18.01.2021) in Supertech Township Project Ltd. Vs Inderpal Singh Khandpur HUF   [Company Appeal (AT) (Insolvency) No. 17 of 2021] held that;

• when the Corporate Debtor and the Regulator are under legal obligation to display the particulars in regard to allottees on their websites. No prejudice can be claimed by the Appellant on account of the direction in so far as the same relates to providing information in regard to allottee for limited purpose of enabling it to garner necessary support for initiating class action.

Excerpts of the order;

18.01.2021: The issue raised in this appeal preferred by the Corporate Debtor against impugned order dated 8th December, 2020 directing the Corporate to provide information about the 100 number of Allottees or 1/10th of total number of the Allottees of the project, whichever is less, excluding those with whom settlement has happened, is that such direction apart from being violative of the provisions of the ordinance and the direction of the Hon’ble Apex Court in Writ Petition (Civil) No. 26/2020 and allied matters directing maintenance of status quo with respect to pending applications is unsustainable also on the ground that requisite information has already been provided on the website of RERA.

# 2. After hearing Shri P. Nagesh, learned counsel representing the Appellant and Ms. Rashi Bansal, Advocate for the Respondent, we find that the impugned order does not adjudicate upon any right in regard to triggering of Corporate Insolvency Resolution Process. By merely directing the Corporate Debtor to provide information to the Respondent – Allottee to meet the threshold criteria to initiate the class action in the face of the ordinance laying such threshold limit, no legal right vested in the Appellant /Corporate Debtor can be said to have been infringed. In this age of transparency, knowledge and information revolution coupled with the fact that adequate information as required by the Respondent – Allottee is not displayed on the website of the Corporate Debtor, as emanating from the impugned order, we are of the considered opinion that the impugned order cannot be termed to be erroneous or unsustainable. In so far as the direction given by the Hon’ble Apex Court is concerned, it is in regard to initiation or continuance of Corporate Insolvency Resolution Process in the pending cases wherein status quo is directed to be observed. The order of Hon’ble Apex Court cannot be interpreted to hold that the requisite information for initiating class action by an allottee under Section 7 of the I&B Code to meet the threshold criteria laid down under the ordinance cannot be provided, more so when the Corporate Debtor and the Regulator are under legal obligation to display the particulars in regard to allottees on their websites. No prejudice can be claimed by the Appellant on account of the direction in so far as the same relates to providing information in regard to allottee for limited purpose of enabling it to garner necessary support for initiating class action.

# 3. In the given circumstance, while we find no merit in the appeal, we dispose off this appeal with direction that the Corporate Debtor will display the information in regard to the allottees with full particulars on its website within two weeks from today and that in the event Respondent – Allottee approaches the Appellant for providing necessary information, same shall be provided to the Allottee by the Appellant.

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