National Company Law Appellate Tribunal
Tudor India Private Limited vs Servotech Power Systems Limited on 16 February, 2022
Author: Ashok Bhushan
Bench: Ashok Bhushan
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Company Appeal (AT) (Insolvency) No. 148 of 2022
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.
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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