Style Fashion Vs Aditya Birla Fashion and Retail Limited (NCLAT Delhi)
Summary: NCLAT Delhi dismissed the Operational Creditor’s appeal against rejection of its Section 9 IBC application seeking CIRP against Aditya Birla Fashion and Retail Ltd., while disagreeing with the NCLT’s finding that the application was barred by limitation. The Operational Creditor had acted as franchisee and commission agent under Planet Fashion and Allen Solly Agency Agreements. Following closure of the showrooms on 02.02.2016, disputes arose regarding outstanding commission and claims for salvageable and non-salvageable assets. The Operational Creditor issued a Section 8 demand notice on 07.08.2019 claiming operational debt of Rs.1.05 crore and filed the Section 9 application on 01.10.2019.
Though the demand notice had inadvertently stated the date of default as 27.08.2016, NCLAT noted that part-payment of Rs.51,823 was made on 28.04.2017. The fresh limitation period therefore commenced from the date of the last payment, making the Section 9 application timely. Relying on B.K. Educational Services Pvt. Ltd. v. Parag Gupta, NCLAT also held that the Limitation Act applies equally to Sections 7 and 9 applications. On merits, however, NCLAT found a pre-existing dispute regarding computation of commission and claims under the Agency Agreements. The Corporate Debtor relied on a revised commission arrangement allegedly recorded at a meeting dated 28.08.2012, while the Operational Creditor alleged that the minutes were fabricated.
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