Sagar Business Private Limited Vs Sidhartha Construction And Private Limited (NCLT Cuttack)
Conclusion: An application filed under Section 9 was within limitation, as the part payment made on 22.11.2016 extended the limitation period under Section 19 of the Limitation Act, 1963. Further, statutory demand notice under Section 8 of the IBC had been duly served and no pre-existing dispute was raised by the Corporate Debtor. Consequently, the petition was admitted, moratorium under Section 14 of the IBC was declared and Interim Resolution Professional was appointed to conduct the Corporate Insolvency Resolution Process of corporate debtor.
Held: Sagar Business Private Limited (Operational Creditor) had supplied TMT bars to the Sidhartha Construction and Trading Private Limited (Corporate Debtor) in April 2015. Despite repeated demands, payments remained outstanding. Operational Creditor sought to initiate Corporate Insolvency Resolution Process against Corporate Debtor/Respondent by invoking the provisions of Section 9 of IBC, 2016 read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter “Adjudicating Authority Rules”) for an Operational Debt of Rs. 18,99,474/- (Eighteen Lakhs Ninety-Nine Thousand Four Hundred and Seventy-Four Rupees Only). A Section 8 demand notice was issued. The Corporate Debtor did not respond. Initially, the application under Section 9 was dismissed on 26.07.2022 as being barred by limitation (default date 06.05.2015; application filed 01.11.2019). On appeal, the Hon’ble NCLAT (10.09.2024) set aside the dismissal, holding that a part payment of ₹2,00,000/- made on 22.11.2016 extended the limitation under Section 19 of the Limitation Act, 1963. Hence, the application (filed before 22.11.2019) was within limitation and remanded for fresh adjudication. Operation creditor contended that payment of ₹2,00,000/- was by cheque on 22.11.2016 extended limitation and section 8 demand notice was duly served on 17.09.2018 (postal receipt & tracking report produced). Respondent (Corporate Debtor) contended that application was barred by limitation since default date was 06.05.2015, section 8 notice was not served and invoices were fabricated; cheques allegedly never issued. It was held that relying on B.K. Educational Services and Babulal Vardharji Gurjar to argue limitation and following NCLAT’s ruling, limitation was to be computed from 22.11.2016, making the application (filed 01.11.2019) within time. Proof of service of Section 8 notice on 17.09.2018 was accepted. No pre-existing dispute was raised before issuance of demand notice. Liability exceeding ₹1 lakh stood established. The subsequent enhancement of pecuniary jurisdiction to ₹1 crore (24.03.2020 notification) had no retrospective effect. Therefore, section 9 petition was admitted, moratorium under Section 14 IBC was imposed, Interim Resolution Professional (IRP) was appointed. Applicant directed to deposit ₹1,00,000/- towards CIRP costs. IRP directed to make public announcement, invite claims, manage the Corporate Debtor as a going concern, and file progress reports.
