Case Title: S. M. Ghogbhai v. Schedulers Logistics India Pvt. Ltd
The National Company Law Appellate Tribunal Bench, comprising Justice Ashok Bhushan and Dr Alok Srivastava, while adjudicating in the matter, observed that there is no application of Article 1 of the Limitation Act, 1963, in regard to the petition filed by operational creditor and held that Article 1 of the Limitation Act, 1963, is not applicable to such petition under Section 9 of the IBC.
In this case, the appellant, S.M. Ghogbhai, and the respondent, Schedulers Logistics India Pvt. Ltd., were engaged in transport services. A demand notice dated March 8, 2019, was issued by the appellant under Section 8 of the Code to the respondent, claiming an outstanding amount of Rs. 76,04,050, which was refuted by the respondent as there was a denial of such dues. Thereafter, the appellant filed an application under Section 9 of the Code seeking CIRP of the respondent before the NCLT, Mumbai. However, NCLT Mumbai rejected the aforementioned application on the grounds that the invoices were time-barred. Thereafter, the appellant preferred an appeal before the NCLAT, New Delhi, against the order of the NCLT, Mumbai.
One of the primary issues, in this case, was to adjudicate upon the concern of whether Article 1 of the Limitation Act, 1963, would be applicable for the claim of outstanding dues under Section 9 of the Code.
The counsel on behalf of the appellant contended that the parties were having a running account, and, in the facts and circumstances of the case, the said application should be allowed as it is well beyond the limitation period of 3 years from March 31, 2017. Furthermore, it was contended by the appellant that the NCLT should have condoned the delay (if any) through its exercise of jurisdiction under Section 5 of the Limitation Act.
The appellant relied on the case of Sesh Nath Singh v. Bidyabati Sheoraphulu Coop. Bank Ltd, wherein it was decided that the IBC does not exclude the application of any other provisions of the Limitation Act.
On the other hand, the respondent refuted the claims of the appellant and contended that Article 1 of the Limitation Act would not be applicable in the aforementioned case.
The Hon'ble NCLAT observed that the said application by the appellant does not fall within the purview of a suit related to accounts as Article-1 deals with suit related to accounts. Furthermore, it opined that the application under Section 9 could have been filed within 3 years of the last payment made by the respondent. Thereupon, the court observed that Article 137 of the Limitation Act would apply for filing applications under Sections 7 and 9 of the Code. Thereafter, the tribunal dismissing the appeal affirmed that the NCLT had rightly rejected the said application.