JUDICIAL UPDATES -
II. Supreme Court -
IBC-PETITION U/S 9 CANNOT BE DISMISSED, IF FEW INVOICES ARE TIME BARRED AMONGST MULTIPLE INVOICES.
In M/S Next Education India Pvt. Ltd. v. M/S K12 Techno Services Pvt. Ltd [CIVIL APPEAL NO.1775 OF 2021], the Appellant, an Operational Creditor, provided digital classroom solution services to the Respondent, Corporate Debtor. The Appellant raised several invoices for the services provided, which the Respondent failed to pay in full. Consequently, the Appellant filed a Petition u/s 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) before the National Company Law Tribunal (“NCLT”) to initiate Corporate Insolvency Resolution Process (“CIRP”) against the Respondent. The NCLT reviewed all the evidence and facts and dismissed the petition filed by the Appellant as it was barred by limitation. The Appellant appealed before the National Company Law Appellate Tribunal (“NCLAT”), but the said appeal was also dismissed on similar grounds. Therefore, aggrieved by the order of the NCLAT, the Appellant filed an appeal before the Hon’ble Supreme Court.
The Supreme Court after observing all the facts allowed the appeal and set aside the order of the NCLAT. While allowing the appeal the Supreme Court observed that “The NCLT considering the starting point of limitation as 12.03.2011 held that the claim is barred by limitation. However, the NCLT did not take into consideration the subsequent invoices at least preceding three years from the date of filing of the Section 9 application, which ought to have been considered. Under the circumstances, the NCLT ought to have considered the invoices at least for the period preceding three years from the date of the application under Section 9, rather than considering the starting point of limitation as 12.03.2011. Under the circumstances, the order(s) passed by the NCLT and affirmed by the NCLAT are unsustainable.” Additionally, a Section 9 Petition cannot be dismissed solely based on the expiration of some invoices when the petition includes multiple invoices. In such cases, the NCLT should give consideration to those invoices that fall within the limitation period.