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The Supreme Court clarified the limitation period for operational claims related to multiple invoices.


The Hon’ble Supreme Court ruled that in a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC), based on multiple invoices where some are time-barred, the NCLT must consider invoices issued within three years before the petition's filing to determine the limitation period.


Operational Creditor had provided certain services to the Corporate Debtor and accordingly the Operation Creditor raised 187 invoices. Due to non-payment by the Corporate Debtor, the Operational Creditor issued a Demand Notice under Section 8 of the IBC, citing the date of the first invoice as the default date. Subsequently, the Operational Creditor initiated proceedings under Section 9 of the IBC, specifying the date of the last invoice as the default date. The NCLT dismissed the Petition on the ground of the claim being time barred.


The NCLAT after lengthy consideration decided that as the section 9 petition emanates from the Demand Notice issued under section 8, the sections have to be read conjointly. The Tribunal stated that the date of default shall in the matter be the date of first invoice, which is time barred as the limitation period has expired. The said NCLAT order was challenged by way of the present appeal.


The Supreme Court set aside the decision of the NCLT and NCLAT, emphasizing that the starting point of limitation should be determined by considering invoices issued up to at least three years before the filing of the Petition, not necessarily starting from the date of first invoice. Hence, the decision of the Hon’ble Apex Court settles the legal framework for determining the limitation period when filing a Section 9 application under the IBC based on multiple invoices.

 

M/s. Next Education India Pvt. Ltd. Vs. M/s. K12 Techno Services Pvt. 

Civil Appeal No. 1775 of 2021 

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