ASHOK KUMAR SINGH

Saturday, May 10, 2025

Limitation under the Insolvency and Bankruptcy Code, 2016

Limitation under the Insolvency and Bankruptcy Code, 2016 (IBC) refers to the time limit within which an application for initiating the Corporate Insolvency Resolution Process (CIRP) can be filed before the National Company Law Tribunal (NCLT).

📘 Legal Basis:

The Supreme Court in B.K. Educational Services Pvt. Ltd. v. Parag Gupta & Associates (2018) held that:

The Limitation Act, 1963 is applicable to proceedings under the IBC from the inception.

⏳ Applicable Limitation Period:

Applicant Type	IBC Section	Limitation Period	Starts From
Financial Creditor	Section 7	3 years	From the date of default
Operational Creditor	Section 9	3 years	From the date when payment became due
Corporate Debtor	Section 10	3 years	From the date of default

🔄 Extension / Reset of Limitation:

Acknowledgment of Debt (Section 18, Limitation Act):
- A written acknowledgment of debt before expiry of limitation resets the 3-year clock.
- Examples: balance sheets, emails, part-payments.
Part-Payment (Section 19, Limitation Act):
- Any part-payment made before expiry of limitation also extends the period from the date of such payment.
Exclusion of Time (Section 14, Limitation Act):
- Time spent pursuing a remedy in a wrong forum (with due diligence) can be excluded.
Fraud or Mistake (Section 17):
- Limitation starts from the date the fraud or mistake is discovered.

🚫 Delay Consequences:

Applications filed beyond 3 years (without a valid extension) are barred by limitation and are rejected by NCLT.

🧠 Key Case Laws:

B.K. Educational Services – Limitation Act applies to IBC.
Sesh Nath Singh v. Baidyabati Sheoraphuli Co-op Bank (2021) – Section 14 can be invoked for exclusion.
Laxmi Pat Surana v. Union Bank of India (2021) – Limitation for guarantor starts from date of default.

Claim Under the Insolvency and Bankruptcy Code, 2016

Under the Insolvency and Bankruptcy Code, 2016 (IBC), the term "claim" is defined in a broad and inclusive manner. It is a critical concept, as both "debt" and "default" under the IBC are based on the existence of a claim.

📘 Statutory Definition:

Section 3(6) of the IBC defines “claim” as:

"a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured;"
or
"a right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, disputed, undisputed, secured or unsecured."

✅ Key Features of a "Claim":

Broad scope:
- Covers both monetary and remedial rights that can lead to payment.
No requirement for certainty:
- Can be disputed or undisputed, fixed or unliquidated, matured or unmatured.
Includes legal and equitable rights:
- Even a right based on fairness (not strict law) can be a claim.
Includes rights to remedy breaches:
- For example, compensation for breach of contract.

🔍 Examples of "Claim" under IBC:

A supplier demanding payment for delivered goods.
An employee seeking unpaid salary.
A bank asserting recovery of a defaulted loan.
A government department claiming unpaid taxes or duties.
A party claiming damages for breach of a service contract.

📂 Types of Claims:

Type	Basis	Examples
Financial Claim	Based on disbursal of money with time value	Loans, bonds, interest-bearing instruments
Operational Claim	Based on goods, services, or statutory dues	Supplier invoices, employee dues, tax claims
Contingent Claim	Dependent on a future event	Performance guarantees, indemnities

📌 Role in IBC:

The insolvency resolution process starts when a claim (debt) is shown to be in default.
Creditors must file their claims with proof before the Resolution Professional (RP).
Only valid claims are considered in the Committee of Creditors (CoC) and in resolution plans.

Debt Under the Insolvency and Bankruptcy Code, 2016

Under the Insolvency and Bankruptcy Code, 2016 (IBC), "debt" is a foundational concept, defined broadly to include various forms of legal obligations to pay money.

📘 Statutory Definition:

Section 3(11) of the IBC defines "debt" as:

“a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt.”

🔍 Key Components of "Debt" under IBC:

Liability or obligation:
- Must be a legal responsibility to pay.
In respect of a claim:
- The claim can arise from contractual, statutory, or legal provisions.
Due:
- The amount must be due and payable, not merely a future or contingent liability.
Includes:
- Financial debt (Section 5(8))
- Operational debt (Section 5(21))

📂 Types of Debt under IBC:

Type	Definition	Examples
Financial Debt	A debt disbursed against the consideration for the time value of money (Section 5(8))	Loans, debentures, external commercial borrowings, lease liabilities
Operational Debt	A claim in respect of goods, services, employment, or statutory dues (Section 5(21))	Unpaid invoices for goods/services, employee dues, taxes
Secured Debt	Backed by collateral	Loan against property, mortgage
Unsecured Debt	No specific security or collateral	Credit card dues, unsecured personal loans

💡 Important Related Terms:

Claim (Section 3(6)): A right to payment, whether disputed or undisputed, legal or equitable.
Creditor (Section 3(10)): Includes financial and operational creditors.

✅ Relevance in IBC Proceedings:

The existence of debt and default are mandatory conditions for initiating insolvency resolution under Section 7 (financial creditors), Section 9 (operational creditors), or Section 10 (corporate applicant).
Limitation period of 3 years applies, but can be extended if there’s acknowledgment or part-payment.

Operational Debt under IBC 2016

Under the Insolvency and Bankruptcy Code, 2016 (IBC), an "operational debt" is defined in Section 5(21) as:

"a claim in respect of the provision of goods or services including employment or a debt in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority."

Breakdown of the Definition:

An operational debt includes:

Dues for goods or services:
- Any claim arising from the supply of goods or the rendering of services (including utilities, rent for use of premises, etc.).
Employment-related dues:
- Salaries, wages, and other employment-related payments owed by the corporate debtor.
Statutory dues:
- Taxes, duties, or penalties payable to the Central Government, State Government, or any local authority (e.g., income tax, GST, PF contributions).

Key Features:

Operational creditors can initiate insolvency under Section 9 of the IBC.
Before filing, they must issue a demand notice in Form 3 or 4.
If the corporate debtor fails to pay or disputes the debt within 10 days, the operational creditor can file a petition before the NCLT.

Examples of Operational Debt:

A vendor not paid for supplies delivered to a company.
A service provider (like a logistics firm, IT services firm) owed fees.
Employees claiming unpaid salaries.
GST or income tax dues pending with the government.

Distinction from Financial Debt:

Financial debt (Section 5(8)) involves money lent with consideration for time value (e.g., loans, bonds).
Operational debt arises from day-to-day business transactions and obligations.

Confirmation of debt under the Insolvency and Bankruptcy Code, 2016

Confirmation of debt under the Insolvency and Bankruptcy Code, 2016 (IBC) refers to an acknowledgment by the debtor of an existing liability or debt owed to the creditor. While the IBC itself does not explicitly define "confirmation of debt," the concept plays a crucial evidentiary role in insolvency proceedings, especially under Section 7 (financial creditors) and Section 9 (operational creditors).

Legal Basis and Importance:

Under the Indian Evidence Act, 1872 (Section 18 & 19):
- An acknowledgment or confirmation of debt can be treated as an admission, which is relevant in proving the existence of a debt.
Under the Limitation Act, 1963 (Section 18):
- A written and signed acknowledgment of debt made before the expiry of the limitation period resets the limitation clock, giving the creditor fresh time to initiate legal proceedings under IBC.
Judicial Interpretation:
- Indian courts and tribunals (including NCLT and NCLAT) have accepted balance sheets, email correspondence, payment of part amounts, and settlement proposals as forms of acknowledgment or confirmation of debt.

Common Forms of Confirmation:

Signed balance sheets by the corporate debtor showing the debt.
Emails or letters from the debtor acknowledging the liability.
Part payments or cheques towards the outstanding amount.
Any formal settlement proposals or restructuring requests.

Relevance in IBC Proceedings:

It strengthens the evidence of default for the creditor.
It can extend the limitation period to file an insolvency petition.
Helps establish the existence of a financial or operational debt.

Show Cause Petition in Consumer Case by the Revisionist

Before the Hon’ble West Bengal State Consumer Disputes Redressal Commission, Kolkata

KretaSurakshaBhawan

11A, MirzaGhalib Street, Kolkata – 700087

Revision Petition no. RP /158/2023

In the matter of :

M/s. Vastu Realtors,

______Revisionist

- Versus –

Sri Himansu Bikas Majumdar, and Another;

________Respondents

Show Cause Petition of the Revisionist;

The humble Petition of the above named Revisionist, most respectfully;

Showeth as under;

1. That on earlier occasion i.e. 17/01/2025, while the matter was called on for necessary hearing by the Hon’ble Commission. The Hon’ble Commission found the Revisionist absent either in person or by their Learned Advocate, and thus the Hon’ble Commission was pleased to direct the Show Cause on the Revisionist.

2. That on the earlier occasion i.e. 17/01/2025, the Learned Advocate of the Revisionist reached at late due to transportation, and by the time the matter was called for and necessary direction being Show Cause on the Revisionist issued by the Hon’ble Commission.

3. That the absence on the give date was not willful as the Learned Advocate of the Revisionist stuck in traffic jam and did not reach at time more particularly while the matter was called for by the Hon’ble Commission.

4. That the Revisionist placed its unconditional apology for such absence, and undertake to be present at the time of call of the matter before the Hon’ble Commission.

5. That unless the Hon’ble Commission accept the cause shown by the Revisionist, the Revisionist will highly prejudice and suffer with irreparable loss and injury thereof.

6. That the preponderance of the balance of convenience and inconveniences are in favour of the Revisionist.

7. That this application is made bonafide and in the interest of administration of Justice.

It is therefore prayed that your Lordships would graciously be pleased to accept the cause show by the Revisionist, in the interest of administration of Justice, and or to pass such other or further necessary order or orders as your Lordship may deem, fit, and proper, for the end of justice.

And for this act of kindness, your Petitioner, as in duty bound shall ever pray.

AFFIDAVIT

We (i) Sri Pawan Kumar Agarwal, Son of Late RoshanlalAgarwal, residing at WINDSOR GARDEN, 957, MahamayaMandir Road, Post Office – Garia, Police Station – Narendrapur, Kolkata – 700084, District – South 24 Parganas, and (ii) Sri Uma Shankar Naik, Son of Late DukhanSah, residing at “ANANYA, Flat – 1B, M-173, Garia Garden, Post Office – Garia, Police Station – Narendrapur, Kolkata – 700084, District – South 24 Parganas, do hereby solemnly affirm and say as follows;

1. We are the Partners of M/s. Vastu Realtors, a Partnership Firm, having its Registered office at “ANANYA”, M-173, Garia Garden, Post Office – Garia, Police Station – Narendrapur, Kolkata – 700084, District – South 24 Parganas, and we are the Revisionist, in the present Revision Petition.

2. That the statements made in paragraph number 1, 2, & 3, of the Show Cause Petition are true to our knowledge and the rests are our humble submissions before the Hon’ble State Commission.

The above statements are true to our knowledge and belief.

DEPONENTS

Identified by me,

Advocate

Prepared in my Chamber,

Advocate

Date : _______________2025

Place :Alipore Judges’ Court

N O T A R Y

forwarding letter

PRITAM DAS

Advocate.

High Court at Calcutta. C/o Sanjib Bandyopadhyay High Court Bar Association Room No. 14, High Court at Calcutta. Mobile number : 9804412345, E-mail : pritam.das2u2013@gmail.com

Dated : 2^nd day of May’ 2025

To,

The Learned Registrar,

The National Company Law Tribunal

Kolkata Bench

Ref.: TP(IB) No. 2/KB/2022

In the matter of :

M/s. Rishav Enterprise,

________Operational Creditor

- Versus –

M/s. Nuddea Plantation Limited

________Corporate Debtor

Dear Sir,

Please take note that the Original Copy of the Reply on Affidavit has already been filed in the month of February’ 2023, in the above referred Case, as well as on line file has been complied with on the Web Portal of the Hon’ble NCLT Kolkata Bench; But very surprisingly while the case has been called for hearing on 1^st day of May’ 2025 being Item No. 204, the Hon’ble 2^nd Bench of Kolkata NCLT did not find the hard copy of the Reply on Affidavit of the Corporate Debtor and therefore the Hon’ble Bench was obliged to direct the Corporate Debtor to submit the hard copy of the Reply on Affidavit. Thus in compliance of such direction, please find a hard copy of the Affidavit in reply of the Corporate Debtor and oblige.

Kindly do the needful in keeping the hard copy of the Reply on Affidavit of the Corporate Debtor in the above referred Case record to be placed on board before the Hon’ble Bench 2^nd NCLT Kolkata at the date fixed for hearing.

Thanking you,

Yours’ faithfully,

Pritam Das, Advocate

For the Corporate Debtor