Un-encashed cheque cannot amount to an acknowledgement of liability in terms of Section 18 of the Limitation Act, 1963
Cause Title : M/s. Primee Silicones (Chennai) Pvt. Ltd. vs M/s. UCAL Fuel Systems Ltd., Company Appeal (AT) (CH) (Ins.) No. 299 of 2021, National Company Law Appellate Tribunal At Chennai
Date of Judgment/Order : 17/02/2023
Corum : Justice M. Venugopal, Member (Judicial) & Ms. Shreesha Merla, Member (Technical)
Citied:
- Karamadai Naicken Vs. R. Raju Pillai & Anr., AIR 1949 Mad 401
- Asset Reconstruction Company India Limited Vs. Bishal Jaiswal and Anr., (2020) 16 SCC 366
- Bharat Skins Corporation Vs. Taneja Skins Corporation Private Limited, (2012) 186 DLT 290
- Wilsons Jacobs Vs. Lucid Prints & Ors., 2018 SCC OnLine BOM 1998
Background
Appeal was filed against the order of the NCLT dismissing an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, as barred by Limitation.
The Appellant had argued that the Corporate Debtor has not disputed the receipt of goods or raised any disputes prior to the receipt of Statutory Notice dated 07.02.2020, but their only contention is that some of the invoices are dated prior to 2017 and are hence time barred which according to the Appellant was incorrect as the account was a running account. It is the case of the Appellant that even if the Accounts are not construed to be a ‘running Account’, the email sent by the Corporate Debtor on 23.10.2018, asking the Appellant to reconcile the Accounts and share of payment advice mentioning Invoice Number very specifically and also mentioning the details of the cheque dated 13.03.2017 drawn on Bank of India for Rs.3 Lakhs/- would show that the Respondent Company had admitted the liability. Further, the earliest unpaid invoice is dated 29.04.2015, for which the Limitation of three years, expires on 28.04.2018, but the cheque payment alleged by the Corporate Debtor is dated 13.03.2017 which construes an intention to pay and therefore the Application is well within the period of Limitation.
The Corporate Debtor/Respondent argued that the Application was clearly ‘barred by Limitation’ and that the Account cannot be termed as a ‘running Account’ as the ingredients of a ‘running Account’ would include:
- the value of the goods supplied to be debited in the Debit Column;
- when amounts are paid by the ‘buyer’ to the ‘seller’, they are entered in the Credit Column; and
- the difference is continuously maintained in the column for balance.
The Corporate Debtor also argued that the email communications relied upon by the Appellant does not construe acknowledgement of debt, but only contain a payment advice from the Respondent. Further, the cheque which was issued by the Respondent in respect of these amounts was not even cleared by the Bank.
Judgment
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