NCLAT Dismisses Insolvency Application by Air Wave Technocrafts Against Voltas, Cites Time-Barred Claims and Pre-existing Disputes

The appellate tribunal upheld the NCLT's decision citing limitations and unresolved disputes over invoices, setting a precedent for strict adherence to statutory deadlines and dispute resolution processes.

In a significant ruling, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, dismissed the insolvency application filed by Air Wave Technocrafts Private Limited against Voltas Limited. The decision was rendered by a bench comprising Justice Ashok Bhushan and Barun Mitra, Member (Technical). The bench upheld the National Company Law Tribunal (NCLT) Mumbai Bench-I's order, which had dismissed the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC), filed by the operational creditor Air Wave Technocrafts.

The appellate tribunal's decision hinged on two primary grounds: the claims were time-barred, and there were pre-existing disputes regarding the invoices submitted by Air Wave Technocrafts. The tribunal noted that the invoices related to work orders issued between 2010 and 2019, with the last invoice dated January 2, 2019. Air Wave Technocrafts' application for initiating the Corporate Insolvency Resolution Process (CIRP) was filed on August 29, 2024, beyond the three-year limitation period specified by the Limitation Act, 1963, thus rendering the application time-barred.

Further, the tribunal rejected Air Wave Technocrafts' argument that the invoices were part of a running account, which would extend the limitation period. The tribunal emphasized that each invoice constituted a separate cause of action, and partial payments made by Voltas in respect of certain invoices could not extend the limitation period for all invoices.

Additionally, the tribunal recognized the existence of pre-existing disputes between the parties over the invoices, as evidenced by email communications and responses to the demand notice. These disputes included issues related to the non-submission of compliance documents and the lack of certification of invoices, which were highlighted in multiple correspondences by Voltas prior to the filing of the Section 9 application.

The decision underscores the importance of adhering to statutory deadlines and the necessity of resolving disputes before seeking relief under the IBC. The tribunal's ruling is expected to guide operational creditors in comprehending the nuances of limitation periods and the impact of unresolved disputes on insolvency proceedings.

Bottom Line:

Insolvency and Bankruptcy Code - Section 9 application dismissed due to being time-barred and presence of pre-existing disputes.

Statutory provision(s): Insolvency and Bankruptcy Code, 2016 - Sections 8, 9; Limitation Act, 1963 - Sections 18, 19

Air Wave Technocrafts Private Limited v. Voltas Limited, (NCLAT)(Principal Bench, New Delhi) : Law Finder Doc Id # 2813181