NCLAT: 'Deemed Authentication' of Debt by IU Does Not Revive Time-Barred Claims

New Delhi: The National Company Law Appellate Tribunal (NCLAT), Principal Bench, has delivered a significant ruling clarifying that the "deemed authentication" of a debt by an Information Utility (IU) does not constitute an acknowledgment of liability by the debtor and cannot extend the period of limitation under the Insolvency and Bankruptcy Code, 2016 (IBC).

In a judgment delivered by a bench comprising Chairperson Justice Ashok Bhushan and Member (Technical) Barun Mitra, the tribunal dismissed an appeal filed by Air Wave Technocrafts Private Limited against Voltas Limited. The NCLAT upheld the National Company Law Tribunal (NCLT), Mumbai's decision to reject an insolvency petition, finding the operational debt to be both barred by limitation and mired in a pre-existing dispute.

Background of the Dispute

The case originated from a Section 9 application filed by Air Wave Technocrafts (the Operational Creditor) seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against Voltas Limited (the Corporate Debtor). Air Wave claimed an outstanding operational debt of ₹1,20,46,835 for HVAC maintenance services provided between 2010 and 2019.

The NCLT had dismissed the application on two primary grounds: the claim was time-barred, and there was a clear pre-existing dispute between the parties. Aggrieved by this, Air Wave appealed to the NCLAT.

Key Arguments Presented

Appellant's Contentions (Air Wave Technocrafts):

- The business relationship was based on a "running account," and individual invoices from 2010-2019 should not be treated as separate causes of action.

- A part payment made by Voltas on February 18, 2021, and a settlement offer for ₹15.03 lakhs in emails dated August 11, 2022, and December 22, 2022, amounted to an acknowledgment of debt under Section 18 of the Limitation Act, 1963, thereby extending the limitation period.

- The registration of the debt with an Information Utility (IU), which was "deemed to be authenticated" after Voltas did not respond, served as binding proof of debt and revived the limitation period.

Respondent's Rebuttal (Voltas Limited):

- The invoices pertained to separate and disconnected work orders, not a running account. Therefore, each invoice had its own limitation period, most of which had expired.

- The part payment was for specific, certified invoices and did not extend the limitation for all other disputed claims.

- There were long-standing, pre-existing disputes regarding the lack of supporting documents like attendance sheets, wage registers, and PF/ESIC challans, which were communicated to Air Wave well before the demand notice was issued.

- The "deemed authentication" by the IU is a procedural status and not a conscious acknowledgment of liability by the debtor.

NCLAT's Analysis and Ruling

The appellate tribunal meticulously examined the arguments and evidence on record, focusing on the two core issues of limitation and pre-existing dispute.

On the Issue of Limitation

The NCLAT found the claim to be unequivocally time-barred. It noted that the last invoice was raised on January 2, 2019, and the Section 9 application was filed on August 29, 2024, well beyond the three-year limitation period.

The tribunal systematically dismantled the appellant's arguments for extending the limitation:

1. Part Payment: Even if the part payment date of February 18, 2021, was considered a fresh starting point, the three-year period would have expired on February 17, 2024. The application, filed in August 2024, was still late.

2. Running Account: The tribunal rejected the "running account" theory, observing that the invoices were for multiple, unrelated work sites (e.g., Rashtrapati Bhawan, IIT Delhi, TATA Power) without a single overarching contract.

3. Acknowledgment via Emails: The emails from Voltas did not acknowledge the entire debt of ₹1.20 crore. Instead, they disputed most of the claim while discussing a potential settlement for a specific amount of ₹15.03 lakhs, contingent on document submission.

4. Information Utility (IU) Record: This was the most crucial aspect of the ruling. The NCLAT held that the mere filing of information by a creditor with an IU does not restart the limitation clock. The judgment clarified:

> "The mere recording or submission of financial information on the IU does not automatically extend the limitation period under the Limitation Act, 1963. When the Corporate Debtor did not formally admit or acknowledge the debt shown on the IU, it cannot be said that the date of registering debt on the IU can trigger the counting the fresh period of limitation."

On the Pre-Existing Dispute

The tribunal also affirmed the NCLT's finding of a pre-existing dispute. It pointed to emails from August and December 2022, which were sent before the Section 8 demand notice, where Voltas had clearly raised issues regarding non-submission of compliance documents and lack of work certification.

The NCLAT highlighted Voltas's reply to the demand notice, which detailed these disputes, stating:

> "The Corporate Debtor in the... Notice of Dispute has categorically denied and disputed the claim of Rs 1,20,46,835/- and held the same to be false, frivolous and barred by law of limitation."

The tribunal concluded that these were not "moonshine" disputes but substantive issues raised prior to the initiation of insolvency proceedings.

Final Decision

Finding no legal infirmity in the NCLT's order, the NCLAT dismissed the appeal. The judgment reinforces the principle that the IBC framework is not a tool for debt recovery, especially for claims that are time-barred or genuinely disputed. It provides critical clarity on the evidentiary value of IU records in the context of the Limitation Act.