The limitation for claims against sick companies involves intricate legal and factual questions that must be adjudicated in full trials rather than through interlocutory applications.

ORDER

The petitioner has filed this Civil Revision Petition, challenging the order dated 17.10.2022 passed in I.A.No.1 of 2021 in C.O.S.No.496 of 2022 on the file of the Commercial Courts, Egmore, Chennai, wherein, the petitioner herein has filed an interlocutory application under Order VII Rule 11 of the Code of Civil Procedure, 1908 to reject the plaint and the same was dismissed.

2. According to the petitioner, he is the defendant in the suit and the respondent herein being the plaintiff has filed the suit for the relief of recovery of money (the amount due for the period from 10.03.2005 to 25.11.2005) as against the petitioner/defendant.

3. The petitioner/defendant is a public limited Company and was manufacturer of ceramic floor tiles and sanitary wares. During the course of business, the petitioner/defendant has appointed various retailers to market their products and one among whom, is the respondent/plaintiff herein.

4. In the year 2006, the petitioner/defendant Company ran into financial difficulties due to competition from foreign and domestic manufacturers and proceedings were initiated against the petitioner/defendant before the Board for Industrial and Financial Reconstruction (BIFR). The petitioner/defendant Company was declared as a “sick industrial Company” by BIFR on 03.11.2006 under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). Thereafter, the BIFR by its order dated 20.10.2016 approved Revival Scheme of the petitioner/defendant Company, which is binding on all the creditors of the petitioner/defendant Company in terms of Section 18(8) of the SICA.

5. The respondent/plaintiff had issued a Legal Notice dated 19.11.2020 demanding a sum of Rs.25,00,000/- with interest at the rate of 18% for the goods supplied to the petitioner/defendant in the year 2005. The interest was calculated from April 2006 onwards. A reply was sent by the petitioner/defendant Company dated 02.12.2020. Thereafter, the respondent/plaintiff had again issued rejoinder Notice on 25.12.2020 stating that they did not know about the Rehabilitation Scheme or that the amount of Rs.1,50,000/- was paid by the petitioner/defendant to the respondent/plaintiff in accordance with the Rehabilitation Scheme and further stated that the petitioner/defendant Company was not included in the Draft Rehabilitation Scheme dated 20.10.2016. According to the petitioner/defendant, the email dated 23.10.2018 was sent by the former employee of the petitioner/defendant Company who acknowledged the debt, but virtually, the suit was barred by limitation owing to cause of action being in the year 2005 and the respondent/plaintiff had lost their right to claim such amounts within a period of three years, however, the suit was filed only after 15 years have passed. Further, the petitioner/defendant had also reiterated that the respondent/plaintiff has not invoked Section 25 of the SICA against the BIFR order dated 20.10.2016. Therefore, the Scheme of revival had attained the finality. Therefore, the suit is barred by limitation and the same is liable to be rejected under Order VII Rule 11 of the Code of Civil Procedure, 1908. But the trial Court has not considered the case of the petitioner/defendant and thereby the order passed by the trial Court is liable to be set aside and the plaint has to be rejected.

6. According to the respondent/plaintiff, the petitioner/defendant at no point of time in the Pre-Suit Notices, denied the liability to pay the suit claim and now only for the first time, has come forward with this petition. The question of limitation is a mixed question of law and facts, which cannot be adjudicated under Order VII Rule 11 of the Code of Civil Procedure, 1908. The petitioner/defendant has not denied the suit claim specifically through the Reply Notice and Sur-Rejoinder Notice. Since on account of operation of the moratorium from the date of declaration of the petitioner/defendant herein as “sick industry” i.e., 03.11.20