Default Date in Absence of Payment Mentioned - Multiple NCLT judgments highlight that when no specific payment date is reflected in invoices, ledger entries, or bank statements, the default date cannot be accurately determined solely based on invoice issuance or invoice due dates. Instead, courts consider the date when the debt becomes due and payable, often relying on contractual terms, mutual understanding, or subsequent correspondence. For example, in cases like Amirsons Timber VS SKYLINE ENGINEERING CONTRACTS (INDIA)PVT LIMITED - National Company Law Tribunal, Amirsons Timber VS SKYLINE ENGINEERING CONTRACTS (INDIA)PVT LIMITED - National Company Law Tribunal, and Amirsons Timber VS SKYLINE ENGINEERING CONTRACTS (INDIA)PVT LIMITED - National Company Law Tribunal, the courts observed that the absence of explicit payment dates in ledger records means default cannot be presumed from invoice dates alone. Amirsons Timber VS SKYLINE ENGINEERING CONTRACTS (INDIA)PVT LIMITED - National Company Law Tribunal, Amirsons Timber VS SKYLINE ENGINEERING CONTRACTS (INDIA)PVT LIMITED - National Company Law Tribunal, Amirsons Timber VS SKYLINE ENGINEERING CONTRACTS (INDIA)PVT LIMITED - National Company Law Tribunal
Limitation and Date of Default - The courts emphasize that limitation begins from the date when the right to apply accrues, i.e., when the debt becomes due and payable. If the debtor disputes the default or if the default date is not clearly established, the initiation of proceedings can be challenged. For instance, in VS Ramalingam Construction Company Pvt. Ltd. - 2023 Supreme(Online)(NCLT) 1765 - 2023 Supreme(Online)(NCLT) 1765 and VS Ramalingam Construction Company Pvt. Ltd. - 2023 Supreme(Online)(NCLT) 1766 - 2023 Supreme(Online)(NCLT) 1766, the courts held that the default date should be the date when the debt was due and unpaid, not merely the date of invoice or dispute. The date mentioned in Form 3 (e.g., 04.09.2019) was accepted as the default date when it aligned with the last payment or contractual due date.
Mutual Understanding and Settlement Agreements - When parties enter into memoranda of understanding or settlement agreements after the initial default, the courts recognize these as relevant to determining the default date. In VERMMILLION COMMUNICATION PRIVATE LIMITED VS HERO ELECTRIC VEHICLES PRIVATE LIMITED - 2024 Supreme(Online)(NCLT) 4090 - 2024 Supreme(Online)(NCLT) 4090, the court noted that subsequent mutual understanding and settlement terms can alter the default timeline, especially if invoices remain unpaid but are subject to ongoing negotiations.
Invoices Raised Prior to MoU or Disputed Defaults - In cases like VERMMILLION COMMUNICATION PRIVATE LIMITED VS HERO ELECTRIC VEHICLES PRIVATE LIMITED - 2024 Supreme(Online)(NCLT) 4090 - 2024 Supreme(Online)(NCLT) 4090, the courts scrutinize the invoice dates and the terms of the agreement. If invoices were raised before a settlement or MoU, and the default is claimed based on later dates, the courts may consider the contractual due date rather than invoice issuance alone.
Case-Specific Considerations - The courts also consider the nature of the account (running account vs. specific invoice), the clarity of default dates, and the evidence of payment or dispute. For example, in E.I DUPONT INDIA PVT LTD VS MILTECH INDUSTRIES PVT LTD - National Company Law Tribunal, the default was identified as occurring on 10.08.2016, based on payment default against earlier invoices, emphasizing that default dates are often linked to actual non-payment instances rather than invoice dates alone.
Analysis and Conclusion:The NCLT jurisprudence indicates that when no explicit payment date is recorded in invoices or bank records, the default date cannot be presumed solely from invoice issuance or due dates. Instead, the default is established based on the date when the debt becomes due and remains unpaid, considering contractual terms, mutual understanding, or subsequent acknowledgment of default. The limitation period begins from this default date, which must be substantiated with concrete evidence such as payment records, correspondence, or contractual clauses. Courts tend to favor the date when the debtor's obligation is unequivocally due and unpaid, rather than the invoice date, especially in cases lacking clear payment records.
