Deemed Authentication Not Acknowledgment: NCLAT Bars Time-Barred Insolvency Claim
Deemed Authentication Not Acknowledgment: NCLAT Bars Time-Barred Insolvency Claim
Introduction
The National Company Law Appellate Tribunal (NCLAT), New Delhi, has held that uploading debt information to an Information Utility (IU) such as NeSL does not amount to acknowledgment of debt under Section 18 of the Limitation Act. Consequently, such uploading cannot trigger a fresh limitation period for filing a Corporate Insolvency Resolution Process (CIRP) application under Section 9 of the Insolvency and Bankruptcy Code (IBC). The Tribunal upheld the NCLT Mumbai’s dismissal of the Section 9 petition as time-barred.
Factual background
Air Wave Technocrafts Pvt. Ltd. provided operation and maintenance of HVAC systems at various Voltas Limited client sites between 2010 and 2019. The operational creditor claimed that dues totalling ₹1.20 crore remained unpaid for multiple invoices raised under different work orders issued over several years. Air Wave argued that its ledger formed a running account between the parties.
In February 2021, Voltas made a payment towards certain invoices, and in 2022, exchanged emails discussing ₹15.03 lakh. In 2023, Air Wave uploaded the outstanding debt information on the NeSL Information Utility, which was categorized as “deemed authenticated.”
Procedural background
Air Wave filed a Section 9 CIRP application before NCLT Mumbai in August 2024. The NCLT dismissed the application as barred by limitation, noting pre-existing disputes and lack of any acknowledgment within the limitation period. Air Wave appealed to the NCLAT, asserting that limitation had been extended by part payment, email acknowledgments, and the IU upload.
Issues for determination
1. Whether uploading financial information on an Information Utility amounts to acknowledgment under Section 18 of the Limitation Act.
2. Whether the February 2021 part payment or 2022 emails revived limitation for the entire claimed amount.
3. Whether the Section 9 application was barred by limitation.
4. Whether pre-existing disputes disentitled the operational creditor from invoking Section 9.
Contentions of the Parties
Appellant: The invoices formed part of a running account; hence, limitation ran from the last transaction. Part payment in February 2021 revived the entire debt. Emails exchanged in 2022 amounted to acknowledgement. Uploading the debt on NeSL in 2023 and the “deemed authenticated” status constituted acknowledgment by the corporate debtor. Therefore, the Section 9 filing in August 2024 was within time.
Respondent: Each work order was independent; there was no running account. The 2021 part payment related only to specific invoices and did not revive others. The alleged outstanding amounts lacked necessary documentation: attendance sheets, wage registers, PF/ESIC challans, certified invoices, etc. Voltas had consistently disputed the majority of the claim, including through the reply to the demand notice. The IU record was not acknowledged by Voltas; “deemed authentication” cannot be treated as acknowledgment. The petition was time-barred.
Reasoning and Analysis
The Bench of Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra held that the Section 9 petition was clearly time-barred. Even if the 2021 part payment is treated as acknowledgment, the limitation expired in February 2024, whereas the CIRP petition was filed in August 2024. The Tribunal observed that the invoices arose from separate work orders and thus carried separate limitation periods. Regarding the IU information, the Tribunal clarified that uploading financial information does not constitute acknowledgment under Section 18; acknowledgment must be conscious and attributable to the debtor, which was absent here. “Deemed authentication” only ensures integrity and availability of data but cannot extend limitations. The emails relied upon by the appellant reflected acknowledgment only of ₹15.03 lakh and did not revive the broader ₹1.20 crore claim. Further, Voltas’s ongoing disputes over documentation indicated clear pre-existing disputes, making the Section 9 application independently untenable. The Tribunal therefore affirmed the NCLT’s dismissal.
Implications
The ruling reinforces that operational creditors cannot rely on IU uploads to revive time-barred claims and that acknowledgment under the Limitation Act requires explicit debtor participation. It clarifies that “deemed authenticated” entries are not equivalent to acknowledgment. The decision also reiterates that CIRP petitions must strictly adhere to limitation rules and cannot circumvent them by registering debt information on an IU. Additionally, the judgment underscores the significance of pre-existing disputes, restricting misuse of Section 9 as a debt recovery remedy.
In this case the appellant was represented by Mr. Vishal Agarwal, Advocate.
