The National Company Law Appellate Tribunal (NCLAT) in New Delhi, comprising Justice Ashok Bhushan as Chairperson and Barun Mitra as Technical Member, recently delivered a judgment in an appeal case. The NCLAT held that an unsigned and unauthenticated statement of accounts attached to an email does not constitute a valid acknowledgement of debt under Section 18 of the Limitation Act. Consequently, the Section 9 application seeking initiation of the Corporate Insolvency Resolution Process was deemed time-barred and rightly dismissed.
The appeal was filed under Section 61 of the Insolvency and Bankruptcy Code, 2016, by the Appellant against an order issued on June 6, 2022, by the Adjudicating Authority (National Company Law Tribunal, New Delhi Court-II) in CP (IB) No. 345 (NB)/2020. In the order, the Adjudicating Authority dismissed a Section 9 application filed by the Operational Creditor, M/s G.L. Shoes, which sought the initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor, Action Udhyog Private Limited. The Operational Creditor claimed that the Corporate Debtor had defaulted on payment for the supplied goods and had issued a demand notice that went unanswered. The Adjudicating Authority dismissed the application, citing the bar of limitation, as it was filed more than three years after the date of default.
During the proceedings, the Operational Creditor argued that an email from the Corporate Debtor acknowledging the debt should extend the limitation period. However, the Adjudicating Authority held that the email and its attachment, an unsigned statement of accounts, did not qualify as a valid acknowledgement under Section 18 of the Limitation Act. In response, the Appellant contended that an email acknowledging the debt should be considered valid under the Information Technology Act, 2000. Conversely, the Respondent argued that the email and its attachment lacked proper authentication.
After considering the arguments and examining the records, the NCLAT concluded that while electronic communication is recognized, an unsigned attachment cannot be deemed a valid acknowledgement. The NCLAT's decision highlights the significance of proper authentication and emphasizes that an unsigned and unauthenticated statement of accounts attached to an email does not fulfil the requirements under Section 18 of the Limitation Act.
This judgment by the NCLAT clarifies the legal position regarding the validity of electronic acknowledgements in insolvency cases and sets a precedent for future disputes in similar matters.
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