Holding

The Supreme Court set aside the NCLAT order allowing the Section 9 application and directed the NCLT to reconsider the application with the additional email documents while granting the corporate debtor a proper hearing.

Summary

M/S Wizaman Impex Pvt Ltd, the corporate debtor, challenged a Section 9 application filed by Kedrion Biopharma Inc., an operational creditor, which sought to initiate corporate insolvency proceedings. The NCLT rejected the application, holding it was time‑barred under the three‑year limitation period. On appeal, the NCLAT admitted email exchanges not previously before the NCLT and treated them as acknowledgments of debt, thereby allowing the Section 9 application. The Supreme Court held that while the emails must be considered, the NCLAT erred in admitting them at the final stage without giving the corporate debtor an opportunity to be heard, and consequently set aside the NCLAT order that allowed the Section 9 application. The Court directed the NCLT to reconsider the Section 9 application, taking the emails into account and providing a fair hearing. The appeal was partly allowed.

Issues considered

Whether the NCLAT could admit additional documents (emails) not on record before the NCLT at the final stage of the appeal without affording the corporate debtor an opportunity to be heard.
Whether the Section 9 application filed on 30 June 2020 is barred by the three‑year limitation period under the Limitation Act, 1963.
Whether the NCLAT's order allowing the Section 9 application should be set aside.

Legislation cited

Insolvency and Bankruptcy Code, 2016s. 3(11), s. 3(12), s. 5(21), s. 9
Limitation Act, 1963s. Article 137

Subjects

InsolvencySection 9 applicationLimitation periodAcknowledgment of debtProcedural fairnessNCLATNCLTCorporate debtorOperational creditorEmail evidence

Judgment

120 SUPREME COURT
[2022]REPORTS
2 S.C.R. 120 [2022] 2 S.C.R.

A M/S WIZAMAN IMPEX PVT. LTD.
v.
KEDRION BIOPHARMA INC.
(Civil Appeal No. 466 of 2022)
B FEBRUARY 7, 2022
[DINESH MAHESHWARI AND VIKRAM NATH, JJ.]
Insolvency and Bankruptcy Code, 2016 – s.9 – Corporate
Insolvency Resolution – Respondent filed s.9 application against
appellant-corporate debtor – National Company Law Tribunal
C
(‘NCLT’) considered the documents referred by the respondent in
support of its contention that there had been acknowledgment of
debt and thereby the period of limitation would shift from the date
of acknowledgement – However, NCLT rejected the s.9 application
by noting that, viewed from any angle, the application filed by the
D respondent was beyond the limitation period of three years – In
appeal before National Company Law Appellate Tribunal (‘NCLAT’),
respondent sought permission to produce exchanges of e-mails with
respect to the propositions for settlement of dues – The said
documents were not on record before the NCLT – Appellate Tribunal
granted permission to respondent to place such additional
E
documents on record – All suggestions, admissions and offers
evidenced by said e-mails were taken by NCLAT as acknowledgement
by the corporate debtor within time and therefore, the order of the
NCLT rejecting s.9 application was set aside – Held: The impugned
order of NCLAT allowing the appeal and even admitting the s.9
F application cannot be sustained on a short point that the said
additional documents were taken on record only while finally
deciding the appeal and without adequate opportunity of response
to the corporate debtor – However, at the same time, due
consideration of the said documents also appears requisite and the
documents i.e., the said e-mails, cannot be removed out of
G
consideration only because they were not on record before NCLT –
NCLT directed to re-consider the s.9 application filed by respondent-
applicant while taking into consideration the additional documents
taken on the record and at the same time, while extending adequate
opportunity of hearing to the corporate debtor.
H
120
M/S WIZAMAN IMPEX PVT. LTD. v. KEDRION BIOPHARMA INC. 121

Partly allowing the appeal, the Court A
HELD: 1. The impugned order allowing the appeal and even
admitting the application under Section 9 of the Insolvency and
Bankruptcy Code, 2016 cannot be sustained on a short point that
the said additional documents were taken on record only while
finally deciding the appeal and without adequate opportunity of B
response to the corporate debtor. However, at the same time,
due consideration of the said documents also appears requisite
and the documents i.e., the said e-mails, cannot be removed out
of consideration only because they were not on record before
NCLT. [Para 7][124-B-C] C
2. The appropriate course in this matter would be to set
aside the impugned order passed by NCLAT to the extent it has
allowed the application under Section 9 of the Code filed by the
applicant-respondent but while retaining the other part of the
impugned order taking the documents filed on record. After taking D
the said documents on record, for the appropriate process of
adjudication in the matter, it is also considered just and proper
that the order dated 06.10.2020 passed by NCLT be also set
aside and the NCLT be directed to re-consider the application
under Section 9 of the Code as filed by the applicant-respondent
while taking into consideration the additional documents now E
taken on record and at the same time, while extending an adequate
opportunity of hearing to the corporate debtor. [Para 8][124-C-
E]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 466 of
2022. F

From the Judgment and Order dated 15.12.2021 of the National
Company Law Appellate Tribunal, New Delhi in Company Appeal (AT)
(Insolvency) No.981 of 2020.
Jayant K. Mehta, Sr. Adv., A. T. Patra, Karan Khaitan, Aditya G
Ghadge, Ms. Bina Gupta, Advs. for the Appellant.
Nakul Dewan, Sr. Adv., Ms. Suruchi Suri, Simran Jot Singh,
Chanchal Kumar Ganguli, Advs. for the Respondent.

H
122 SUPREME COURT REPORTS [2022] 2 S.C.R.

A The Judgment of the Court was delivered by
DINESH MAHESHWARI, J.
1. Having regard to the short point involved and the contesting
parties being represented, we have heard learned counsel for the parties
finally at this stage itself.
B
2. By way of this appeal, the appellant-company, said to be the
corporate debtor within the meaning of the Insolvency and Bankruptcy
Code, 20161, has questioned the judgment and order dated 15.12.2021,
as passed in Company Appeal (AT) Insolvency No. 981 of 2020 whereby,
the National Company Law Appellate Tribunal, Principal Bench, New
C Delhi2 has set aside the order dated 06.10.2020, as passed by the National
Company Law Tribunal, New Delhi Bench- V3 in CP(IB) 841(ND) of
2020 and has also allowed the application moved by the applicant
(respondent herein) under Section 9 of the Code.
3. The said application under Section 9 of the Code was filed by
D the applicant-respondent on 30.06.2020, in its capacity as an operational
creditor of the corporate debtor while claiming, inter alia, that there had
been a distribution agreement whereby, the corporate debtor was to sell
the pharmaceutical products of the applicant company only until its
subsidiary by the name “Kedrion India” was capable of doing so. Several
E invoices were raised in duration and credit notes were also issued. It has
been the case of the applicant-respondent that as regards the debts due,
a notice dated 25.07.2019 was sent, demanding a sum of USD 9,01,000
but, the said demand notice was returned undelivered. Thereafter, on
07.08.2019, another demand notice was sent at the new registered office
address of the corporate debtor. The applicant alleged that on 17.08.2019,
F the corporate debtor replied to the said demand notice disputing the
admitted and acknowledged the dues payable, with reference to its pending
dispute with the Directorate of Health Services, Maharashtra with regard
to the supply of short shelf-life products. The applicant contended that
the corporate debtor had committed a default within the meaning of
G Section 3(12) of the Code and the outstanding amount qualified as an
operational debt within the meaning of Section 3(11) read with Section
5(21) of the Code.

1
Hereinafter also referred to as ‘the Code
2
Hereinafter also referred to as ‘the Appellate Tribunal’ or ‘the NCLAT’.
3
H Hereinafter also referred to as ‘the Adjudicating Authority’ or‘the NCLT’.
M/S WIZAMAN IMPEX PVT. LTD. v. KEDRION BIOPHARMA INC. 123
[DINESH MAHESHWARI, J.]

4. In its order dated 06.10.2020, the NCLT considered the A
documents referred by the applicant in support of its contention that
there had been acknowledgment of debt and thereby the period of
limitation would shift from the date of acknowledgment. The NCLT
observed that the document dated 15.12.2017 was a credit memo, issued
by the applicant and not by the respondent and thus, it could not be
B
treated as an acknowledgment of debt. As regards document dated
07.07.2016 carrying the signatures of the Director of the Company and
addressed to the Bank regarding payment of pending invoices, the NCLT
observed that even if the said letter was treated as an acknowledgment
of debt, the limitation would run from its date, i.e., 07.07.2016. The NCLT
further considered another letter dated 02.02.2017 and observed that C
even if the said document was taken as an acknowledgement of debt,
the limitation would run from 02.02.2017. Hence, the NCLT came to the
conclusion that, viewed from any angle, the application filed on 30.06.2020
was beyond the period of three years in terms of Article 137 of the
Limitation Act, 1963. Thus, the NCLT proceeded to reject the application D
so made by the respondent.
5. It appears from the perusal of the record that the applicant-
respondent, in appeal against the aforesaid order of the NCLT, moved
an application (I.A. No. 2685 of 2020) before the Appellate Tribunal and
thereby, sought permission to produce the exchanges of e-mails from E
03.11.2017 to 11.01.2019 with respect to the propositions for settlement
of dues. Admittedly, the said documents were not on record before the
NCLT.
6. However, the Appellate Tribunal found it just and proper to
grant permission to the applicant (appellant before the NCLAT) to place F
such additional documents on record; but accorded such permission only
in the impugned order dated 15.12.2021. Thereafter, on the basis of the
said additional documents taken on record, the Appellate Tribunal came
to the conclusion that the corporate debtor had admitted its liability and
had shown its readiness to make payment as also to revise the settlement G
proposal. All such suggestions, admissions and offers evidenced by the
said e-mails were taken by the Appellate Tribunal as acknowledgement
by the corporate debtor within time and thus, it was held that the
Adjudicating Authority erred in holding the applicant’s claim to be barred
by time.
H
124 SUPREME COURT REPORTS [2022] 2 S.C.R.

A 7. Though several contentions have been urged by the learned
counsel for contesting parties as regards effect of the said documents
placed before the Appellate Tribunal by way of I.A. No. 2685 of 2020
but, we are clearly of the view that the impugned order allowing the
appeal and even admitting the application under Section 9 of the Code
cannot be sustained on a short point that the said additional documents
B
were taken on record only while finally deciding the appeal and without
adequate opportunity of response to the corporate debtor. However, at
the same time, due consideration of the said documents also appears
requisite and the documents i.e., the said e-mails, cannot be removed
out of consideration only because they were not on record before NCLT.
C 8. For what has been discussed and observed hereinabove, in our
view, the appropriate course in this matter would be to set aside the
impugned order dated 15.12.2021 passed by NCLAT to the extent it has
allowed the application under Section 9 of the Code filed by the applicant-
respondent but while retaining the other part of the impugned order taking
D the documents filed with I.A. No. 2685 of 2020 on record. After taking
the said documents on record, for the appropriate process of adjudication
in the matter, it is also considered just and proper that the order dated
06.10.2020 passed by NCLT be also set aside and the NCLT be directed
to re-consider the application under Section 9 of the Code as filed by the
applicant-respondent while taking into consideration the additional
E documents now taken on record and at the same time, while extending
an adequate opportunity of hearing to the corporate debtor.
9. We may, of course, observe that at the outset Mr. Nakul Dewan,
learned senior counsel appearing for the respondent has attempted to
question the maintainability of this appeal at the instance of the corporate
F debtor because NCLAT had, by the impugned order, allowed the
application under Section 9 of the Code. We have overruled such objection
for the simple reason that the said application had been rejected by NCLT
and was allowed only by way of impugned order and until the said order
was examined by this Court and attained finality, the right and locus of
G the corporate debtor to challenge the correctness thereof, could not have
been denied. In any case, in the present matter, the impugned order was
passed on 15.12.2021 and admittedly, no other steps had been taken in
the matter including that of appointment of resolution professional. In
the given set of facts, we overruled the objections raised by the learned
senior counsel for the respondent.
H
M/S WIZAMAN IMPEX PVT. LTD. v. KEDRION BIOPHARMA INC. 125
[DINESH MAHESHWARI, J.]

10. Accordingly, this appeal is allowed to the extent and in the A
manner indicated hereinabove. The application under Section 9 of the
Code in CP(IB) 841(ND) of 2020 stands restored for re-consideration
by the Adjudicating Authority keeping in view the observations and
requirements foregoing.
11. It goes without saying that we have not pronounced on the B
merits of the case either way and not even on the evidentiary value and
effect of the documents in question. All the aspects are left open for
examination by the Adjudicating Authority in accordance with law.
12. Having regard to the circumstances of the case and the fact
that the application under Section 9 of the Code was filed way back on C
30.06.2020, we would expect the Adjudicating Authority to assign a
reasonable priority to the matter and to proceed expeditiously.

Bibhuti Bhushan Bose Appeal partly allowed.
D

E

F

G

H