SC Allows Exclusion of COVID-19 Period in Lease Default Case – Petition Wasn’t Barred by Limitation

Case Details: Thakral Computers (P.) Ltd. v. Pythhos Technology (P.) Ltd. - [2024] 159 taxmann.com 503 (NCLT - New Delhi)

Judiciary and Counsel Details

• Dharminder Singh, Judicial Member & Ms Sumita Purkayastha, Technical Member

Facts of the Case

In the instant case, the operational creditor and the corporate debtor entered into an arrangement whereby the operational creditor provided its office space to the corporate debtor for its use. The operational creditor raised invoices and debit notes for rent and expenses incurred on account of the corporate debtor.

Since, the corporate debtor defaulted in paying dues, the operational creditor sent a demand notice u/s 8 of the IBC to the corporate debtor. The operational creditor filed a petition u/s 9 on 01.10.2021 against the corporate debtor as it failed to pay dues. The corporate debtor replied that the instant petition was barred by limitation wherein the date of default was between 01.07.2017 to 02.03.2018 and the limitation expired on 01.03.2020.

It was noted that the lease of office space was commercial and hence, the claim of operational creditor was an operational debt. Further, since in the instant case, the corporate debtor admitted its liability to pay an operational debt in its reply to the demand notice, the instant petition was to be allowed.

NCLT Held

The NCLT held that since, the Supreme Court, in its judgement in a suo motu case, excluded the period of limitation w.e.f. 15-3-2020 owing to the outbreak of COVID-19 and the period of limitation was extended, the instant petition was not time-barred and, thus, the same was to be allowed.