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Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + AT Insolvency and Bankruptcy - 2021 (11) TMI AT This

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2021 (11) TMI 794 - AT - Insolvency and Bankruptcy


Issues Involved:
1. Defective application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Date of default and its implications on the limitation period.
3. Non-compliance with procedural requirements.
4. Applicability of Section 18 of the Limitation Act, 1963 for extending the limitation period.

Issue-wise Detailed Analysis:

1. Defective Application under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The Appellant argued that the application filed by the Respondent under Section 7 was defective as it did not mention the date of default in Form-1. The Adjudicating Authority noted that the date of default was omitted from the relevant column but observed that the date of default was mentioned in the pleadings and documents enclosed with the application. Despite this omission, the Authority allowed the application, emphasizing that the non-mentioning of the date of default in the specified column was not fatal to the application as long as the default was evident from the accompanying documents.

2. Date of Default and its Implications on the Limitation Period:
The Appellant contended that the application was time-barred, arguing that the correct date of default was 12.11.2016, which was beyond the three-year limitation period prescribed under Article 137 of the Limitation Act, 1963. The Respondent, however, maintained that the date of default was 27.11.2018, which was within the limitation period. The Tribunal found that the date of default was indeed 27.11.2018, as evidenced by the SARFAESI notice and other documents, and thus the application was filed within the limitation period.

3. Non-compliance with Procedural Requirements:
The Appellant argued that the application should have been rejected due to non-compliance with procedural requirements, specifically the omission of the date of default in Part IV of Form-1. The Tribunal referred to the Supreme Court's decision in Surendra Trading Co. v. Juggilalkamlapat Jute Mills Co., which held that the timelines under Section 7(5) are directory and not mandatory, and that defects in the application should be rectified. The Tribunal concluded that the omission was not fatal as the default was sufficiently evidenced by other documents.

4. Applicability of Section 18 of the Limitation Act, 1963 for Extending the Limitation Period:
The Respondent argued that the limitation period was extended by an acknowledgment of debt dated 16.08.2018, which fell within the three-year limitation period. The Tribunal agreed, citing the Supreme Court's decision in Laxmi Pat Surana v. Union Bank of India, which held that a subsequent acknowledgment of debt can extend the limitation period. Thus, the application filed on 19.12.2019 was within the extended limitation period.

Conclusion:
The Tribunal dismissed the appeal, finding that the application under Section 7 was not defective despite the omission of the date of default in Part IV of Form-1, as the default was evidenced by accompanying documents. The application was filed within the limitation period, considering the acknowledgment of debt, and the procedural non-compliance was not fatal to the application. The Tribunal emphasized that the primary objective of the Insolvency and Bankruptcy Code is to resolve insolvency issues and not to dismiss applications on technical grounds.

 

 

 

 

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