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2020 (8) TMI 870 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Non-Performing Asset (NPA) - existence of debt and dispute or not - time limitation - HELD THAT - The Hon'ble Apex Court in B.K. Educational Services Pvt. Ltd. Vs. Parag Gupta and Associates 2018 (10) TMI 777 - SUPREME COURT where it was held that The right to sue therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application. This application is hopelessly time barred - Application dismissed.
Issues:
Initiation of Corporate Insolvency Resolution Process under Section 7 of Insolvency and Bankruptcy Code, 2016. Application filed for Corporate Insolvency Resolution Process against M/S. Indian Speciality Fats Ltd. Transfer of application from NCLT Mumbai Bench to NCLT Cuttack Bench. Default in repayment leading to declaration of loan account as NPA. Assignment of loan by State Bank of India to Kotak Mahindra Bank Ltd. Applicability of Limitation Act to applications under Sections 7 and 9 of the Code. Dismissal of application on grounds of being time-barred. Detailed Analysis: 1. Initiation of Corporate Insolvency Resolution Process: The application was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 for the initiation of Corporate Insolvency Resolution Process against the Corporate Debtor, M/S. Indian Speciality Fats Ltd. The application was originally filed before the NCLT Mumbai Bench and later transferred to the NCLT Cuttack Bench after its constitution. 2. Default in Repayment and NPA Declaration: The State Bank of India sanctioned financial facilities to the Corporate Debtor in 1996. However, the Corporate Debtor failed to adhere to the terms and conditions of the loan, leading to the declaration of the loan account as a Non-Performing Asset (NPA). Subsequently, recovery proceedings were initiated by the State Bank of India before the Debts Recovery Tribunal in Jabalpur. 3. Transfer of Loan and Applicability of Limitation Act: The State Bank of India assigned the loan to Kotak Mahindra Bank Ltd. through a Deed of Assignment dated 16.01.2006. The Tribunal noted the applicability of the Limitation Act to applications filed under Sections 7 and 9 of the Insolvency and Bankruptcy Code. Citing the B.K. Educational Services Pvt. Ltd. case, the Tribunal highlighted that the right to sue accrues when a default occurs, and applications filed beyond the limitation period are subject to dismissal. 4. Dismissal of Application: Based on the above analysis, the Tribunal found the application to be time-barred and, therefore, dismissed it. The Tribunal emphasized that the application was hopelessly time-barred, leading to its dismissal without any costs imposed on either party. The Registry was directed to communicate the order to the applicant/petitioner and respondent, with a certified copy to be issued upon compliance with formalities. In conclusion, the Tribunal's judgment centered on the dismissal of the application for the initiation of Corporate Insolvency Resolution Process against the Corporate Debtor due to being time-barred under the provisions of the Limitation Act. The detailed analysis covered the background of the case, the transfer of the application, the default in repayment leading to NPA declaration, the assignment of the loan, and the application of the Limitation Act resulting in the dismissal of the application.
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