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2021 (9) TMI 1324 - Tri - Insolvency and BankruptcyMaintainability of application - applicability of time limitation - seeking condonation of Delay is maintainable in an Application filed under Sec7 of IBC? - section 5 of the Limitation Act - sufficient cause for condonation of delay present or not - HELD THAT - In the present case, the total financial debt owed by the Corporate Debtor is ₹ 681.87 crores to the Applicant who is a custodian of public money and public interest is at stake, CBI proceedings were instituted pursuant to FIR bearing No. RC068206E0014 and also with an element of fraud and involvement of certain officers of Applicant/Petitioner. The petitioner had taken steps and filed recovery proceedings before DRT and thus there is no negligence no lack of bonafides on the part of the Applicant in exercise of its legal rights. This bench is bound to conclude that an application under Sec.7 is to be filed within three years as construed under Article 137 save and except in those cases where, in the facts of the case, sec.5 of Limitation Act may be applied to condone the delay in filing such application only on the ground that sufficient cause has been shown to condone such delay. It is well settled expression sufficient Cause is to receive liberal construction and that the judicial discretion is to be exercised with vigilance and circumspection. It is not the case of the Respondent/ Corporate Debtor that grave injustice would be occasioned if the delay is condoned, this Bench is adopting a liberal approach considering that the applicant is a public sector undertaking of Government of India involving public interest/public money. This proceedings under Section 7 is not a recovery proceedings but to initiate Corporate Insolvency Resolution Process of the Corporate Debtor and as such this Adjudicating Authority is exercising its judicial discretion in condoning the delay in filing the petition under Sec.7 as an exceptional case. On perusal of the documents filed by the Financial Creditor, is of the view that the Premier Limited and the Corporate Debtor defaulted in repaying the loan availed. The existence of debt and default is reasonably established by the Petitioner as a major constituent for admission of a Petition under Section 7 of the Code. Therefore, the Petition under sub-section (2) of Section 7 is taken as complete, accordingly this Bench hereby admits this Petition - Petition dismissed - moratorium declared.
Issues Involved:
1. Applicability of the Limitation Act to proceedings under the Insolvency and Bankruptcy Code (IBC). 2. Whether the delay in filing the Company Petition under Section 7 of the IBC can be condoned. 3. Sufficient cause for condonation of delay under Section 5 of the Limitation Act. 4. The impact of the balance sheet acknowledgment on the limitation period. 5. The role of public interest and public sector undertakings in the context of delay. Detailed Analysis: 1. Applicability of the Limitation Act to proceedings under the Insolvency and Bankruptcy Code (IBC): The Tribunal confirmed that the Limitation Act, 1963, applies to proceedings under the IBC, particularly to petitions under Section 7. Section 238A of the IBC explicitly incorporates the Limitation Act into IBC proceedings. The Tribunal referred to the Supreme Court's judgments in B.K. Educational Services Pvt. Ltd. v. Parag Gupta and Associates and Babulal Vardharji Gurjar v. Veer Gurjar Aluminium, which established that the period of limitation for filing petitions under Section 7 of the IBC is three years from the date of default, as governed by Article 137 of the Limitation Act. 2. Whether the delay in filing the Company Petition under Section 7 of the IBC can be condoned: The Tribunal evaluated whether the delay of 1,392 days in filing the Company Petition could be condoned under Section 5 of the Limitation Act. It was noted that the delay was primarily due to the uncertainty in the law regarding the applicability of the Limitation Act to IBC proceedings. The Tribunal highlighted that the IBC came into force on 01.12.2016, and Section 238A was inserted on 06.06.2018, which led to conflicting judgments from various benches of NCLT and NCLAT regarding the applicability of the Limitation Act. 3. Sufficient cause for condonation of delay under Section 5 of the Limitation Act: The Tribunal emphasized that the expression "sufficient cause" under Section 5 of the Limitation Act should be interpreted liberally to serve the ends of justice. The Tribunal found that the Petitioner had shown sufficient cause for the delay, including the uncertainty in the law and the diligent efforts made by the Petitioner to recover the debt through various legal proceedings under the RRDB Act and SARFAESI Act. The Tribunal also noted that the Petitioner, being a public sector undertaking, represents the collective cause of the community, and public interest is at stake. 4. The impact of the balance sheet acknowledgment on the limitation period: The Tribunal acknowledged that the balance sheet of the Corporate Debtor for the year 31.03.2015 recorded the liability to the Financial Creditor, which extended the limitation period by a fresh three years from 31.03.2015 to 31.03.2018. This reduced the period of delay from 1,392 days to 662 days. The Tribunal referred to the Supreme Court's judgment in Asset Reconstruction Company (India) Ltd. v. Bishal Jaiswal & Anr., which held that entries in balance sheets amount to acknowledgment of debt under Section 18 of the Limitation Act. 5. The role of public interest and public sector undertakings in the context of delay: The Tribunal considered that the Petitioner is a public sector undertaking of the Government of India, which represents public interest and the collective cause of the community. The Tribunal adopted a liberal approach in condoning the delay, emphasizing that substantial justice should prevail over technical considerations. The Tribunal cited the Supreme Court's judgment in Collector, Land Acquisition, Anantnag and Another v. Mst. Katiji & Others, which supports a liberal approach to condonation of delay to ensure justice is served. Conclusion: The Tribunal condoned the delay of 662 days in filing the Company Petition under Section 7 of the IBC, considering the sufficient cause shown by the Petitioner, including the uncertainty in the law and the diligent efforts made to recover the debt. The Tribunal admitted the petition, initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor and appointing an Interim Resolution Professional. The Tribunal emphasized the importance of public interest and the role of public sector undertakings in the context of delay.
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