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2022 (9) TMI 1579 - SCH - Insolvency and BankruptcyTime limitation of proceedings as financial creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016 - calculation of time period - HELD THAT - The company had paid a sum of Rs.49,50,000/- on 19.12.2016, amounting to acknowledgment of debt - the period of three years has to be calculated from the said date. Reliance is placed on a Judgment of this Court in SESH NATH SINGH ANR. VERSUS BAIDYABATI SHEORAPHULI CO-OPERATIVE BANK LTD AND ANR. 2021 (3) TMI 1183 - SUPREME COURT , wherein this Court has held We see no reason why Section 14 or 18 of the Limitation Act,1963 should not apply to proceeding under Section 7 or Section 9 of the IBC. Of course, Section 18 of the Limitation Act is not attracted in this case, since the impugned order of the NCLAT does not proceed on the basis of any acknowledgment. The order passed by the National Company Law Appellate Tribunal is clearly erroneous in law. The same is set aside and the order of the National Company Law Tribunal dated 27.08.2019 is restored. The appeal is, accordingly, allowed.
Issues: Challenge to NCLAT order allowing appeal based on limitation period calculation under IBC.
Analysis: The Supreme Court addressed the challenge to the NCLAT order in this appeal, which stemmed from an order passed by the National Company Law Tribunal. The core issue revolved around the calculation of the limitation period under the Insolvency and Bankruptcy Code, 2016 (IBC). The NCLAT had allowed the appeal filed by the respondent, the former Managing Director of the company, on the grounds that the initiation of proceedings as a financial creditor was beyond the three-year limit prescribed by Article 137 of the Limitation Act, 1963. The NCLAT's decision was based on the fact that the nonperforming asset was declared before the initiation of proceedings under the IBC. The appellant argued that a payment made by the company in 2016 amounted to an acknowledgment of debt, which should reset the calculation of the three-year period. The appellant relied on a judgment by the Supreme Court in Sesh Nath Singh & Anr. Vs. Baidyabati Sheoraphuli Co-operative Bank Ltd. & Anr., which highlighted the applicability of the Limitation Act provisions to proceedings under the IBC before the NCLT and NCLAT. The Court emphasized that all provisions of the Limitation Act are applicable to these proceedings to the extent feasible, including Section 6, 14, and 18. Furthermore, the Court referenced another judgment in Dena Bank (Now Bank of Baroda) Vs. C. Shivakumar Reddy & Anr., reinforcing the application of the Limitation Act to proceedings under the IBC. The Supreme Court concluded that the NCLAT's order was legally flawed based on the cited judgments. Consequently, the Court set aside the NCLAT order and reinstated the National Company Law Tribunal's decision from 2019. The Insolvency Resolution Professional appointed by the NCLT was directed to proceed with the matter in accordance with the law, and any pending interlocutory applications were disposed of.
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