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2020 (9) TMI 54 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - time limitation - whether the Application under Section 7 of the I B Code, 2016 filed by the Respondent Bank was within the period of limitation? - HELD THAT - The determining factor is the three years period from date of default/NPA. This Appellate Tribunal has also observed in RAJENDRA KUMAR TEKRIWAL (EX- DIRECTOR PITHAMPUR POLY PRODUCTS LIMITED) VERSUS BANK OF BARODA (BEFORE MERGER WITH RESPONDENT BANK WAS KNOWN AS DENA BANK ) 2020 (8) TMI 498 - NATIONAL COMPANY LAW APPEALLATE TRIBUNAL, NEW DELHI that the period of three years from the date of the Account of Corporate Debtor is classified as NPA then it becomes impermissible to proceed with Section 7 Application as observed in the para 11 of the Judgment - All these leads to reiterate that the provisions of The Limitation Act, 1963 vide Section 238A of the I B Code, 2016 will be applicable to all NPA cases provided they meet the criteria of Article 137 of the Schedule to The Limitation Act, 1963. The extension for the period of Limitation can only be done by way of application of Section 5 of The Limitation Act, 1963, if any case for the condonation of delay is made out. The impugned order dated 27.08.2019 passed by the Adjudicating Authority (NCLT, Hyderabad Bench, Hyderabad) is set aside - appeal allowed.
Issues involved:
- Appeal against the order initiating Corporate Insolvency Resolution Process - Delay in filing the appeal - Determining the period of limitation for filing under Section 7 of the Insolvency and Bankruptcy Code - Applicability of The Limitation Act, 1963 in NPA cases Analysis: 1. The appellant, a Suspended Managing Director, filed an appeal against the order initiating Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code. The appellant sought to set aside the ex-parte order and stay the insolvency proceedings against the Corporate Debtor. The appellant provided details of the company's financial status, including losses incurred from the financial year 2014-15, along with relevant legal documents such as the Memorandum of Writ Petition and the order of Debt Recovery Tribunal. 2. The Adjudicating Authority noted the appellant's failure to respond despite repeated notices and appearances by counsel. The Authority admitted the case based on payments made by the Corporate Debtor to the Respondent Bank, even though the account was declared a Non-Performing Asset (NPA) on a previous date. 3. The issue of delay in filing the appeal was addressed, with the Registrar having already condoned the delay. The Respondent Bank raised concerns about the limitation period for filing under Section 7 of the I&B Code, citing relevant legal precedents and the fresh period of limitation starting from the date of a partial repayment by the Corporate Debtor. 4. The Appellate Tribunal emphasized the three-year limitation period from the date of default/NPA for filing under Section 7 of the Code. Legal judgments were cited to support this position, highlighting that the date of default remains fixed and cannot shift. The Tribunal also referred to previous cases where the period of three years from the date of NPA classification was crucial in determining the validity of Section 7 applications. 5. The Tribunal concluded that The Limitation Act, 1963, specifically Section 238A of the I&B Code, applies to all NPA cases meeting the criteria of Article 137 of the Schedule to the Limitation Act. The extension of the limitation period is only possible through a Section 5 application for condonation of delay. Consequently, the appeal was allowed, the impugned order was set aside, and all related actions were declared illegal and revoked. The Corporate Debtor was directed to pay fees and costs incurred during the proceedings, and the judgment was to be communicated and uploaded as per regulations.
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