2021 (2) TMI 307 - HC - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - company defaulted in payment of the dues and the loan account was treated as 'Non-Performing Asset' - HELD THAT - Though the learned Senior Counsel appearing for the petitioner, as well as the learned Standing Counsel appearing for the 1st respondent Bank, impressed upon the Court to consider their rival claim as to the bar of limitation in respect of the application filed by the 1st respondent Bank, this Court is not inclined to go into the claim in the light of the well settled position of law that the issue relating to limitation is a mixed question of law and facts, especially in the light of the plea taken by the 1st respondent Bank in Para No.27 of their application. It is brought to the notice of this Court by the respective learned counsel for the parties that the 2nd respondent Tribunal is yet to entertain the application. This Court permits the petitioner, cited as Corporate Debtor in the said application, to raise the plea of limitation by also putting the 1st respondent Bank on notice, and the 2nd respondent Tribunal is requested to decide on the basis of the materials placed, as to the maintainability of the application, especially in the light of the plea taken by the writ petitioner/Corporate Debtor with regard to the bar of limitation, and decide the same in accordance with law - Petition disposed off.

Summary

Issues:
1. Application for initiation of Corporate Insolvency Resolution Process against the petitioner/guarantor.
2. Bar of limitation in filing the application under Section 7(2) of the Insolvency and Bankruptcy Code, 2016.

Analysis:
1. The petitioner, a Promoter and erstwhile Director of a company, availed a loan from the 1st respondent Bank as a personal guarantor. The company defaulted, leading to the loan being classified as a 'Non-Performing Asset.' Subsequently, the Bank initiated legal proceedings for recovery, including filing an application for Corporate Insolvency Resolution Process against the petitioner. The petitioner argued that the application was barred by limitation, citing a Supreme Court judgment and emphasizing the application of the Limitation Act to insolvency proceedings. The petitioner contended that since the date of default was in 2015, the application was time-barred. The respondent Bank, however, argued that the plea of limitation was a mixed question of law and facts, and considering the impact of the Covid-19 pandemic, the application was within the limitation period.

2. The Court acknowledged the rival submissions regarding the limitation issue but declined to adjudicate on it, noting that the matter involved a mixed question of law and facts. The Court highlighted the plea made by the respondent Bank in their application and the pending consideration by the Debts Recovery Tribunal. Consequently, the Court permitted the petitioner to raise the plea of limitation before the Tribunal and directed the Tribunal to decide on the application's maintainability based on the materials presented. The Court emphasized that the Tribunal would assess the application in light of the petitioner's limitation argument and issue a decision in accordance with the law. Depending on the Tribunal's decision, further actions would ensue, and the writ petitions were disposed of without costs, with connected miscellaneous petitions closed.