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2021 (3) TMI 232 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - SICA proceedings - existence of debt and dispute or not - time limitation - Whether as per section 22(1) of the SICA the legal proceedings for recovery of operational debt were suspended? - HELD THAT - During sanction of the rehabilitation scheme Appellant filed an application under Section 22(1) of the SICA before the BIFR. BIFR vide order dated 20.11.2012 allowed the application and the Appellant was permitted to approach appropriate Civil Court for adjudication of its dues, with the condition that if any, decree awarded by the Court, it would be executed with prior approval of BIFR - it is clear that the Appellant was not ready to accept proposal of the settlement of outstanding dues at 20% and Appellant sought consent of the board to approach appropriate Civil Court for adjudication of its dues. It means the Appellant was not part of the Scheme and he intends to approach Civil Court for recovery of operational debt. It is also seen that during the pendency of reference before BIFR on 23.03.2009 the Appellant had filed a Civil Suit No. 315 of 2009 before Civil Judge Vadodara for declaration that the transfer or alienation of the assets by the Respondent is illegal and malafide and issue injunction against the Respondent not to transfer or alienate the assets of the Company - The Appellant was not part of the scheme and they have already approached Civil Court. In such circumstances, it cannot be said that the legal right of remedy of the Appellant against the Respondent was suspended as per section 22(1) of the SICA. Whether as per section 22(5) of the SICA the Appellant is entitled to get exclusion in computing the period of limitation spent in SICA Proceedings? - HELD THAT - As per the provision of Section 22(5) of the SICA the Appellant is entitled to get exclusion for aforesaid period in computing the period of limitation - the Appellant was not part of the scheme and he has obtained the consent of BIFR for initiating its legal right of remedy against the Respondent Company before the Civil Court. Thus the remedy against the Respondent was not suspended, therefore, the Appellant is not entitled to claim extension of period of limitation by virtue of exclusion of period of suspension. The Ld. Adjudicating Authority has rightly held that the Appellant is not entitled for exclusion of the period which spent during the pendency of proceedings under SICA. Thus, the Application under Section 9 of the I B Code is barred by Limitation. Appeal dismissed.
Issues:
1. Whether legal proceedings for recovery of operational debt were suspended under section 22(1) of the SICA? 2. Whether the Appellant is entitled to exclusion in computing the period of limitation under section 22(5) of the SICA? Issue No. 1: The Appellant, a printing and packaging material supplier, filed an Appeal under Section 61 of the Insolvency and Bankruptcy Code against an order rejecting their Application under Section 9 of the I&B Code as time-barred. The Corporate Debtor failed to make payments, leading to financial distress and referral to BIFR. The Appellant argued for exclusion of the period under SICA, claiming the debt acknowledgment in 2005 as the starting point for limitation calculation. The Adjudicating Authority rejected the Application, stating SICA provisions do not apply to I&B Code proceedings. The Appellant challenged this decision, citing BIFR observations and the interplay between SICA and I&B Code. Issue No. 2: The Appellant contended that the period till 2017, when the rehabilitation scheme was not implemented, should be excluded for limitation calculation under section 22(5) of SICA. However, it was established that the Appellant was not part of the BIFR-approved scheme and had sought civil court intervention for debt recovery. The Tribunal held that the Appellant's remedy was not suspended under SICA, thus not entitled to claim an extension of the limitation period. The judgment differentiated the present case from precedent, concluding that the Appellant was not eligible for exclusion of the period spent in SICA proceedings, rendering the Application under Section 9 of the I&B Code time-barred. In summary, the Tribunal dismissed the Appeal, upholding the Adjudicating Authority's decision that the Appellant was not entitled to exclusion of the period spent during SICA proceedings, leading to the Application under Section 9 of the I&B Code being time-barred.
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