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2023 (7) TMI 830 - HC - Insolvency and BankruptcySeeking dismissal of the application filed under Section 7 of the IBC - barred by limitation or not - review of the order directing liquidation as well as the order initiating Corporate Insolvency Resolution Process - It was contended that the application filed by respondent No. 2 under Section 7 of IBC was clearly barred by limitation and therefore all proceedings and orders passed on the basis of such application were non est in the eye of law. HELD THAT - NCLT had passed the initial order dated 20.09.2019 after hearing both the financial creditor as well as the corporate debtor. Petitioner had filed reply to the application filed under Section 7 of IBC but did not raise any issue of limitation. What was urged before the NCLT was that it was because of the methodology adopted by the financial creditor that the corporate debtor ran into liquidity crunch which resulted in default in payment of outstanding dues. Be that as it may if the petitioner was aggrieved by the order dated 20.09.2019 he had his remedy of filing appeal under Section 61 of the IBC. However under sub-section (2) of Section 61 such appeal is required to be filed within thirty (30) days before NCLAT. As per the proviso NCLAT has the discretion to allow an appeal to be filed after the expiry of the said period of thirty days if it is satisfied that there was sufficient cause for not filing the appeal but such period shall not exceed fifteen days. Thus overall there is limitation of 45 days in filing appeal under Section 61. Petitioner did not file any such appeal. Long thereafter he filed an interlocutory application under Section 60(5)(c) of IBC for rejecting the application filed under Section 7 of IBC as being barred by limitation which we have seen above has been dismissed by NCLT vide the impugned order dated 30.03.2021. NCLT shall have jurisdiction to entertain or dispose of any application or proceeding by or against the corporate debtor or corporate person; any claim made by or against the corporate debtor or corporate person including claims by or against any of its subsidiaries situated in India; and any question of priorities or any question of law or facts arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under IBC. It is under this provision that the related interlocutory application was filed by the petitioner. According to us it has been rightly dismissed by the NCLT. In Glaxo Smith Kline Consumer Health Care Limited 2020 (5) TMI 149 - SUPREME COURT Supreme Court has held that ordinarily High Court should not entertain a petition under Article 226of the Constitution of India after exhaustion of the limitation period provided by the statute for availing the remedy thereunder. Extension of limitation in proceedings under IBC - HELD THAT - Adverting to Section 18 of the Limitation Act 1963 Supreme Court in Chandra Prakash Jain 2021 (10) TMI 144 - SUPREME COURT held that the said provision is applicable to applications filed under Section 7 of IBC. In case the application under Section 7 of IBC is filed beyond the period of limitation of three years from the date of default and the financial creditor furnishes the required information relating to acknowledgement of debt in writing by the corporate debtor before the adjudicating authority with such acknowledgement having taken place within the initial period of three years from the date of default a fresh period of limitation commences and the application can be entertained if filed within this extended period. In the instant case the date of declaration of the loan account as NPA. It is 31.05.2011. Demand notice was issued by respondent No. 2 to the corporate debtor under Section 13(2) of the SARFAESI Act on 22.06.2011 followed by possession notice dated 15.09.2021. While proceeding under the SARFAESI Act was going on a proposal for rescheduling of the loan account was mooted by the parties on 19.03.2012. Corporate debtor had also executed balance confirmations on 04.07.2013. Thereafter corporate debtor had submitted proposal by way of e-mail communications dated 22.12.2015 and 23.12.2015 showing its readiness and willingness to settle outstanding dues at Rs. 16.00 crores. A meeting was held thereafter between the corporate debtor and the financial creditor on 08.01.2016 - Following further communications between the parties respondent No. 2 agreed for settlement of its dues under OTS vide letter dated 22.04.2016. It was thereafter that application under Section 7 of IBC was filed before NCLT in the year 2018 to be precise on 29.10.2018 which ultimately led to the order dated 20.09.2019. Therefore it cannot be said that the application under Section 7 of IBC is barred by limitation. The present writ petition is thoroughly misconceived and is liable to be dismissed - Petition dismissed.
Issues Involved:
1. Legality and validity of the NCLT order dated 30.03.2021. 2. Bar of limitation under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016. 3. Non-joinder of necessary party. 4. Availability of alternative remedy under Section 61 of IBC. Summary: 1. Legality and validity of the NCLT order dated 30.03.2021: The petitioner challenged the NCLT order dated 30.03.2021, which dismissed the interlocutory application filed under Section 60(5) of the IBC. The petitioner sought dismissal of the application under Section 7 of the IBC as being barred by limitation. NCLT had initiated the Corporate Insolvency Resolution Process (CIRP) on 20.09.2019 and later ordered liquidation on 22.02.2021. 2. Bar of limitation under Section 7 of the IBC: The petitioner argued that the application under Section 7 of the IBC was barred by limitation as the default date was 31.05.2011, and the application was filed in 2019. However, the court found that the financial creditor had acknowledged the debt in writing within the initial three-year period, thus extending the limitation period. The court referred to the Supreme Court's decision in Rajendra Narottamdas Sheth v. Chandra Prakash Jain, which held that Section 18 of the Limitation Act, 1963 applies to applications under Section 7 of the IBC. 3. Non-joinder of necessary party: The court noted that the petitioner had not disclosed material facts, including the sale of the corporate debtor to M/s. Mahashiv Shakti Trading Company. This non-disclosure and non-joinder of the necessary party were grounds for dismissal of the writ petition. 4. Availability of alternative remedy under Section 61 of IBC: The court emphasized that the petitioner had the remedy of filing an appeal under Section 61 of the IBC against the NCLT order dated 20.09.2019 but failed to do so within the prescribed limitation period. The court referred to the Supreme Court's decision in Glaxo Smith Kline Consumer Health Care Limited, which held that High Courts should not entertain petitions under Article 226 after the exhaustion of the statutory limitation period. Conclusion: The court dismissed the writ petition, stating that it was thoroughly misconceived. The interim order passed on 21.12.2021 was vacated, and no order as to costs was made.
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