2024 (11) TMI 211 - AT - IBC

Maintainability of application - initiation of CIRP - condonation of delay in filing petition u/s 7 of IBC - It was averred in the application that at the time of filing of petition, no application for condonation of delay was filed as it is alleged that the OBC at that time was under the bonafide impression and belief that the CP was filed well within the period of limitation - HELD THAT - The Tribunal held that Section 5 of the Act shall apply to the application filed under Section 7 or 9 of the Code but while referring to a decision of the Hon ble Supreme Court in the case of B.K Educational Services Pvt. Ltd. Vs. Parag Gupta And Associates 2018 (10) TMI 777 - SUPREME COURT held that the right to sue, therefore, accrues when a default occurs and that if the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases where in the facts of the case Section 5 of the Act may be applied to condone the delay in filing such an application . The Tribunal has also held that the Appellant cannot be permitted to take the plea of bonafide belief that the limitation for filing the application, filed under Section 7, would start from 01.12.2016 when the Code came into being and became enforceable. The Tribunal has also discussed in its order about the liberal approach of the Court in condoning the delay but it was held that if mandatory provision is not complied with and that delay is not sufficiently, satisfactorily and convincingly explained then the delay cannot be condoned on equitable or sympathetic grounds alone. There are no merit in the present appeal for the purpose of interference and hence, the same is hereby dismissed.

Issues:
1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 filed by Oriental Bank of Commerce against Walia Traders Limited.
2. Disbursement of two term loans by OBC to the Corporate Debtor on the same date.
3. Details of the application filed by OBC for resolution of a specific amount.
4. Classification of the Corporate Debtor's account as NPA by OBC and the claimed amount based on the default date.
5. Application by PNB to substitute OBC's name in the main petition.
6. PNB's application for condonation of delay in filing the CP under Section 7.
7. Contestation of the delay period by the Respondent.
8. Tribunal's interpretation of Section 5 of the Limitation Act in the context of the application under Section 7 of the Code.
9. Tribunal's decision on the plea of bonafide belief and the application of the limitation period.
10. Dismissal of the application for condonation of delay and the subsequent dismissal of the main CP as barred by limitation.
11. Arguments raised by the Appellant and lack of supportive judgments.
12. Relying on the Tribunal's findings by the Respondent.

Analysis:
1. The judgment involves an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 filed by Oriental Bank of Commerce against Walia Traders Limited. The application sought to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor based on outstanding amounts.

2. Oriental Bank of Commerce disbursed two term loans to the Corporate Debtor on the same date, totaling Rs. 21.48 Cr. The application detailed the disbursement amounts and dates, forming the basis of the claimed outstanding dues.

3. The application filed by OBC under Section 7 specified the resolution amount of Rs. 31,42,82,870/- as of a certain date. This amount was the subject of the insolvency proceedings initiated by OBC against the Corporate Debtor.

4. OBC classified the Corporate Debtor's account as a Non-Performing Asset (NPA) on a specific date, leading to the claimed amount based on the default date. The judgment outlined the account details and the outstanding amounts as of a later date.

5. Additionally, PNB filed an application to substitute OBC's name in the main petition, citing an amalgamation between OBC and PNB under the Banking Companies Act. The Tribunal allowed this application during the pendency of the proceedings.

6. PNB later filed an application for condonation of delay in filing the Corporate Petition under Section 7. The application sought to explain the delay in filing and the reasons behind the delay, invoking Section 5 of the Limitation Act, 1963.

7. The Respondent contested the delay period asserted by PNB, highlighting discrepancies in the calculation of days elapsed since the default date. This contestation formed a crucial part of the Tribunal's analysis of the delay issue.

8. The Tribunal interpreted Section 5 of the Limitation Act in the context of applications under the Insolvency and Bankruptcy Code, emphasizing the accrual of the right to sue from the date of default. This interpretation guided the decision on the condonation of delay application.

9. The Tribunal deliberated on the plea of bonafide belief raised by the Appellant regarding the limitation period for filing the application under Section 7. The judgment discussed the application of limitation periods and the necessity to comply with statutory provisions.

10. Ultimately, the Tribunal dismissed the application for condonation of delay, leading to the dismissal of the main Corporate Petition as barred by limitation. The decision was based on the interpretation of relevant legal provisions and precedents cited during the proceedings.

11. The arguments presented by the Appellant, including references to pending proceedings and beliefs regarding the limitation period, were thoroughly examined by the Tribunal. The lack of supportive judgments and legal grounds weakened the Appellant's case.

12. The Respondent heavily relied on the Tribunal's findings and legal interpretations to support their submissions. The Tribunal's reasoning and conclusions formed the basis for the Respondent's defense and the ultimate outcome of the case.

← Previous Next →