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2020 (2) TMI 286 - AT - Insolvency and BankruptcyMaintainability of petition - initiation of CIRP - Corporate Debtor defaulted in repayment of its debt - existence of debt and dispute or not - time limitation - HELD THAT - The corporate debtor has taken a ground that the application under Section 7 of I B Code is time barred in the appeal itself. Such ground is not agitated before the Adjudicating Authority. Therefore, there is no finding of Adjudicating Authority on this issue. We have carefully examined the issue of limitation. The Respondent has bonafidely prosecuted within limitation period under SARFEASI Act - Therefore, the Respondent is entitled for the exclusion of time period under Section 14(2) of Limitation Act i.e. the period of 3 years and 6 months. After exclusion of this period the application filed under Section 7 of I B Code is within limitation period. The application under Section 7 is within limitation and there is no force in the argument of Learned counsel for the Appellant that the application is time barred - appeal dismissed.
Issues involved:
1. Whether the application under Section 7 of the Insolvency and Bankruptcy Code is time-barred? Analysis: 1. The appeal involved Directors of a Corporate Debtor against whom the Corporate Insolvency Resolution Process (CIRP) was initiated. The Appellants sought to set aside the order initiating CIRP and stay the proceedings. The Financial Creditor granted a cash credit facility to the Corporate Debtor, who defaulted on payments, leading to the initiation of CIRP. 2. The Financial Creditor declared the Corporate Debtor's account as a non-performing asset (NPA) due to payment irregularities, issuing notices under the SARFEASI Act. The Corporate Debtor challenged these notices in court, leading to a possession order being issued against them. Subsequently, the Financial Creditor filed an application under Section 7 of the Insolvency and Bankruptcy Code. 3. The Appellants argued that the application was time-barred as it was filed over 5 years after the default occurred. Citing legal precedents, they contended that the application should have been filed within three years of the default as per the Limitation Act. 4. The Respondent countered, stating that they diligently pursued legal remedies under the SARFEASI Act, which extended the limitation period. They argued that the time spent in legal proceedings should be excluded from the limitation calculation, making their application timely. 5. The Tribunal noted that the issue of limitation was not raised before the Adjudicating Authority. After examining the facts, it concluded that the Respondent had acted diligently within the limitation period, excluding the time spent in legal proceedings. Therefore, the application under Section 7 was deemed to be within the limitation period, and the appeal was dismissed. 6. The judgment highlighted the importance of diligently pursuing legal remedies and the exclusion of time spent in legal proceedings from the limitation calculation. The decision reaffirmed the application of the Limitation Act to insolvency proceedings and the need for timely initiation of such actions.
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