2021 (4) TMI 890 - Tri - Insolvency and Bankruptcy

Liquidation of Corporate Debtor - Section 60(5) of Insolvency and Bankruptcy Code, 2016 r/w. Rule 11 of NCLT Rules, 2016 and Section 420 of the Companies Act, 2013 - HELD THAT - It is highly improper to reverse the clock and the petitioner ought to have taken up this matter when the matter was admitted, before the Hon'ble National Company Law Appellate Tribunal (NCLAT), which is the Appellate Authority in the present situation. Application dismissed.

Summary

Issues involved:
Review of application under Section 60(5) of I & B Code, 2016 and dismissal based on limitation; Declaration of further proceedings infructuous.

Detailed Analysis:

Issue 1: Review of application under Section 60(5) of I & B Code, 2016 and dismissal based on limitation
- The application was filed by the Suspended Director of the Corporate Debtor seeking review under Section 60(5) of the I & B Code, 2016 and Rule 11 of NCLT Rules, 2016, along with Section 420 of the Companies Act, 2013.
- The Financial Creditor initiated proceedings under Section 7 of the I & B Code, leading to the admission of the Company Petition by the Tribunal and the invocation of the CIRP process.
- The Applicant argued that the application was barred by limitation as the default date mentioned was 31.05.2011, and the application should have been dismissed accordingly.
- The Applicant contended that the demand notice issued by the Financial Creditor was not a statutory requirement under Section 7 of the I & B Code, and the only relevant point was the "Date of Default."
- Various legal citations were relied upon to support the argument that the application was indeed barred by limitation under Article 137 of the Limitation Act, as interpreted by the Hon'ble Supreme Court of India in different cases.
- The Applicant invoked the Tribunal's powers under Section 60(5)(c) of the I & B Code, Rule 11 of NCLT Rules, 2016, and Section 420(2) of the Companies Act, 2013, to review the order based on the mistake apparent from the record regarding limitation.

Issue 2: Declaration of further proceedings infructuous
- During the CIRP process, the Resolution Professional and COC decided to file an application for liquidation of the Corporate Debtor, leading to the issuance of an order for liquidation by the Tribunal.
- The Applicant sought to declare all further proceedings based on the CIRP order as infructuous due to the alleged limitation issue.
- The Applicant relied on decisions of the Hon'ble Supreme Court of India and the National Company Law Appellate Tribunal to support the argument that the application was time-barred and should have been dismissed.
- The Tribunal found it improper to reverse the clock at this stage and stated that the matter should have been taken up before the NCLAT, the Appellate Authority, during the admission stage.
- Consequently, the Tribunal dismissed the Interlocutory Application, emphasizing that there was no reason to entertain it at that point.

In conclusion, the Tribunal dismissed the Interlocutory Application seeking a review and dismissal based on limitation, as well as the declaration of further proceedings as infructuous, citing that the matter should have been addressed at an earlier stage before the Appellate Authority.