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TMI BlogLimitation Act and the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC),2016.X X X X Extracts X X X X X X X X Extracts X X X X ..... NCLAT), allowing Company Appeal (AT) (Insolvency) No.407 of 2019, by the Respondents,i.e. C Shivakumar Reddy & Anr. /Corporate debtor under section 7 of IBC. The NCLAT held that the petition of the appellant bank/Dena Bank under section 7 of the IBC was barred by limitation. On 23rd December, 2011 the Appellant Bank/Dena Bank had sanctioned Term Loan and Letter of Credit Cum Buyers' Credit in favour of the Corporate Debtor, with an upper limit of ₹ 45.00 Crores.The Corporate Debtor had to pay back this loan within a period of eight (8) years. Accordingly there was a deposit of title deeds of the immovable property with the Appellant Bank. On 20th September, 2013 the Corporate Debtor defaulted in repayment of its dues to the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,438.60 with future interest at the rate of 16.55% per annum, from the date of filing the application till the date of realization, in the form of a Recovery Certificate. The Counsel for the Bank alleged, that the Corporate Debtor had, in its Annual Reports for the financial years 2016- 2017 and 2017-2018, acknowledged its liability in respect of the loan taken by it from the Appellant Bank. On 1st October 2018, the Appellant Bank issued a Demand Notice to the Corporate Debtor under '2016 Adjudicating Authority Rules', or the "Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016". The Appellant Bank later filed the Petition i.e. CP(IB) No.244/BB/2018 before the Adjudicating Authority under Section 7 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in forty-five days from the date of receipt of such order. The prima facie issue which arose for consideration of hon'ble Supreme Court, in the appeal u/s. 62 is whether NCLAT has erred in law in arriving at the conclusion that the Petition filed by the Appellant Bank under Section 7 of the IBC was barred by limitation, culminating into setting aside the order dated 21st March 2019. Another question is whether a final judgment and decree of the DRT in favour of the Financial Creditor, or the issuance of a Certificate of Recovery in favour of the Financial Creditor, would give rise to a fresh cause of action to the Financial Creditor to initiate proceedings under Section 7 of the IBC within three years from the date of the final judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions before the adjudicating authority/NCLT were challenged as in there was a belated filing of documents an action ought not to have been allowed by the court of first instance,i.e. NCLT/adjudicating authority. Moreover there was an interim application filed by the Bank and new set of facts were introduced. This liberty was granted only to file a gist of the case and some orders/judgments. However the Appellant Bank in abuse of the process of the Tribunal, filed I.A. No. 131 of 2019, introducing a whole new set of documents and setting up an entirely new case for extension of limitation, on the ground of alleged acknowledgement of debt. NCLAT made an averment in its order as to the factual finding that there was nothing on record to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of the Limitation Act. Finally the certificate of recovery as issued by DRT cannot be linked to a Petition under section 7 IBC. There could be no question of reckoning limitation from the date of failure to make payment in terms of the Recovery Certificate. HELD THAT: The hon'ble court referred to its own judgment of Swiss Ribbons Pvt. Ltd. And Anr. Versus Union of India And Ors. - 2019 (1) TMI 1508 - Supreme Court as the primary focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting the corporate debtor from its own management and from a corporate death by liquidation. The Code is thus a beneficial legislation which puts the corporate debtor back on its feet, not being a mere recovery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The principles of limitation should apply to an application under Section 7 of the IBC which enables a financial creditor to file an application initiating the Corporate Insolvency Resolution Process (CIRP)against a Corporate Debtor before the Adjudicating Authority, when a default has occurred. On a conjoint reading of the provisions of the IBC quoted above, it is clear that a final judgment and/or decree of any Court or Tribunal or any Arbitral Award for payment of money, if not satisfied, would fall within the ambit of a financial debt, enabling the creditor to initiate proceedings under Section 7 of the IBC. Respondent is a Corporate Debtor and the Appellant Bank, a Financial Creditor. Held that, Section 7 of the IBC would not be b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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