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TMI Blog2024 (9) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... e between the parties subject to exercise of these powers not contravening or violating any express provision in the statute. In the present matter, the Adjudicating Authority considering the facts of the attendant case, has relied on the ratio of the judgment of the Hon ble Supreme Court in B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES [ 2018 (10) TMI 777 - SUPREME COURT] to hold that for calculating the period of limitation in an application under Section 7 of the IBC, the date of default is significant and keeping in mind that the present Company Petition is filed within 3 years from the date of default, it held that the petition was within the period of limitation in terms of Article 137 of the Limitation Act. Similar view has been espoused again by the Hon ble Supreme Court in JIGNESH SHAH ANOTHER VERSUS UNION OF INDIA ANOTHER [ 2019 (9) TMI 1121 - SUPREME COURT] wherein it held that the period of limitation for making an application under Section 7 or 9 of the IBC is three years from the date of accrual of the right to sue, that is, the date of default. Given the catena of judgments of the Hon ble Supreme Court which affirm the applicability of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench-III admitted the Section 7 application vide its order dated 06.12.2022. Aggrieved by the above order of the Adjudicating Authority, an appeal was preferred by the ex-Director of the Corporate Debtor before this Tribunal vide CA(AT)(Insolvency) No. 121 of 2023. In exercise of its appellate jurisdiction, this Tribunal, on 02.04.2024, dismissed the appeal and affirmed the order of the Adjudicating Authority dated 06.12.2022. Aggrieved by the decision of this Tribunal dated 02.04.2024, the Appellant filed a Civil Appeal No. 5531 of 2024 before the Hon ble Supreme Court. 3. The Hon ble Supreme Court passed the following order on 06.05.2024 in Civil Appeal No. 5531 of 2024: Learned Senior Advocate appearing for the appellant seeks permission to withdraw the present appeal and states that the appellant Arunkumar Jayantilal Muchhala may file an application seeking a review of the impugned judgment, limited to the ground that the petition under Section 7 of the Insolvency and Bankruptcy Code of India, 2016 was barred by limitation. It is stated that the question was specifically raised in the National Company Law Appellate Tribunal, but has not been answered. In view of the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the part of Respondent No.1 to say that only Article 137 is applicable to Section 7 petition under IBC. Stating that such a timebarred debt could not be viewed as a debt in default, reliance was placed on the judgement of the Hon ble Supreme Court in B.K. Educational Services Pvt. Ltd. Vs. Parag Gupta Associates (2019) 11 SCC 632 that an application filed under IBC, cannot suddenly revive any debt which is no longer due and is timebarred. It was therefore submitted that the Adjudicating Authority had erred in holding that the Company Petition filed in 2018 was within the limitation period. 7. It is also the contention of the Appellant that the issue of limitation was pleaded in the Company Petition as well as in the appeal before the Tribunal. The Appellant has adverted attention to decision of the Hon ble Supreme Court in V.M. Salgaocar Bros Vs. Board of Trustees of Port of Mormugao Anr. AIR 2005 SC 4138 to assert that it is the duty of the Court to dismiss any suit instituted after the prescribed period of limitation irrespective of the fact whether the ground of limitation has been set up as a defence. Limitation is an issue which the courts are bound to decide even if the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances of the case, there are sufficient and cogent grounds for recall of the order of this Tribunal of 02.04.2024 at a time when liberty was given by the Hon ble Supreme Court to file a review of the said order limited to the grounds of limitation. 11. It is the case of the Appellant that Tribunals including this Tribunal has inherent powers to recall and set aside its order as laid down by the Hon ble Supreme Court in Budhia Swain Ors. Vs. Gopinath Deb Ors. (1999) 4 SCC 396. It is the rival contention of the Respondent No. 1 that while liberty was given by the Hon ble Supreme Court to file a review of the said order limited to the grounds of limitation, the Respondent No. 1 has chosen to file a recall application which liberty was not given by the Hon ble Apex Court and that ground of limitation is not a ground for recall of the order of this Tribunal. 12. Before we dwell on the rival contentions of both sides, we need to notice that the gamut and scope of power to review and the power to recall which can be exercised by this Tribunal has been elaborately considered by this Tribunal in its judgement in the matter of Union Bank of India Vs. Dinkar T. Venkatasubramanian and other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Tribunal has no power to review, no exception can be taken to that part of the judgment. We, however, hold that the judgment laying down that this Tribunal has no power to recall the judgment does not lay down correct law. ( Emphasis supplied ) 13. Thus, the law as it stands today, this Tribunal in exercise of its inherent jurisdiction can entertain an application for recall of judgment on sufficient grounds. Inherent powers not being powers which are conferred expressly upon the Tribunal but are innate powers of the court which can be exercised to dispense justice between the parties subject to exercise of these powers not contravening or violating any express provision in the statute. When we look at the present case, we find that the Appellant has invoked the inherent powers of recall under Rule 11 of the NCLAT Rules which has been opposed by the Respondent No.1 stating that the issue of limitation, not being a procedural error, no recall application can be filed. We are conscious of the fact that there is no express provision in the IBC or the Regulations/Rules framed thereunder conferring on this Tribunal the jurisdiction to recall its order on the issue of limitation. We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inception the Code, Article 137 of the Limitation Act gets attracted. The right sue , therefore, accrues when a default occurs. 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 Limitation Act may be applied to condone the delay in filing such application . 27. We are convinced that the loan amount claimed to be in default was repayable on demand and accordingly the demand was raised in 2018 which is not refuted by the Corporate Debtor. The Company Petition is filed in 2018 which is well within limitation and thus needs no further clarification. Accordingly we answer the second question in affirmative. Even if we are to consider the arguments of the Corporate Debtor, then too, there is no doubt that in B.K Education Services Pvt. Ltd. (supra) the Hon ble Supreme Court has made it clear that a petition u/s 7 of the Code will fall within the residuary Article 137 of the limitation Act under which it is clear that the period of limitation is 3 years from the date of default. The same has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... default in the present case. We are well aware that in any proceeding initiated under Section 7 of the IBC, the application is required to be filed in a prescribed form along with relevant documents annexed therein. We therefore need to notice Column 2 of Part-IV of Form-1 where date on which the default had occurred has been pleaded before the Adjudicating Authority. The same is as extracted below: PART- IV PARTICULARS OF FINANCIAL DEBT 2. Amount claimed to be in default and the date on which the default occurred (attach the workings on computation of amount and delays of default in tabular form) Amount in default: Rs 8,56,30,137/- i.e. outstanding principal of Rs 5,00,00,000/- plus interest of Rs 3,56,30,137/- at the rate of 15% per annum as on 30th September, 2018. Date of default: 15th March, 2016. The Financial Creditor disbursed a loan for an amount of Rs 5 crores which was repayable on demand, during the financial year 2013-2014 to the Corporate Debtor towards its working capital. The Corporate Debtor agreed to pay interest at the rate of 15% p.a. from the date of disbursement until the date of repayment to the Financial Creditor. From February 2016 onwards, the Financial C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 SCC 481 where it held: 43. Ordinarily, upon declaration of the loan account/debt as NPA that date can be reckoned as the date of default to enable the financial creditor to initiate action under Section 7 IBC. However, Section 7 comes into play when the corporate debtor commits default . Section 7, consciously uses the expression default - not the date of notifying the loan account of the corporate person as NPA. Further, the expression default has been defined in Section 3(12) to mean non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be. Given the catena of judgments of the Hon ble Supreme Court which affirm the applicability of Article 137 of the Limitation Act in respect of Section 7 applications filed under IBC, we find that the contention of the Appellant that the present Section 7 application be held as time-barred under Article 21 of the Limitation Act is misconceived and untenable. 22. In view of the foregoing discussions, we are of the considered view that the Adjudicating Authority did not commit any error in holding that the Company Petition wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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