2020 (3) TMI 1244 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI

Maintainability of application - initiation of CIRP - Non-Performing Assets (NPA) Corporate Debtor failed to make repayment of its dues - time limitation - relevant date of default - HELD THAT:- The issue decided in the case of V HOTELS LIMITED, TULIP STAR HOTELS LTD. & ANR. VERSUS ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED [2019 (12) TMI 1273 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] where it was held that for the purpose of computing the period of limitation of application under Section 7, the date of default is ‘NPA’ and hence a crucial date.

In JIGNESH SHAH & ANOTHER VERSUS UNION OF INDIA & ANOTHER [2019 (9) TMI 1121 - SUPREME COURT], the Hon’ble Supreme Court noticed the decision of the Hon’ble Patna High Court in FERRO ALLOYS CORPN. LTD. VERSUS RAJHANS STEEL LTD. [1999 (4) TMI 486 - HIGH COURT OF PATNA], wherein the Hon’ble Patna High Court held that simply because a suit for realisation of the debt of the petitioner Company against Opposite Party 1 was instituted in the Calcutta High Court on its original side, such institution of the suit and the pendency thereof in that Court cannot enure for the benefit of the present winding-up proceeding.

A suit for recovery of money can be filed only when there is a default of dues. Even if the decree is passed, the date of default cannot be shift forward to the date of decree or date of payment for execution as a decree can be executed within specified period i.e. 12 years. If it is executable within the period of limitation, one cannot allege that there is a default of decree or payment of dues - thus, a Judgment or a decree passed by a Court for recovery of money by Civil Court/ Debt Recovery Tribunal cannot shift forward the date of default for the purpose of computing the period for filing an application under Section 7 of the ‘I&B Code’.

In the present case, as the account of the ‘Corporate Debtor’ was declared NPA on 31st October, 2002 and decree was passed on 19th June, 2009/ 31st August, 2009, the application under Section 7 filed by ‘M/s. Stressed Assets Stabilization Fund (SASF)’ against ‘M/s. Uthara Fashion Knitwear Limited’- (Corporate Debtor) is barred by limitation and was not maintainable.

The impugned order dated 21st November, 2019 passed by the Adjudicating Authority (National Company Law Tribunal), Division Bench, Chennai, is set aside - appeal allowed.