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2020 (8) TMI 336 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHIMaintainability of application - initiation of CIRP - Time limitation - Section 7 of the I&B Code - HELD THAT:- The Form-1 of the Application, (Part 4 at serial No.2) records the date of default as 31st December 2007. This Application under Section 7 is filed on 26th February 2019, i.e. after more than 11 years. The Financial Creditor has also admitted in the statutory Form-1 that the consequence of default is that all the interest amount became due and payable forthwith. Hence, the period of limitation admittedly started on 31st December 2007. This Appellate Tribunal in case of Gauri Prasad Goenka Vs. Punjab National Bank & Others [2020 (5) TMI 65 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] has held that Section 3 of the Limitation Act is a mandatory provision and it is obligatory on the Tribunal to examine the issue of limitation. Further, if the claim is barred by limitation, the Corporate Debtor cannot be held to have committed a default. Admittedly, in this case, the Applicant/Financial Creditor has stated that default started from 31st December 2007 and the Application for initiation of Corporate Insolvency Resolution Process is filed on 26th February 2019. The Financial Creditor has also admitted that the consequence of default is that all the interest amount became due and payable immediately. Hence, the period of limitation began from 31st December, 2007. As per the terms of Agreement, the subscription to the debentures was done for a period of 84 months. Interest @ 12% p.a. and in case of default, an additional interest of 6% p.a. was required to be paid. In the entire duration of the Agreement, the Corporate Debtor paid interest amounting to ₹ 39,86,371/- only once, i.e. for the Quarter ending 31st September 2007. It is further contended that the Corporate Debtor defaulted on the payment of interest till the time stipulated in the Agreement, i.e. up to 20th May 2014. Thus, it is clear that the default started on 31st December 2007. Thereafter, the default continued till 20th May 2014, i.e. the expiry of the period as stipulated in the Agreement - Therefore, the right to sue accrued from the moment, default first occurred on 31st December 2007. Since the default has occurred over three years prior to the date of filing of the Application, it would be barred by limitation under Article 137 of the Limitation Act. Therefore, the right to sue accrued from the moment, default first occurred on 31st December 2007. Since the default has occurred over three years prior to the date of filing of the Application, it would be barred by limitation under Article 137 of the Limitation Act. The Adjudicating Authority erred in admitting the Application filed under Section 7 of the I&B Code, even though it was time-barred - Appeal allowed.
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