Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + AT Insolvency and Bankruptcy - 2020 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (8) TMI 498 - AT - Insolvency and BankruptcyCIRP process - applicability of time limitation - challenge to impugned order is limited to issue of limitation, it being raised as a ground in appeal that the financial debt in respect whereof the ‘Financial Creditor’ sought triggering of ‘Corporate Insolvency Resolution Process’ was not payable in law, same being barred by limitation - HELD THAT:- It is well settled by now that the provisions of the Limitation Act, 1963 are applicable to applications relating to triggering of ‘Corporate Insolvency Resolution Process’ under ‘I&B Code’ and Article 137 of the Limitation Act, 1963 prescribing a period of three years applies to such applications. In “Vashdeo R. Bhojwani vs. Abhyudaya Co-operative Bank Limited and another [2019 (9) TMI 711 - SUPREME COURT ], the Hon’ble Apex Court referring to its Judgment rendered in “B.K. Educational Services Private Limited vs. Parag Gupta and Associates [2018 (10) TMI 777 - SUPREME COURT ] it was held that it is manifestly clear that the right to sue accrues when a default occurs and if such default has occurred over three years prior to the date of filing of application, the application would be barred by limitation except in cases where on the facts of the case such delay is condoned. Computation of a fresh period of limitation from the date of acknowledgment of liability - HELD THAT:- Such acknowledgment in respect of any right has to be in writing and signed by the borrower against whom such debt is claimed well before the expiration of the prescribed period for a suit or application in respect of such right. Any acknowledgment made after the period for enforcement of such right, recovery of such property or debt would not fall within the purview of Section 18 of the Limitation Act, 1963 for the purpose of commencement of fresh period of limitation. In the instant case, the account of the ‘Corporate Debtor’ was classified as NPA on 1st May, 2000 which is admitted as the date of default. This being an admitted fact and clearly discernible from Form-1 (application by Financial Creditor to initiate Insolvency Resolution Process under Section 7 of the ‘I&B Code’) Column 2 of Part-IV at page 65 of the appeal paper book which clearly specifies the date of default as 1st May, 2000 when the account of ‘Corporate Debtor’ was classified as NPA as stated earlier. The filing of recovery proceeding before the Debts Recovery Tribunal and the claim being subsequently decreed would not shift the date of default. It is settled position of law that in application under Section 7 of the ‘I&B Code’ relief is sought for Resolution of Insolvency of the ‘Corporate Debtor’ - It is apt to notice that Section 7 of the ‘I&B Code’ has been brought into force on 1st December, 2016 vide S.O. 3594(E) dated 30th November, 2016. Therefore, triggering of Corporate Insolvency Resolution Process in respect of defaults occurring prior to 1st December, 2013 would be impermissible in view of application of Article 137 of the Limitation Act, 1963. The arguments canvassed on behalf of the Appellant that initiation of ‘Corporate Insolvency Resolution Process’ at the instance of the ‘Financial Creditor’ was unsustainable as the same had been filed well beyond the period of three years from the date the account of ‘Corporate Debtor’ was classified as NPA - Appeal allowed.
|