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2022 (12) TMI 914 - AT - Insolvency and BankruptcyMaintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - whether there would be afresh period of limitation available to the Respondent from the date when the recovery certificate was issued by the DRT? - HELD THAT - There is no doubt that in both the decisions, relied upon by the Respondent, namely, DENA BANK (NOW BANK OF BARODA) VERSUS C. SHIVAKUMAR REDDY AND ANR. 2021 (8) TMI 315 - SUPREME COURT and KOTAK MAHINDRA BANK LIMITED VERSUS A. BALAKRISHNAN ANR. 2022 (6) TMI 13 - SUPREME COURT the Hon ble Supreme Court has held that the limitation would start afresh from the date of issuance of recovery certificate but Counsel for the Appellant has submitted that the application under Section 7 of the Code should have been filed on the basis of the recovery certificate and merely placing on record of the said recovery certificate would not be suffice. The decision in the case of Dena Bank has been followed in the case of Kotak Mahindra Bank Ltd. In the case of Dena Bank the Corporate Debtor defaulted in repayment of its dues to the Bank and the loan account was declared NPA on 31.12.2013, O.A No. 16 of 2015 was filed by the Bank on or about 01.01.2015 under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, now known as the Recovery of Debts and Bankruptcy Act, 1993 before the DRT at Bangalore. O.A was decreed on 27.03.2017. The Bank filed a petition under Section 7 of the Code before the Adjudicating Authority on 12.10.2018 and subsequently filed one application i.e.I.A. No. 27 of 2019 on 09.01.2019 for permission to place on record additional documents including final decision dated 27.03.2017 of the DRT in OA No. 16 of 2015 and the recovery certificate dated 25.05.2017. There is hardly any merit in the present appeal and the same is hereby dismissed.
Issues Involved:
1. Admissibility of the application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016. 2. Limitation period for filing an application under Section 7 of the IBC. 3. Fresh period of limitation from the date of issuance of the recovery certificate by the Debt Recovery Tribunal (DRT). 4. Mis-joinder and non-joinder of parties in the application. Issue-wise Detailed Analysis: 1. Admissibility of the application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016: The appeal was directed against the order dated 18.09.2019 passed by the Adjudicating Authority (National Company Law Tribunal, Chandigarh Bench, Chandigarh), which admitted the application filed under Section 7 of the IBC by the State Bank of India (SBI) for initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The Corporate Debtor had availed various loan facilities from multiple banks, which were later amalgamated into SBI. Due to failure in repayment, the loan accounts were declared Non-Performing Assets (NPA), and recovery notices were issued under the SARFAESI Act. 2. Limitation period for filing an application under Section 7 of the IBC: The Corporate Debtor contended that the application under Section 7 was time-barred as per Article 137 of the Limitation Act, 1963, which prescribes a three-year limitation period from the date when the right to apply accrues. The Adjudicating Authority initially observed that the period of limitation was 12 years by applying Article 62 of the Limitation Act, which pertains to suits for recovery of mortgaged property. However, this was contrary to the Supreme Court's decision in Gaurav Hargovindbhai Dave vs. Asset Reconstruction Company (I) Ltd. & Anr., where it was held that Article 62 applies only to suits, and applications under Section 7 of the IBC fall under the residuary Article 137 with a three-year limitation period. 3. Fresh period of limitation from the date of issuance of the recovery certificate by the DRT: The Respondent argued that a fresh period of limitation commenced with the issuance of the recovery certificate dated 18.08.2017 by the DRT. The Supreme Court in Dena Bank vs. C. Shivakumar Reddy and Kotak Mahindra Bank Ltd. vs. A. Balakrishnan & Anr. held that the limitation period starts afresh from the date of the recovery certificate. The application under Section 7 was filed on 27.09.2018, within the limitation period calculated from the date of the recovery certificate. 4. Mis-joinder and non-joinder of parties in the application: The Corporate Debtor argued that there was a mis-joinder and non-joinder of parties, as the loan facilities were granted by a consortium of banks, including SBI and other banks. However, this issue was not elaborated upon in the judgment. Conclusion: The appeal was dismissed, and the application under Section 7 of the IBC was held to be within the limitation period due to the fresh cause of action arising from the recovery certificate issued by the DRT. The decision of the Adjudicating Authority to admit the application for initiating CIRP against the Corporate Debtor was upheld.
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