| The Tax Publishers 2020 TaxPub(CL) 1109 (NCLAT-Del) INSOLVENCY AND BANKRUPTCY CODE, 2016
Sections 238A, 7 & 61
The determination of claim of proceedings before Debts Recovery Tribunal (DRT) could neither extend time or exclude period of limitation nor it could be a continuance of cause of action, as proceedings before DRT was not pursued before a wrong forum, and, thus, insolvency resolution application filed against corporate debtor for default in year 2010 was barred by limitation.
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Limitation - Non-payment of dues by corporate debtor - Initiation of CIRP - Insolvency application, whether time-barred or not
Bank sanctioned cash credit facility to Corporate Debtor (CD) in 2008. However, the account of CD was classified as NPA in 2010. Bank assigned said debt to appellant, an asset reconstruction company, who filed CIRP application under section 7 against CD. NCLT rejected said application on ground that the claim of appellant was barred by limitation. Appellant filed an appeal under section 61 contending that debt had been acknowledged by CD in its balance sheet of financial years commencing from 2010 to 2016. Further, bank initiated an action for recovery of outstanding financial debt before Debts Recovery Tribunal (DRT) in 2011 which was allowed and appeal against judgment of DRT was pending before Debts Recovery Appellate Tribunal, therefore, time spent in proceedings before DRT should be excluded while calculating period of limitation. Held: The determination of claim of proceedings before DRT would neither extend the time nor exclude the period of limitation. The limitation commenced from the date of default reckoned on the basis of classification of CD's account as NPA, would not admit of any extension or exclusion on the basis of pursuit of a remedy under the SARFAESI Act, 2002 or in a recovery proceedings before the DRT, as proceedings before DRT for recovery of 'financial debt' would neither be a proceeding being pursued before a wrong forum nor would that be a continuation of the cause of action. Further, ground of limitation being extended on account of financial debt being reflected in balance sheet of CD was also to be repelled. Thus, default of debt which occurred in 2010 was barred by limitation. Hence, appeal was dismissed.
REFERRED : Sesh Nath Singh & Ors. v. Baidyabati Sheoraphuli Cooperative Bank Ltd. [Company Appeal (AT) (Insolvency) No. 672 of 2019] : 2020 TaxPub(CL) 0351 (NCLAT-Del), Ishrat Ali v. Cosmos Cooperative Bank Ltd. & Anr. [Company Appeal (AT) (Insolvency) No. 1121 of 2019], V. Padmakumar v. Stressed Assets Stabilitation Fund (SASF) & Anr. [Company Appeal (AT) (Insolvency) No. 57 of 2020, dt. 12-3-2020] : 2020 TaxPub(CL) 0902 (NCLAT-Del).
FAVOUR : Against the appellant
A.Y. :
IN THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI
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