Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | 2016 Insolvency and Bankruptcy Code |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case(s) Referred | Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4 Referred Case 5 |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Dismissed |
Headnote | Insolvency and Bankruptcy Code, 2016 – s.62 – The Assignor Bank, along with Corporation Bank sanctioned a term loan of Rs.40 lakhs to the corporate debtor – The corporate debtor failed to repay loan – The Assignor Bank declared the account of corporate debtor as an “Non-Performing Asset” (NPA) on 01.04.1993 – Assignor Bank filed application before the Debt Recovery Tribunal for recovery of dues – A settlement was reached between the Assignor Bank and the corporate debtor – Accordingly, DRT issued a Recovery Certificate on 27.03.2003 – Corporate debtor again failed to comply with the settlement – Thereafter, an agreement between the Assignor Bank and the appellant was entered into, the appellant was substituted as applicant in place of the Assignor Bank in DRT and an amended Recovery Certificate was issued on 13.12.2012 – On 27.07.2018, the appellant filed application u/s. 7 of the IBC against the corporate debtor for initiation of Corporate Insolvency Resolution Process (CIRP) before the NCLT, which was dismissed – The NCLAT also found that application u/s.7 was barred by limitation – Before the Supreme Court, appellant adverted to two documents, that is, (i) the Balance sheet of the corporate debtor dated 16.08.2017 and (ii) a letter dated 23.04.2019 issued by the corporate debtor in the Paper Book to contend that the proceedings u/s. 7 of the IBC are not barred by limitation, as limitation would start running afresh for a period of three years u/s.18 of the Limitation Act – Held: The right to sue accrues when a default occurs, and if that default has occurred over three years prior to the date of filing of an application u/s. 7 of the IBC, the application would be barred u/ Art.137 of the Limitation Act – The right to sue accrued on 01.04.1993 when the amount of the corporate debtor with the Assignor Bank was declared NPA – In Part IV of its application u/s. 7 of the IBC, the appellant itself declared the date of default as 01.04.1993 – Thus, the claim is apparently barred by limitation – Even the application u/s.7 of the IBC was filed almost 6 years after issuance of the amended Recovery Certificate (issued on 13.12.2012) – As far as two documents referred by the appellants are concerned, the two documents cannot be construed as admissions that amount to acknowledgment of the jural relationship and existence of liability – The balance sheet dated 16.08.2017 does not acknowledge or admit any debt – Further, the letter dated 23.04.2019 again is not an acknowledgment and admission of liability – The language and tone of the letter makes it absolutely clear that the liability was denied – The Balance Sheet of the corporate debtor dated 16.08.2017 and the letter dated 23.04.2019, do not constitute any acknowledgment of liability and were not even referred to by the appellant in its application under IBC – The NCLAT, rightly held that the application u/s.7 of the IBC is barred by limitation. Limitation Act, 1963 – Art. 137 – Insolvency and Bankruptcy Code, 2016 – ss. 7 and 9 – In B.K. Educational Services Private Ltd. v. Parag Gupta and Associates (2009) 11 SCC 633: [2018] 12 SCR 794 held that the Limitation Act is applicable to applications filed under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted. Limitation Act, 1963 – Art. 137 – Insolvency and Bankruptcy Code, 2016 – s. 7 – Held: In Gaurav Hargovindbhai Dave v. Asset Reconstruction Company (India) Ltd. and Ors. (2019) 10 SCC 572, it was held that “an application” which is filed u/s. 7, would fall only within the residuary Art. 137. |
Judge | Hon'ble Ms. Justice Indira Banerjee |
Neutral Citation | 2021 INSC 35 |
Petitioner | M/s. Reliance Asset Reconstruction Company Ltd. |
Respondent | M/s Hotel Poonja International Pvt. Ltd. |
SCR | [2021] 1 S.C.R. 495 |
Judgement Date | 2021-01-21 |
Case Number | 4221 |
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