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 |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Dismissed |
Headnote | Insolvency and Bankruptcy Code, 2016 – s. 7 – Maintainability of – Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 – Limitation Act – s.18 – Loans were granted by the Financial Creditor-respondent no.2 to the Corporate Debtor-appellants – The Corporate Debtor was unable to settle the dues of the Financial Creditor in time – The account of the Corporate Debtor was declared as Non-Performing Asset (NPA) – The Financial Creditor issued notice for recovery of all dues payable – Pursuant to the notice, the Financial Creditor filed an application before the Debt Recovery Tribunal u/s. 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 for recovery of the dues, which was still pending consideration – Meanwhile, the Financial Creditor filed an application u/s. 7 of the Insolvency and Bankruptcy Code averring that the Corporate Debtor owed an amount of Rs. 24.62 crore – There are two issues that arise for consideration in this appeal before Supreme Court, the first pertains to the maintainability of the application u/s. 7 of the Code filed by a power of attorney holder and the second relates to the question of limitation of the same application u/s.7 of the Code – Held: As per Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, the financial creditor is required to make an application for initiating the corporate insolvency resolution process against the corporate debtor u/s. 7 of the Code in Form 1 which is required to be signed by the “person authorized to act on behalf of the financial creditor” – In the instant case, general authorisation, in terms of the power of attorney with respect to all the business and affairs of the Bank, including commencement of legal proceedings was given to a person ‘P’ who has filed the application u/s.7 of the Code – Hence, Application filed u/s 7 of the Code is maintainable – As far aslimitation is concerned, any suit, appeal or application filed after the prescribed period of limitation shall be dismissed in spite of limitation not being set up as a defence, as per s. 3 of the Limitation Act – s.238A of the 2016 Code makes the provisions of the Limitation Act applicable to the proceedings before the Adjudicating Authority, as far as may be – Application u/s 7 has to filed within 3 years from the date of default – In the present case date of default is 30.09.2014 and the application was filed on 25.04.2019 – However, Corporate Debtor had placed on record a letter dated 17.11.2018, which detailed the amount repaid till 30.09.2018 and acknowledged the amount outstanding as on 30.09.2018 – On the basis of the said letter and the record showing that the Corporate Debtor had executed various documents amounting to acknowledgement of the debt even in the financial year 2019-20 – Therefore, the Application u/s.7 is not time barred by limitation. |
Judge | Hon'ble Mr. Justice L. Nageswara Rao |
Neutral Citation | 2021 INSC 579 |
Petitioner | Rajendra Narottamdas Sheth & Anr. |
Respondent | Chandra Prakash Jain & Anr. |
SCR | [2021] 7 S.C.R. 838 |
Judgement Date | 2021-09-30 |
Case Number | 4222 |
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