Insolvency and Bankruptcy Code, 2016 has not excluded application of Section 4 to Section 24 of the Limitation Act, 1963: National Company Law Appellate Tribunal
Article 137 of the Limitation Act, 1963 defining a period of 3 years will be computed after considering Section 18 or 19 of the Limitation Act, 1963 with a fresh period of limitation in spite of the dates being after the date of NPA. This was held in Sanjay Lamba V. Union Bank of India and Ors [Company Appeal (AT) (Insolvency) No. 276 of 2020] in the National Company Law Appellate Tribunal, Principal Bench, New Delhi by a bench consisting of Justice Bansi Lal Bhat and Dr. Ashok Kumar Mishra, Technical Member.
Facts are that The present appeal is filed by the Appellant U/S.61 of IBC, 2016 against the order of the NCLT which had admitted the petition filed under Section 7(5) of the Code r/w Rule 4 of the IBBI Rules, 2016 on the Application filed by Financial Creditor -Corporation Bank, New Delhi.
The counsel for the appellant contended that they have paid an amount of Rs.8,22,28,000/- towards one-time Settlement out of Settlement Amount of Rs. 67 Crore. The Appellant is willing to pay the entire amount by 31.05.2020 which was not accepted by the Bank. They stated that the Banks are moving in forum shopping and also online auction under Section 13(4) of the SARFAESI ACT. He had further submitted that the date of default being NPA date is 30.09.2016 and the Petition was filed on 22.11.2019 is clearly barred by limitation and thus the order needs to be set aside.
The court made reference to the judgement of the Apex court in, a. Sesh Nath Singh & Anr. Vs. Baidyabati Sheoraphuli Co-operative Bank Ltd and Anr., wherein it was held that “There is no specific period of limitation prescribed in the Limitation Act, 1963 for an application under the IBC before the NCLT. An application for which no period of limitation is provided anywhere else in the Schedule is governed by Article 137 of the Schedule to the Limitation Act. Under Article 137 of the Schedule to the Limitation Act, the period of limitation prescribed for such an application is three years from the date of accrual of the right to apply.”
The court also made reference to the Supreme Court judgement in Laxmi Pat Surana Vs. Union Bank of India & Anr. where in the following observations were made, “It has been made amply clear that right to initiate action within 3 years from such acknowledgment of debt accrues to the Financial Creditor. However, needs to be exercised within 3 years when the right to sue/apply accrues as per Article 137 of the Limitation Act. This is the effect of Section 18 of the Limitation Act, in that a fresh period of limitation is required to be computed from the time when the acknowledgment was so signed by the principal borrower or corporate guarantor as the case may be.”
Considering the law and the facts of the case the court held that, the Code has not excluded the application of Section 4 to Section 24 of the Limitation Act, 1963 while determining the period of limitation and Section 29(2) of the Limitation Act appears to be applicable. Section 18 & 19 of the Limitation Act, 1963 is also applicable to the Code. The Appellant himself had made submissions acknowledging the debt on 21.06.2017, which had itself shifted the 3 years period to June 2020. As part payment was also made by the appellant, the application has been filed within a period of 3 years. Thus disposing off the appeal.