Citation: I.B. 24/ PB/2017
Decided On: March 31, 2017
Court: National Company Law Tribunal (“NCLT”), Principal Bench, New Delhi
Deem – Tech Ltd. (“Petitioner”), the operational creditor, had invoices for the period February, 2011 to January, 2012 which were also evidences of the debt against R.L. Steel & Energy Ltd. (“Respondent”), the corporate debtor. Hence, based on these invoices, Petitioner issued Demand notice under sub-section (1) of section 8 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) in Form 3. Upon non-receipt of payment from the Respondent within 10 days from the date of delivery of the demand notice, Petitioner filed the present petition for corporate insolvency resolution process. However, in the closing balance of ledger account for the year ended 2015 and 2016, Petitioner had mentioned same figures due against the Respondent. Moreover, none of the ledger accounts and the closing balances stated any confirmation or acknowledgment issued by the Respondent. Respondent claimed that insolvency process cannot be triggered as IBC is time barred.
Whether Limitation Act is applicable to Insolvency and Bankruptcy Code, 2016?
As per Section 60(5) of IBC, NCLT is enjoined with the jurisdiction to entertain or dispose off any questions of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this code.
Section 225 of IBC provides that Companies Act, 2013 will be amended in the manner specified in the eleventh schedule to IBC. Eleventh schedule to IBC lists out the amendments made to the Companies Act, 2013 (due to IBC coming into effect). Please note that the provision of Section 433 of Companies Act, 2013 is not amended in this schedule.
Section 433 of the Companies Act, 2013, provides that:
“The provisions of the Limitation Act, 1963 (36 of 1963) shall, as far as may be, apply to proceedings or appeals before the Tribunal or the Appellate Tribunal, as the case may be.”
Therefore, in the absence of any specific bar in the IBC to the application of the Limitation Act, 1963, read with Section 433 of Companies Act, 2013 (which makes Limitation Act applicable to NCLT), the debt as claimed by the Petitioner is barred by limitation and cannot be the basis for invoking IBC before NCLT.
The Court further held that in case decree have been obtained from the civil court in order to claim the amount, it would have been well within Petitioner’s rights to get it executed before the appropriate civil courts. In that case, NCLT could not have been the executing court of the said ex-parte decree. NCLT also referred to its order in Annapurna Infrastructure Pvt. Ltd. & Ors. vs. Soril Infra Resources Ltd. C.P. No.(IB)-22(PB)/2017 wherein it was held that “petition cannot seek to avail multiple remedies in respect to the same cause of action and thus venture into forum shopping.
Conclusion: Limitation Act, 1963, applies to the proceedings or appeals before the NCLT and its Appellate Tribunal as Section 433 of the Companies Act has not been amended under eleventh schedule of IBC.
Editor: Vivek Verma
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