Skip to main content

NCLT to consider limitation even when not pleaded by defendants

Citation : Bank of Baroda vs Rajiv Rai, CP/89/IB/2021

Date of Judgment/Order : 20/6/2022

Court/Tribunal : National Company Law Tribunal, Chennai

Corum : Justice (Retd.) S. Ramathilagam, Member (Judicial), Anil Kumar B, Member (Technical)

Background

These applications have been filed under Section 95 (1) of the Insolvency and Bankruptcy Code, 2016 against the personal guarantors of SBQ Steels Limited, the Corporate Debtor. The present application is filed by the Financial Creditor viz. Bank of Baroda against the personal guarantors of the Corporate Debtor.

It is stated in Part III of the Application that the date on which the debt fell due was 31.03.2012 and the date of default is also on 31.03.2012. It is seen that the present Application has been filed before this Tribunal on 10.04.2021.

The Respondent has raised a plea of limitation as to the present Application. 

Judgment

The NCLT observed that the Respondent has entered into a Deed of personal guarantee as early as on 27.03.2012. Thereafter, it is stated in the synopsis filed by the Applicant that a loan recall notice was issued as early as on 06.11.2014 and the Respondent has acknowledged the same. Pursuant, thereto, no documents have been placed on record to show that the debt as claimed by the Applicant falls within the period of limitation.

The NCLT held that Section 238A of IBC, 2016 applies to the entire provisions of IBC, 2016 and as such Article 136 of the Limitation Act, 1963 also applies to an Application filed under Section 95 of IBC, 2016. In the said circumstances, as per Section 3 of the Limitation Act, 2013, even Court / Tribunal is required to examine the debt on the point of limitation, even though such a defence has not been setup.

The NCLT also observed that the Corporate Debtor viz. SBQ Steels Limited has already been dissolved by virtue of the order passed by this Tribunal dated 11.02.2022 in MA/5/2021 and in that situation, any insolvency proceeding against the individual guarantor would be carried out only before the DRT having jurisdiction.

The text of Section 60(2) discloses that Section 60 of the IBC Code would apply to an individual only if there is a corporate insolvency resolution process pertaining to the corporate entity which is the principal debtor, that has been filed or commenced. In other words, in case of company 'A' being the principal debtor and an individual 'P' the guarantor promising repayment of the credit facilities obtained by 'A', if a corporate insolvency resolution process is initiated under the provisions of the Code pertaining to company 'A', the insolvency resolution process pertaining to guarantor 'P' would per force be before the same adjudicating authority, viz., the National Company Law Tribunal.  But, where there is no corporate insolvency resolution process initiated in respect of company 'A', insolvency proceedings pertaining to quarantor 'P' must necessarily be carried only to the iurisdictional Debts Recovery Tribunal and not to any other forum. To repeat, the provisions of the Acts of 1909 and 1920 will have no manner of application to guarantors who have furnished guarantees in connection with credit facilities obtained by corporate entities.




Comments

Post a Comment

Most viewed this month

Appellate authorities under Special Statutes cannot be asked to condone delay

Madras High Court in R.Gowrishankar vs. The Commissioner of Service Tax has held that Appellate authorities cannot be asked to condone the delay, beyond the extended period of limitation A Division Bench comprising of Justices S. Manikumar and D. Krishnakumar, made this observation while considering an appeal filed against Single Bench order declining to set aside the order made in the condone delay petition filed by the petitioner to condone 223 days in filing the appeal before the Commissioner of Service Tax (Appeals). Article referred: http://www.livelaw.in/appellate-authorities-special-statutes-cannot-asked-condone-delay-beyond-extended-period-limitation-madras-hc/
Post a Comment
Read more

'Seize assets to pay damages to accident victim'

Her story might be an inspiration for the physically challenged but justice has remained elusive for her. In 2008, a bus accident left research engineer S Thenmozhi, 30, paraplegic. In April 2013, the motor accident claims tribunal directed the Tamil Nadu State Transport Corporation (TNSTC) to provide her a compensation of 57.9 lakh. However, TNSTC refused to budge and on Tuesday a city court ordered attaching of movable assets of the transport corporation. Thenmozhi was employed in C-DOT, a telecom technology development centre in Bangalore. On July 21, 2008, she was coming to Chennai in a private bus. Around 2am, the bus had a flat tyre and the driver parked it on the left side of the road near Pallikonda in Vellore district on the Bangalore-Chennai highway. While the tyre was being changed, a TNSTC bus of Dharmapuri division hit the stationary bus. The rear part of the bus was smashed and passengers were injured. Thenmozhi who had a seat at the back of the bus suffered...
Post a Comment
Read more

Infringement of copyright or other rights under the Copyright Act is a cognizable, non-bailable offence

Citation : M/s Knit Pro International Versus The State of NCT of Delhi, Criminal Appeal No. 807 Of 2022;  Date of Judgment/Order : May 20, 2022 Court/Tribunal : The Supreme Court Of India Corum : M.R. Shah; B.V. Nagarathna, Jj. Background The Appellant had filed an application under Section 156(3) Cr.P.C. and sought directions from the learned Chief Metropolitan Magistrate for the registration of FIR against the respondent No.2 herein for the offences under Sections 51, 63 & 64 of the Copyright Act read with Section 420 of the IPC. The said application was allowed and an FIR was registered against the Respondent. The Respondent in turn prayed before the High Court to quash the criminal proceedings on the sole ground that the offence under Section 63 of the Copyright Act is not a cognizable and a non-bailable offence which was allowed. This appeal is against the order of the High Court. Judgment The Supreme Court observed that the short question whi...
Post a Comment
Read more