NATIONAL COMPANY LAW APPELLATE TRIBUNAL

Kotak Mahindra Bank Ltd. vs. Indian Speciality Fats Ltd.

MANU/NL/0051/2021

16.02.2021

Insolvency

When default occurred over three years prior to filing of application, prayer to trigger CIRP against the Corporate Debtor is to be declined

The issue raised in present appeal against order passed by the Adjudicating Authority (National Company Law Tribunal), dismissing the Appellant's application under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("I&B Code" for short) for being barred by limitation.

The financial debt which the Corporate Debtor owed to the Assignor- State Bank of India was declared NPA prior to 16th January, 2006 i.e. the date when the financial debt came to be assigned to Appellant- 'Kotak Mahindra Bank Limited'. It also emerges from the record that, the Assignor- State Bank of India had filed recovery proceedings before DRT, Jabalpur somewhere in year 2000 and the final order came to be passed on 23rd October, 2002 culminating in issuance of Recovery Certificate which is pending execution before the Recovery Officer. Thus, computed from the date of classification of account of Corporate Debtor as NPA or even from the date of issuance of Recovery Certificate, filing of application under Section 7 on 29th October, 2018 is beyond three years.

The Appellant having approached the Recovery Officer for execution of the decree passed by the DRT and execution proceedings and recovery proceedings being subsisting as on the date of filing of application under Section 7 of the 'I&B Code', it would not be open to the Appellant to seek initiation of CIRP by resorting to the Insolvency Resolution mechanism under 'I&B Code' which is not a recovery forum.

It is by now settled that Article 137 of the Limitation Act, 1963 governs filing of an application under Section 7 of the 'I&B Code'. The default having occurred over three years prior to filing of application, prayer of Appellant to trigger CIRP against the Corporate Debtor has rightly been declined. That apart, the Appellant having approached the Recovery Officer for execution of the decree passed by the DRT, Jabalpur and execution proceedings and recovery proceedings being subsisting as on the date of filing of application under Section 7 of the 'I&B Code', it would not be open to the Appellant to seek initiation of CIRP by resorting to the Insolvency Resolution mechanism under 'I&B Code' which is not a recovery forum. However, dismissal of present appeal shall not in any manner affect the right of the Appellant to pursue the recovery proceedings and seek execution of the decree before the Competent Court. Appeal dismissed.

Tags : CIRP Initiation Time bar

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