National Company Law Appellate Tribunal (NCLAT): Full Bench of Justice Bansi Lal Bhat (Acting Chairperson) and Justice Anant Bijay Singh (Member, judicial) and Dr Ashok Kumar Mishra (Member, Technical), made an observation in determining
Whether the provisions of the Limitation Act, 1963 vide Section 238A of the I&B Code, 2016 will be applicable to all NPA cases or not?
Appellant, suspended Managing Director of the Sarda Agro Oils Limited filed the present appeal under Section 61 read with Section 7 of the Insolvency and Bankruptcy Code, 2016 and Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 against the impugned order passed by NCLT, Hyderabad.
By the present appeal, the appellant sought setting aside the ex-parte order of NCLT, Hyderabad apart from the stay of Insolvency Proceeding against the Corporate Debtor, etc.
Appellant has attached the Companies list of Debtors and receivable alongwith action for its recovery. A look at the ‘Balance Sheet’ reveals that the Company has started making losses from the ‘Financial Year’ 2014-15.
Appellant failed to appear before the adjudicating authority after repeated notice.
Further, the adjudicating authority admitted the case based on some payments made by the appellant-corporate debtor into the current account of the respondent bank inspite of Non-Performing Asset on 30-09-2015.
Respondent-Bank made an observation that when this Appellate Authority was hearing the matter on 07-02-2020, it had already observed: “the only issue that deserves consideration in this matter is whether the Application under Section 7 of the I&B Code, 2016 filed by the Respondent Bank was within the period of limitation”.
Bench stated that the determining factor is the three years period from the date of default/NPA. Appellate Tribunal had also observed in Rajendra Kumar Tekriwal v. Bank of Baroda in Company Appeal (AT) (Ins) No. 225 of 2020 dated 13-08-2020 that the period of three years from the date of the Account of Corporate Debtor is classified as NPA then it becomes impermissible to proceed with Section 7 Application as observed in the para 11 of the Judgment.
Further, the tribunal reiterated that the provisions of the Limitation Act, 1963 vide Section 238A of the I&B Code, 2016 will be applicable to all NPA cases provided they meet the criteria of Article 37 of the Schedule to The Limitation Act, 1963.
Extension for the period of limitation can only be done by way of application of Section 5 of The Limitation Act, 1963 if any case for the condonation of delay is made out.
Therefore, in view of the above, the present appeal was allowed and the impugned order was set aside. Consequently, orders passed by the Adjudicating Authority appointing IRP/RP, declaring moratorium, freezing of account, etc. and all consequential action was taken by IRP/RP including advertisement publication, etc. all such orders and actions are declared illegal and set aside.
Adding to the above, tribunal also stated that the Adjudicating Authority will now close the CIRP proceedings and fix the fee of IRP/RP and the Corporate Debtor will pay the fees of IRP/RP and other costs incurred by him. [Jagdish Prasad Sarada v. Allahabad Bank, 2020 SCC OnLine NCLAT 621, decided on 28-08-2020]