Case Note & Summary
The dispute originated from a contractual relationship between GPR Power Solutions Private Limited (appellant) and Rohit Ferro Tech Limited (corporate debtor), where the appellant performed piping system work but alleged non-payment of Rs. 76,85,472. The appellant invoked arbitration and obtained an award of Rs. 55,01,661 plus interest and costs on 30.11.2018. While the appellant's application to set aside the award under Section 34 of the Arbitration Act was pending, State Bank of India initiated Corporate Insolvency Resolution Process (CIRP) against the corporate debtor under Section 7 of the Insolvency and Bankruptcy Code on 07.02.2020. The appellant claimed it became aware of the CIRP only in November 2020 due to COVID-19 lockdowns and filed its claim of Rs. 1,13,38,651 with a delay of about two months. The Resolution Professional rejected the claim as time-barred on 14.01.2021. The appellant then filed an application under Section 60(5) of the IBC for condonation of delay before the Adjudicating Authority (NCLT), which was dismissed on 09.07.2021. The NCLAT upheld this dismissal, noting that the Resolution Plan had been approved by the Committee of Creditors on 21.06.2020. The core legal issue was whether the lower authorities erred in not applying the Supreme Court's suo motu orders extending limitation periods due to the COVID-19 pandemic. The appellant argued that the claim filing deadline should be computed with exclusion of the period from 15.03.2020 to 14.03.2021 as per Supreme Court orders. The respondents' position was not detailed in the judgment. The Supreme Court analyzed its orders dated 22.03.2020 and 08.03.2021 in Suo Motu Writ Petition (Civil) No. 3 of 2020, which extended all limitation periods nationwide from 15.03.2020 and later excluded the period from 15.03.2020 to 14.03.2021 in computing limitation. The Court held that since the appellant was required to file its claim within three months from 11.02.2020 and actually filed before 14.01.2021, the claim should not have been rejected given the subsisting limitation extension orders. The Court found that both the Adjudicating Authority and NCLAT failed to consider these binding orders. Accordingly, the Supreme Court allowed the appeal, set aside the impugned orders, and allowed the appellant's application under Section 60(5) of the IBC.
Headnote
A) Insolvency Law - Corporate Insolvency Resolution Process - Claim Filing and Limitation - Insolvency and Bankruptcy Code, 2016, Sections 60(5), 62 - The appellant, an operational creditor, filed its claim with a delay of about two months during CIRP, citing COVID-19 pandemic and lockdown difficulties - The Adjudicating Authority and NCLAT rejected the condonation application without considering Supreme Court's suo motu orders extending limitation - Held that the period from 15.03.2020 to 14.03.2021 stands excluded in computing limitation, and the claim filed before 14.01.2021 should not have been rejected (Paras 17-20). B) Constitutional Law - Supreme Court's Inherent Powers - Limitation Extension During Pandemic - Constitution of India, Articles 141, 142 - The Supreme Court exercised suo motu powers under Article 142 read with Article 141 to extend limitation periods nationwide due to COVID-19 pandemic - The Court declared that all limitation periods stood extended from 15.03.2020 until further orders, making this binding on all courts, tribunals and authorities - This order was specifically applicable to the appellant's claim filing timeline (Paras 15-16). C) Arbitration Law - Pending Arbitration Proceedings - Interaction with Insolvency Process - Arbitration and Conciliation Act, 1996, Sections 11, 34 - The appellant had obtained an arbitral award against the corporate debtor and filed for its setting aside under Section 34 - The arbitration proceedings were pending when CIRP was initiated against the corporate debtor - This background established the appellant's status as an operational creditor with a legitimate claim (Paras 3-7).
Issue of Consideration
Whether the Adjudicating Authority and NCLAT erred in rejecting the appellant's application for condonation of delay in filing its claim during Corporate Insolvency Resolution Process, without considering the Supreme Court's orders extending limitation periods due to COVID-19 pandemic
Final Decision
The appeal is allowed. The impugned judgment and order of NCLAT is set aside. The impugned order dated 09.07.2021 of Adjudicating Authority is also set aside and the application of appellant under Section 60(5) of IBC is allowed.
Law Points
- Limitation period computation under Insolvency and Bankruptcy Code
- 2016
- Application of Supreme Court's suo motu COVID-19 limitation extension orders
- Condonation of delay in filing claims during Corporate Insolvency Resolution Process
- Exclusion of period from 15.03.2020 to 14.03.2021 in limitation computation
