Case Note & Summary
The dispute arose from the rejection of an application by the State Bank of India under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Krishidhan Seeds Private Limited, which was classified as a Non-Performing Asset on 10 June 2014. The appellant claimed a default in repayment of approximately Rs 189 crores as of 30 June 2018, while the application was filed on 19 September 2018. The National Company Law Tribunal rejected the application on the grounds of limitation, stating that the right to apply had accrued beyond three years from the date of default. The National Company Law Appellate Tribunal upheld this decision, emphasizing that the date of default could not be shifted and that the acknowledgment in the balance sheet did not extend the limitation period. The Supreme Court, however, found that the provisions of Section 18 of the Limitation Act were applicable to IBC proceedings and that an acknowledgment in a balance sheet could extend the limitation period if made within three years from the date of default. The court restored the proceedings to the NCLT for fresh adjudication, allowing all rights and contentions of the parties to be considered. The NCLT was directed to dispose of the application expeditiously within three months from the date of the order.
Headnote
A) Insolvency Law - Limitation for Filing Application - Applicability of Limitation Act - The provisions of the Limitation Act are applicable to proceedings under the Insolvency and Bankruptcy Code, 2016. The court clarified that an acknowledgment in a balance sheet can extend the limitation period if made within three years from the date of default. The appeal was allowed, and the matter was restored to the NCLT for fresh adjudication (Paras 13-16).
Issue of Consideration
Whether the application under Section 7 of the Insolvency and Bankruptcy Code was barred by limitation.
Final Decision
The Supreme Court allowed the appeal, set aside the judgments of the NCLT and NCLAT, and restored the proceedings to the NCLT for fresh adjudication, directing expeditious disposal within three months.
Law Points
- Insolvency and Bankruptcy
- Limitation Act
- Acknowledgment of Debt
- Corporate Insolvency Resolution Process
- Non-Performing Asset
