The NCLAT emphasized the importance of strict adherence to limitation periods in Corporate Insolvency Resolution Proceedings under the I&B Code, 2016, to ensure timely resolution and uphold judicial efficiency.
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench comprising Justice Sharad Kumar Sharma (Judicial Member) and Technical Member Mr. Jatindranath Swain reviewed an appeal and held that the limitation period for filing petitions under the I&B Code, 2016, must be strictly construed in accordance with Section 238A and the directives of the Supreme Court in Suo Moto Writ Petition (C) No. 3/2020. Any filing beyond the computed limitation period, including extensions due to COVID-19 exclusions, is impermissible and warrants dismissal, as the timely resolution is integral to the Code's objectives.
The National Company Law Appellate Tribunal (NCLAT), in the instant case, addressed an appeal challenging the dismissal of a Company Petition by the National Company Law Tribunal (NCLT), Bangalore Bench. The petition, filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (I&B Code), was rejected on the ground that it was barred by limitation. The appellant had sought to initiate the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor for defaulting on a payment of ₹2,43,48,930, with the default date specified as September 7, 2019, in the petition.
The NCLAT analyzed the limitation period under Section 238A of the I&B Code, factoring in the exclusion period granted by the Supreme Court due to COVID-19, as outlined in its judgment in In Re: Cognizance for Extension of Limitation, REEDLAW 2021 SC 03534. The tribunal noted that while the limitation period started on September 7, 2019, 190 days had lapsed before the COVID-related exclusion period began on March 15, 2020. As per the Supreme Court's ruling, the remaining balance period of 905 days resumed on March 1, 2022, making the final date of limitation September 6, 2022.
The appellant's contention that the limitation period extended until August 22, 2024, by recalculating 905 days from March 1, 2022, was deemed misconceived. The tribunal clarified that the actual balance period must be calculated in accordance with the Supreme Court's directive, which stipulated that the longer period of limitation should apply. Since the appellant's petition was electronically filed on April 10, 2023, and physically filed on April 17, 2023, it was far beyond the permissible limitation period ending on September 6, 2022.
Emphasizing the strict construction of limitation periods under the I&B Code, the NCLAT upheld the NCLT's dismissal of the petition, observing that such time frames are essential to achieve the objectives of the Code, including the timely resolution of insolvency proceedings. The appeal was consequently dismissed, as it lacked merit and ran counter to the principles established by the Supreme Court for computing limitation periods.
Mr. Amir Bavani, Advocate represented the Appellant.
Mr. S. Sathiyanarayanan and Mr. Bathry Narayanan, Advocates appeared for the Respondent.
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