2020 (1) TMI 1284 - Tri - IBC

Insolvency Application Dismissed as Time-Barred: Tribunal Upholds Three-Year Limitation Period Under IBC 2016.

State Bank of India Versus Kakhani Metal Private Limited

State Bank of India Versus Kakhani Metal Private Limited - TMI Issues:- Time-barred application under Section 7 of The Insolvency and Bankruptcy Code, 2016.Analysis:The judgment delivered by the Tribunal pertained to a petition filed under section 7 of The Insolvency and Bankruptcy Code, 2016. The applicant, State Bank of India, sought insolvency proceedings against the corporate debtor, M/s. Kakhani Metal Private Limited, due to default on a loan granted on 29.01.2011. The debt was claimed to be not legally enforceable as it was time-barred. The respondent raised objections, primarily arguing that the application was time-barred. The Tribunal considered the timeline of events, noting that the default occurred on 28.08.2014, and the application was filed on 6th June, 2018, well after the three-year period as per the Limitation Act, 1963.The Tribunal highlighted that the debt claimed by the applicant was indeed time-barred under the Limitation Act, as no action had been taken to recover the debt after 04.08.2015, which was crucial in determining the enforceability of the claim. Referring to legal precedents, including the case of B.K. Educational Services Pvt. Ltd. vs. Parag Gupta and Associates, the Tribunal emphasized that the right to sue accrues when a default occurs, and applications filed beyond the limitation period are not maintainable unless exceptional circumstances warrant the application of Section 5 of the Limitation Act to condone the delay.Moreover, the Tribunal cited the case of Gaurav Hargovindbai Dave vs. Asset Reconstruction Company (India) Ltd. & Anr. to establish that applications under Section 7 fall under the residuary Article 137 of the Limitation Act, making it clear that the application in question was time-barred. The judgment also referenced the recent case of Vashdeo R Bhojwani vs. Abhyudaya Co-operative Bank Ltd. & Anr., reinforcing that the intent of the Insolvency and Bankruptcy Code is not to revive time-barred debts.In conclusion, the Tribunal dismissed the petition, ruling that the application under Section 7 of the Insolvency and Bankruptcy Code was not maintainable due to being time-barred under the Limitation Act. The Tribunal emphasized the importance of adhering to statutory limitations in such insolvency proceedings and communicated the decision to both the financial creditor and the corporate debtor.