Application under Section 7 of I&B Code time-barred due to delayed filing; civil suits pendency irrelevant in insolvency.

The Tribunal concluded that the application under Section 7 of the I&B Code was time-barred as it was filed more than three years after the debt became due and payable. The Tribunal clarified that the pendency of civil suits does not affect insolvency proceedings, emphasizing that once a debt is deemed payable and there is a default, the application must be admitted. The appeal was dismissed, with no costs awarded.

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Issues Involved:
1. Application of Limitation Act, 1963 to proceedings under Section 7 of the Insolvency & Bankruptcy Code, 2016.
2. Determination of the date when the debt becomes due and payable.
3. Relevance of pending civil suits to the insolvency proceedings.

Detailed Analysis:

1. Application of Limitation Act, 1963 to proceedings under Section 7 of the Insolvency & Bankruptcy Code, 2016:
The Respondent argued that as per Section 238-A of the I&B Code, the Limitation Act, 1963 applies to proceedings before the Adjudicating Authority. The last balance confirmation was on 01.04.2007, and thus, the application should have been filed within three years from that date, i.e., by 31.03.2010. Since the application was filed on 17.04.2018, it was claimed to be time-barred. The Tribunal referenced the Supreme Court's ruling in B.K. Educational Service Pvt. Ltd. Vs. Parag Gupta and Associates, which stated that the right to sue accrues when a default occurs, and if the default occurred over three years before the application filing date, the application would be barred under Article 137 of the Limitation Act unless Section 5 of the Limitation Act applies to condone the delay.

2. Determination of the date when the debt becomes due and payable:
The Tribunal examined the facts, noting that the loan was advanced on 12.08.2002, with an agreement for repayment within a reasonable time (6 to 12 months). The Corporate Debtor acknowledged the debt via balance confirmation letters, with the last confirmation on 01.04.2007. The Financial Creditor demanded repayment through a letter dated 17.09.2007 and a legal notice on 23.10.2007, served on 04.11.2007, demanding repayment within three weeks. The Tribunal determined that the debt became due and payable on 25.11.2007, three weeks after the notice was served. Since the application under Section 7 was filed on 17.04.2018, it was beyond the three-year limitation period from the date of default, making the application time-barred.

3. Relevance of pending civil suits to the insolvency proceedings:
The Adjudicating Authority had rejected the application on the grounds that the debt was not due until the final decision of the civil suit. The Tribunal disagreed, citing the Supreme Court's ruling in Innovative Industries Ltd. Vs. ICICI Bank & Anr., which clarified that the insolvency resolution process begins when a default occurs, defined as non-payment of a debt once it becomes due and payable. The Tribunal also referenced its previous rulings in Neeraj Jain Vs. Yes Bank Ltd. & Anr. and Karan Goeal Vs. M/s Pashupati Jewellers & Ors., which held that the pendency of a suit or criminal case does not affect the proceedings under Section 7 of the I&B Code. The Tribunal emphasized that once the Adjudicating Authority is satisfied that a debt is payable and there is a default, the application must be admitted.

Conclusion:
The Tribunal concluded that the application under Section 7 of the I&B Code was barred by limitation, as it was filed more than three years after the date of default. The Adjudicating Authority's rejection of the application on the grounds that the debt was not due was incorrect. Consequently, the appeal was dismissed, with no order as to costs.

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