Tribunal denies condonation of delay in Company Petition filing under IBC

The Tribunal dismissed the Application seeking condonation of delay in filing the Company Petition under Section 9 of IBC, 2016, invoking Section 5 of the Limitation Act, 1963. The Tribunal held that the delay of 230 days was not sufficiently justified, as the Applicant failed to provide a satisfactory explanation for the delay. Emphasizing the strict adherence to the limitation period, the Tribunal reiterated the applicability of the Limitation Act from the inception of the Code, in line with Supreme Court precedents.

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Issues Involved:
1. Condonation of Delay
2. Application of Limitation Act, 1963 to IBC, 2016
3. Calculation of Delay Period
4. Sufficient Cause for Delay

Detailed Analysis:
1. Condonation of Delay:
The primary issue was whether the delay of 230 days in filing the Company Petition under the Insolvency and Bankruptcy Code, 2016 (IBC, 2016) could be condoned. The Applicant, M/S. FNA Multi-trade Private Limited, sought condonation of this delay under Section 5 of the Limitation Act, 1963.

2. Application of Limitation Act, 1963 to IBC, 2016:
The Tribunal examined whether Section 5 of the Limitation Act, 1963 applies to Company Petitions filed under IBC, 2016. The Respondent argued that the Petition was barred by limitation as it was filed after three years from the date of the invoice, which gives rise to the cause of action. The Tribunal referred to the Supreme Court's decision in B.K. Educational Services Private Limited vs. Parag Gupta And Associates (2019) 11 SCC 633, which held that the Limitation Act is applicable to applications filed under Sections 7 and 9 of IBC, 2016 from the inception of the Code. The Tribunal noted that the period of limitation is to be reckoned under Article 137 of the Limitation Act, 1963, which provides a three-year period from when the right to apply accrues.

3. Calculation of Delay Period:
The Tribunal found that the last payment date was 22.12.2015, and the three-year limitation period expired on 22.12.2018. The Application for condonation of delay was filed on 09.04.2019, well after the expiration of the limitation period. The Tribunal emphasized that the Applicant did not clearly explain how the 230 days of delay were calculated, nor did it provide sufficient reasons for the delay.

4. Sufficient Cause for Delay:
The Applicant argued that the delay was due to the Director's illness and medical treatment, which prevented timely filing. However, the Tribunal found that the Applicant did not provide sufficient cause for the delay, noting that the inaction of other Directors or staff was not explained. The Tribunal held that even assuming Section 5 of the Limitation Act could apply, no sufficient cause was demonstrated to condone the delay.

Conclusion:
The Tribunal concluded that the Application seeking condonation of delay in filing the Petition under Section 9 of IBC, 2016 invoking Section 5 of the Limitation Act, 1963, stands dismissed without costs. The Tribunal reiterated that the Limitation Act is applicable from the inception of the Code and that the period of limitation must be strictly adhered to, as emphasized by the Supreme Court in various judgments.

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