2021 (2) TMI 1173 - AT - Insolvency and Bankruptcy

Appeal Dismissed: Time-Barred Application under Insolvency & Bankruptcy Code

Kotak Mahindra Bank Ltd. Versus Indian Speciality Fats Ltd.

Kotak Mahindra Bank Ltd. Versus Indian Speciality Fats Ltd. - TMI Issues:- Appeal against order dismissing application under Section 7 of the Insolvency and Bankruptcy Code, 2016 as barred by limitation.Analysis:The appeal in question was filed against an order passed by the Adjudicating Authority, which dismissed the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, on the grounds of being time-barred. The key issue raised was whether the right to file the application existed at the time of filing before the Adjudicating Authority. The Appellant, represented by Mr. Nirmal Goenka, argued that the financial debt owed by the Corporate Debtor to the Assignor was declared as a Non-Performing Asset (NPA) before the assignment of debt to the Appellant, Kotak Mahindra Bank Limited. The Appellant, as the assignee, had approached the Debt Recovery Tribunal for execution of a previous order against the Corporate Debtor. The Adjudicating Authority found that the filing of the application under Section 7 on 29th October, 2018, was beyond the three-year limitation period as per Article 137 of the Limitation Act, 1963. The Appellant's request to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor was rightly declined, considering the ongoing execution and recovery proceedings before the Recovery Officer, which is not the purpose of the Insolvency Resolution mechanism under the I&B Code.The Tribunal noted that the financial debt was classified as NPA before the assignment to the Appellant, and recovery proceedings had been initiated prior to the assignment. The final order from the Debt Recovery Tribunal in 2002 had not been appealed by the Corporate Debtor, making it final. The Tribunal emphasized that the filing of the application under Section 7 of the I&B Code beyond three years from the occurrence of default was not permissible under the Limitation Act. The Appellant's pursuit of recovery proceedings and execution of the decree before the competent court was acknowledged, and the dismissal of the appeal did not affect the right to continue those proceedings. The Tribunal ultimately found no merit in the appeal and dismissed it, affirming the decision of the Adjudicating Authority regarding the time-barred nature of the application under the I&B Code.