2021 (2) TMI 1266 - Tri - Insolvency and Bankruptcy

Tribunal dismisses insolvency application due to limitation period lapse. Default date crucial.

Syndicate Bank Versus RS Builtwell Private Limited

Syndicate Bank Versus RS Builtwell Private Limited - TMI Issues:- Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process.- Jurisdiction of the Adjudicating Authority.- Default in repayment of loan facilities by the Corporate Debtor.- Appointment of Interim Resolution Professional.- Outstanding dues and insolvency of the respondent company.- Limitation period for filing the application under Section 7 of the Code.Analysis:1. The Syndicate Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking the initiation of Corporate Insolvency Resolution Process against the respondent company, RS Builtwell Private Limited. The bank claimed a due amount of Rs. 29,53,87,663.67 along with interest from the respondent company.2. The Tribunal, having territorial jurisdiction over New Delhi, was the Adjudicating Authority for the application as the registered office of the respondent company was in New Delhi. The applicant bank, Syndicate Bank, had its Corporate Office in Manipal, Udupi, with a branch office in New Delhi.3. The applicant bank detailed the default in repayment by the respondent company, leading to the account being classified as a Non-Performing Asset (NPA). Despite various notices and actions taken under SARFAESI Act and Recovery of Debts Due to Banks and Financial Institutions Act, the respondent failed to clear the outstanding dues.4. The applicant proposed the appointment of Mr. Arun Gajwani as the Interim Resolution Professional, who agreed to take up the role and fulfilled the requirements under Section 7(3)(b) of the Code. The bank also submitted relevant statements of accounts and certificates under the Banker's Books of Evidence Act, 1891.5. However, the Tribunal noted that the application was barred by limitation as per the decision of the Hon'ble NCLAT in a similar case. The NPA was declared on 05.04.2008, and the action initiated by the bank under SARFAESI Act in 2015 could not extend the limitation period. As the application was filed in 2019, beyond the limitation period prescribed under Article 137 of the Limitation Act, the Tribunal dismissed the application on the grounds of limitation.6. The Tribunal emphasized that the date of default, in this case, was the date of declaration of NPA, and any subsequent actions taken could not alter the limitation period for filing the application under Section 7 of the Insolvency and Bankruptcy Code. Consequently, the application for Corporate Insolvency Resolution Process was dismissed as barred by limitation.