2021 (12) TMI 678 - Tri - Insolvency and Bankruptcy

Company Petition for CIRP Dismissed Due to Limitation Bar.

Visakha Prime Properties Construction Limited Versus ASREC (India) Limited

Visakha Prime Properties Construction Limited Versus ASREC (India) Limited - TMI Issues:1. Application filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 seeking dismissal of the Petition for Initiation of Corporate Insolvency Resolution Process (CIRP) on the grounds of limitation.Analysis:1. The Applicant/Corporate Debtor sought dismissal of the Petition moved by the Financial Creditor, arguing that the Company Petition was time-barred as the Corporate Debtor was declared as Non-Performing Asset (NPA) on 30.06.2002, and the Petition was filed after 18 years and 28 days, on 02.06.2020, exceeding the limitation period.2. The Respondent countered, stating that the Original Application (O.A.) was filed within the limitation period, and the debt was assigned to the Respondent by the Bank. The Respondent argued that the Corporate Debtor's filing of balance sheets annually, acknowledging the debt, extended the limitation period, and thus, the Petition should not be dismissed on grounds of limitation.3. The Tribunal considered the arguments and referred to the judgment of the Supreme Court, emphasizing that for an Application under Section 7 of the IBC, Article 137 of the Limitation Act applies, starting from the date of declaration of NPA. As the Corporate Debtor was declared as NPA on 30.06.2002, the Petition filed on 05.06.2020 was beyond the limitation period.4. The Respondent cited a Supreme Court judgment stating that a fresh cause of action arises for the Financial Creditor upon a judgment or decree in their favor, but the Tribunal found this argument invalid as the matter was still pending before the Debts Recovery Tribunal (DRT), and no judgment had been passed.5. The Tribunal noted that an acknowledgment of debt by the Corporate Debtor could extend the limitation period, but the entry in the balance sheet was insufficient as it was under non-current liabilities and the amount was below the Tribunal's pecuniary jurisdiction, leading to the dismissal of the Petition on limitation grounds.6. Consequently, the Tribunal dismissed the Company Petition, allowing the Applicant to file a fresh application after the DRT's judgment or decree, if applicable, and granted the Applicant liberty to do so if the right accrues.This detailed analysis covers the issues raised in the judgment, the arguments presented by both parties, the legal principles applied by the Tribunal, and the final decision rendered in the matter.