Extension of Limitation Period under Insolvency and Bankruptcy Code

EXPORT-IMPORT BANK OF INDIA, BANK OF INDIA, STATE BANK OF INDIA, UNION BANK OF INDIA Versus MANEESH PHARMACEUTICALS LTD.

EXPORT-IMPORT BANK OF INDIA, BANK OF INDIA, STATE BANK OF INDIA, UNION BANK OF INDIA Versus MANEESH PHARMACEUTICALS LTD. - TMI Issues Involved:
1. Limitation period for filing the application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Exclusion of the period under Section 22(5) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA).
3. Validity of proceedings in a foreign court while BIFR proceedings were pending.

Summary of Judgment:

1. Limitation Period for Filing the Application:
The primary issue was whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) was barred by limitation. The Respondent argued that the default occurred on 21.02.2012, and the application filed on 30.08.2019 was beyond the three-year limitation period prescribed under Article 137 of the Limitation Act, 1963. The Tribunal found that the date of default should be considered as 21.02.2012, when the corporate guarantee was invoked, not the date when the Borrower's account was declared NPA.

2. Exclusion of the Period Under Section 22(5) of SICA:
The Tribunal examined whether the period during which the Respondent was before the BIFR should be excluded from the limitation period. The Respondent filed a reference with BIFR on 06.11.2012, which was registered on 07.12.2012. The SICA was repealed on 01.12.2016. The Tribunal held that the period from 07.12.2012 to 01.12.2016 should be excluded, thus extending the limitation period to 01.12.2019. The application under Section 7 of IBC filed on 30.08.2019 was within this extended period.

3. Validity of Proceedings in a Foreign Court:
The Tribunal also addressed whether the Appellants could pursue proceedings in a foreign court while the BIFR proceedings were pending. The Respondent argued that the Appellants could not take advantage of Section 22(5) of SICA since they continued with the foreign suit without seeking BIFR's permission. The Tribunal referred to the Bombay High Court's decision in Ashapura Minechem Ltd. Vs. Armada (Singapore) Pte. Ltd., which clarified that SICA's provisions do not extend to properties outside India, and hence, no prior consent from BIFR was required for proceedings in a foreign court.

Conclusion:
The Tribunal concluded that the application under Section 7 of IBC was filed within the extended limitation period, considering the exclusion under Section 22(5) of SICA. The order of the Adjudicating Authority dismissing the application on the ground of limitation was set aside. The appeal was allowed, and no costs were imposed.