NCLAT upholds rejection of time-barred insolvency petition against corporate debtor for failure to seek government consent

NCLAT dismissed an appeal challenging rejection of CIRP initiation application filed by operational creditor against corporate debtor. The corporate debtor had failed to repay dues, but the operational creditor's application was time-barred. HC had earlier disposed of creditor's winding up petition in 2016, noting that central government consent was required for legal action against the debtor under a 2016 notification. Despite being granted liberty to seek such consent, the creditor failed to approach the central government. NCLAT held that creditor had ample time to obtain requisite consent and that Supreme Court's decision in unrelated Duncans Industries case had no bearing on this matter.

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Issues:
1. Dismissal of application under Section 9 of the IBC, 2016 on the ground of limitation.
2. Calculation of limitation period for filing the application.
3. Impact of previous winding up proceedings on limitation period.
4. Requirement of Central Government consent for legal action against the Respondent.
5. Applicability of the decision in the case of Duncans Industries Limited on the limitation period.

Analysis:
1. The judgment pertains to an appeal against the dismissal of an application under Section 9 of the IBC, 2016 due to limitation. The Appellant, an Operational Creditor, sought to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor but faced dismissal based on the limitation issue.

2. The Appellant claimed a sum with interest, alleging that the Corporate Debtor defaulted on payments starting from 90 days after the first bill in 2012. The last payment was made in 2014, and the accounts were confirmed in 2015. The limitation period for filing under Section 9 is three years as per Article 137 of the Act, 1963, which seemingly expired before the petition was filed in 2020.

3. The Respondent argued that the petition was time-barred, citing the dates of last supply, last payment, and account confirmation. The winding up petition filed earlier was disposed of in 2016 due to the requirement of Central Government consent, which the Appellant failed to obtain for further legal action.

4. The judgment highlighted the necessity of obtaining Central Government consent for legal actions against the Respondent, as mandated by the earlier winding up proceedings. Despite the liberty granted to the Appellant to seek necessary steps, no such action was taken, leading to the current dismissal of the appeal.

5. The decision emphasized that the case law cited by the Appellant, regarding a separate matter involving Duncans Industries Limited, was irrelevant to the present situation. The judgment concluded that there was no error in the impugned order, as the Appellant had sufficient time to comply with the legal requirements, and thus dismissed the appeal without costs.

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