2026 (3) TMI 758 - AT - IBC

Limitation exclusion under pandemic suspension preserves the longer residual period, rendering the guarantor applications timely filed.

The Supreme Court order of 10.01.2022 excluded 15.03.2020-28.02.2022 from limitation and made the balance period as on 01.03.2022 available from that ... Exclusion of the period 15.03.2020-28.02.2022 for computation of limitation - Balance period of limitation becomes available from 01.03.2022 where limitation expired during the excluded periodExclusion of the period 15.03.2020-28.02.2022 for computation of limitation - Effect of the Supreme Court's Suo Motu orders on computation of limitation for proceedings under the IBC where limitation expired during the COVID period - HELD THAT: - The Tribunal held that the Supreme Court's order in the Suo Motu proceedings excluded the period from 15.03.2020 to 28.02.2022 for the purposes of computing limitation. Consequently, the period when the cause of action was in a state of eclipse is to be excluded and thereby enlarges the available limitation. The Tribunal applied the principles in the Supreme Court decisions cited and concluded that the excluded period must be added after 28.02.2022, so that the balance period of limitation remaining as on 15.03.2020 becomes available from 01.03.2022. This legal consequence governs computation for Section 95 proceedings under the IBC where the original limitation expired during the excluded period. [Paras 11, 16, 23, 26]The period 15.03.2020-28.02.2022 is excluded in computing limitation and the balance limitation available on 15.03.2020 becomes available from 01.03.2022.Balance period of limitation becomes available from 01.03.2022 where limitation expired during the excluded period - Whether the Section 95 applications filed by the bank were time barred after applying the exclusion and availability of the balance period from 01.03.2022 - HELD THAT: - The Tribunal computed the balance limitation remaining as on 15.03.2020 for each decree and added that balance to 01.03.2022. On that computation the applications filed by the bank fell within the recalculated limitation periods. The Adjudicating Authority's view that only 90 days from 01.03.2022 were available was rejected because where the actual balance period as on 01.03.2022 exceeds 90 days, that longer period applies. Accordingly the Tribunal found the impugned orders holding the applications barred by time to be erroneous. [Paras 24, 25, 26, 27, 28]The Section 95 applications were not barred by limitation when the excluded period and the available balance from 01.03.2022 are applied; the Adjudicating Authority's dismissal on time barred grounds was incorrect.Final Conclusion: The appeals are allowed; the orders rejecting the Section 95 applications as time barred are set aside and the applications are revived and remitted to the Adjudicating Authority for fresh consideration in accordance with law; no other question was decided and parties shall bear their own costs. Issues: Whether the Section 95 applications filed by the Bank against personal guarantors were time-barred having regard to the orders of the Hon'ble Supreme Court in Suo Motu Writ Petition (C) No.3 of 2020 (order dated 10.01.2022) and the consequent exclusion and availability of the balance period of limitation.Analysis: The operative direction in the Supreme Court order of 10.01.2022 excludes the period from 15.03.2020 to 28.02.2022 for computation of limitation and provides that the balance period of limitation remaining as on 01.03.2022 shall become available from that date; where the actual balance remaining as on 01.03.2022 exceeds 90 days, the longer period applies. Applying that regimen to the decrees and three-year limitation under Article 137, the period elapsed between 15.03.2020 and the original expiry date must be excluded and added from 01.03.2022 to compute the fresh deadline. For the appeals before the Tribunal the balance periods computed from 01.03.2022 extended the filing deadlines beyond the dates on which SBI filed the Section 95 applications (24.01.2023 and 25.02.2023), hence the applications fall within the available limitation period.Conclusion: The Section 95 applications are not time-barred; the exclusion and balance-period computation under the Supreme Court's order dated 10.01.2022 apply and entitle the Appellant to the longer balance period rather than only 90 days.