TaxTMI 
TaxTMI 
2025 (8) TMI 721
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....T) (Ins.) No. 991/2025 for deciding both the appeals. 3. Brief facts of the case necessary to be noticed for deciding the appeals are: i. The IDBI Bank extended credit facilities to corporate debtor - Great Logistic and Parking Services Pvt. Ltd., the respondent herein stood personal guarantor and executed a personal guarantee in favour of the creditor on 28.10.2010. ii. The corporate debtor had defaulted in repayment of the cash credit facilities on 31.03.2016 leading the classification of the account as NPA. iii. The creditor issued a guarantee invocation notice to the personal guarantor on 24.10.2016 and an OA was also filed before the Debt Recovery Tribunal (DRT) on 31.03.2017 and recovery certificate was issued in favour of the creditor on 25.01.2019, after issuing demand notice under Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtors) Rules, 2019, (herein after referred to as '2019 Rules') on 19.03.2024. The application under Section 95 was filed by the IDBI Bank on 02.09.2024. iv. The adjudicating authority by the impugned order ....
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....015, 17.10.2017 and another recovery certificate was issued on 04.08.2017. Application under Section 7 was filed on 06.09.2019 before NCLT based on three recovery certificates. On 12.01.2021, adjudicating authority admitted Section 7 application and declared moratorium and appointed the RP. The Managing Director of the corporate debtor filed an appeal before the NCLAT and point urged was point of limitation. The appellate tribunal did not accept the submission of the appellant that debt is barred by limitation. Appeal was dismissed. The appellant before the Hon'ble Supreme Court challenging the order of the NCLT & NCLAT raised two submissions including that the application was barred by limitation. Hon'ble Supreme Court relying on the earlier judgment in 'Kotak Mahindra Bank Ltd.' Vs. 'A. Balakrishnan' reported in [(2022) 9 SCC 186] in respect of recovery certificate issued by DRT has been examined and it was held that limitation shall be 3 years. In paragraph 9 of the judgment, following was laid down: "9. In [Kotak Mahindra Bank Ltd. v. A. Balakrishnan, (2022) 9 SCC 186 : (2022) 4 SCC (Civ) 548], a three-Judge Bench of this Court had examined the question of limitation f....
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.... otherwise entitled to in law. The effect would be that the applicant, who is a decree-holder, would himself be prohibited from executing the decree in his favour. *** 71. We have already hereinabove, done the exercise of considering the relevant provisions of IBC afresh and come to a conclusion that a liability in respect of a claim arising out of a recovery certificate would be a "financial debt" within the meaning of clause (8) of Section 5 IBC and a holder of the recovery certificate would be a "financial creditor" within the meaning of clause (7) of Section 5 IBC. We have also held that a person would be entitled to initiate CIRP within a period of three years from the date on which the recovery certificate is issued. We are of the considered view that the view taken by the two- Judge Bench of this Court in Dena Bank [Dena Bank v. C. Shivakumar Reddy, (2021) 10 SCC 330] is correct in law and we affirm the same. *** 86. To conclude, we hold that a liability in respect of a claim arising out of a recovery certificate would be a "financial debt" within the meaning of clause (8) of Section 5 IBC. Consequently, the holder of the recovery certific....
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....ticed Article 136 of the Limitation Act for execution of any decree where limitation is 12 years which was noticed in paragraph 25. Hon'ble Supreme Court, however, categorically held that limitation for filing an application under Section 7 is 3 years under Article 137 which has been clearly held in paragraph 26. Hon'ble Supreme Court in paragraph 27 & 28 by noticing provisions of 19(22-A) of the 1993 Act has held that for lodging a claim in IBC shall retain the character of decree. The argument of appellant that application under Section 7 was barred by time was rejected which was clearly held in paragraph 30, which is to the following effect: "30. We are otherwise not satisfied with the argument of the appellant about maintainability of the application out of which this appeal arises on the ground of the application being barred under limitation. The application with respect to the two recovery certificates issued in the year 2017 is maintainable. In the event the Appellate Tribunal is of opinion that the CIRP could not lie so far as the recovery certificate of 2015 is concerned, as the decree would be still alive, the claim based on the said recovery certificate could b....
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....gage or otherwise charged upon immovable property When the money secured for becomes due." Twelve years Applying the aforesaid Article, the NCLT reached the conclusion that since the limitation period was 12 years from the date on which the money suit has become due, the aforesaid claim was filed within limitation and hence admitted the Section 7 application. The Nclat vide the impugned judgment [Gaurav Hargovindbhai Dave v. Asset Reconstruction Co. (India) Ltd., 2019 SCC OnLine NCLAT 329] held, following its earlier judgments [Pushpa Shah v. IL&FS Financial Services Ltd., 2019 SCC OnLine NCLAT 572], that the time of limitation would begin running for the purposes of limitation only on and from 1-12-2016 which is the date on which the Insolvency and Bankruptcy Code was brought into force. Consequently, it dismissed the appeal. 6. Having heard the learned counsel for both sides, what is apparent is that Article 62 is out of the way on the ground that it would only apply to suits. The present case being "an application" which is filed under Section 7, would fall only within the residuary Article 137. As rightly pointed out by the learned counsel appearing on b....