NCLAT upholds Dismissal of S.9 IBC Petition as Time-Barred due to Expiry of Limitation Period [Read Order]
Since the petition was filed on April 17, 2023, more than seven months after the limitation period had expired, the dismissal by the NCLT was found to be justified
NCLAT Upholds Dismissal – Time-Barred Due to Expiry of Limitation Period – NCLAT Chennai – taxscan
NCLAT Upholds Dismissal – Time-Barred Due to Expiry of Limitation Period – NCLAT Chennai – taxscan
The Chennai Bench of the National Company Law Appellate Tribunal ( NCLAT )upheld the dismissal of a Section 9 Insolvency and Bankruptcy Code ( IBC ), 2016 petition filed by the appellant citing the expiry of the limitation period.
Vasavi Power Services Pvt.Ltd., appellant challenged an order passed by the National Company Law Tribunal ( NCLT ), Bangalore Bench, which dismissed its Section 9 application under the IBC, against the corporate debtor for being time-barred.
The NCLT had held that the application exceeded the limitation period prescribed by law. The appeal was brought before the NCLAT, under Company Appeal (AT) (CH) (Ins) No. 182/2024.
Master GST - Expert-Led Courses for Ambitious Professionals Click here
The appellant had filed the application on April 17, 2023, alleging a payment default of ₹2.43 crore by the corporate debtor, with the default dated back to September 7, 2019, as per Form 5 submitted with the petition.
The NCLT ruled that the limitation period, calculated as three years from the default date, expired on September 6, 2022. While the Supreme Court had excluded the period from March 15, 2020, to February 28, 2022, due to COVID-19 disruptions, the NCLT determined that this extension did not save the appellant's petition.
The appellant argued that the limitation period should be computed by excluding 190 days ( pre-COVID lapse ) and applying the balance 905 days from March 1, 2022, thereby extending the deadline to August 22, 2024.
However, the NCLAT rejected this contention, citing the Supreme Court's ruling in Suo Moto WP(C) No. 3/2020. The tribunal noted that the actual balance limitation period from March 1, 2022, was 190 days, which extended only up to September 6, 2022.
The two member bench comprising Justice Sharad Kumar Sharma ( Judicial Member ) and Jatindranath Swain ( Technical Member ) observed that the appellant’s plea to extend the limitation period contradicted the Supreme Court’s specific guidelines.
It stated that proceedings under the IBC must adhere strictly to the prescribed timelines to meet the objectives of the Code, which include resolution of corporate insolvency in a time-bound manner. Since the petition was filed over seven months after the expiration of the limitation period, the dismissal by the NCLT was upheld.
Consequently, the NCLAT dismissed the appeal, reiterating the importance of strict adherence to limitation provisions in IBC cases to avoid undermining its objectives.
To Read the full text of the Order CLICK HERE
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
