Period of Moratorium is excluded in Computing Limitation Period in a Suit or an Application by a Corporate Debtor: Supreme Court [Read Judgment]

Limitation Period - Application - Corporate Debtor - Supreme Court - taxscan

The Supreme Court has held that period of Moratorium is excluded in computing the period of limitation in a suit or an application by a corporate debtor.

The appellant, New Delhi Municipal Council had approached the Supreme Court challenging the Delhi High Court’s order allowing the application filed by the respondent, Minosha India Limited corporate debtor under Section 11(6) of the Arbitration and Conciliation Act.

Mr. Gourab Banerjee, counsel for the appellant submitted that the order appointing the arbitrator will not stand because the application under section 11(6) was clearly beyond time. Further submitted by the appellant counsel that the respondent not having brought the application for appointment of an arbitrator within the period of limitation which is ordinarily available, the appellant is disabled from establishing its case before the arbitrator as many of the documents are not available and witnesses may not be available as appellant’s employees have retired. All of this would produce substantially adverse results for the appellant. None of this was in the contemplation of the lawgiver and the acceptance of the respondent’s case would involve giving a free run to those who sleep on their rights and bring a delayed claim much beyond the period of limitation.

Mr. Neeraj Kishan Kaul, counsel for the respondent submitted that a literal interpretation or a contextual interpretation, the result is inevitable that the period of the moratorium will stand excluded even as far as a suit or an application by a corporate debtor is concerned. As far as the literal interpretation goes, the lawgiver has not left anything for imagination and there would be no merit in the case of the appellant.

The Supreme Court observed that the scheme of the IBC Section 60(6) is an integral part of the scheme which will ensure to the benefit of the resolution applicant which is enabled to take suitable measures to ventilate its legitimate grievances by excluding the period during which a Moratorium was enforced for the purpose of computing the period of limitation. Supreme Court further observed that an order of Moratorium under Section 14 was in force, the entire period of the Moratorium is liable to be excluded in computing the period of limitation even in a suit or an application by a corporate debtor.

The division bench presided by Justice K.M. Joseph and Justice Hrishikesh Roy has held that “we are of the view that section 60(6) of the IBC does contemplate the exclusion of the entire period during which the moratorium was in force in respect of a corporate debtor in regard to a proceeding as contemplated therein at the hands of the corporate debtor”.

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Counsel for Appellant:   Mr. Gourab Banerji, Mr. Harsha Peecharra,Mr. Yoginder Handoo

Counsel for Respondent:   Mr. Neeraj Kishan Kaul,Mr. Mahesh Agarwal,Ms. Sayree Basu Mullik


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