NCLAT sets aside Insolvency proceedings against Sarda Agro Oils
By INSOL India Editorial Team Posted On : September 05, 2020
NCLAT set aside Insolvency proceeding of Sarda Agro Oils by stating reason that the claims were filed three years after declaring the account non- performing asset. This 3 judge- bench gave the ruling that, “the date of default is computed from the date of declaration of account as a Non-Performing Asset (“NPA”)and such date of default would not shift.
This is very important to be considered for the purpose of calculation of limitation period of 3 years as prescribed by the Limitation Act 1963. It will be impermissible to proceed with section 7 ie. Application filed by the financial creditor, in case the limitation period lapses.
In the given case, it was observed by NCLAT that due to irregular payments bank had declared this account as NPA on 30thSeptember 2015, whereas the section 7 application was filed on 31stDecember 2018. Appellate Authority ordered NCLT to close this proceedings and declare all activities by resolution professional in the given case to be “Illegal”. "Consequently, orders passed by the Adjudicating Authority appointing IRP/ RP, declaring moratorium, freezing of account etc. and all consequential action taken by IRP/ RP including advertisement publication etc. all such orders and actions are declared illegal and set aside," the NCLAT said.
The bench gives emphasis to the relation of ‘date of Default’ to the ‘date of declaration of NPA’ to be same in such cases.
According to the NCLAT, the Supreme Court has also held that the limitation period for application under Section 7 of the IBC is three years as provided by the Limitation Act, 1963 and is extendable only by the application of Section 5 of Limitation Act, 1963 if any case for condonation of delay is made out. Section 5 pertains to extension of the stipulated period.
This is very important to be considered for the purpose of calculation of limitation period of 3 years as prescribed by the Limitation Act 1963. It will be impermissible to proceed with section 7 ie. Application filed by the financial creditor, in case the limitation period lapses.
In the given case, it was observed by NCLAT that due to irregular payments bank had declared this account as NPA on 30thSeptember 2015, whereas the section 7 application was filed on 31stDecember 2018. Appellate Authority ordered NCLT to close this proceedings and declare all activities by resolution professional in the given case to be “Illegal”. "Consequently, orders passed by the Adjudicating Authority appointing IRP/ RP, declaring moratorium, freezing of account etc. and all consequential action taken by IRP/ RP including advertisement publication etc. all such orders and actions are declared illegal and set aside," the NCLAT said.
The bench gives emphasis to the relation of ‘date of Default’ to the ‘date of declaration of NPA’ to be same in such cases.
According to the NCLAT, the Supreme Court has also held that the limitation period for application under Section 7 of the IBC is three years as provided by the Limitation Act, 1963 and is extendable only by the application of Section 5 of Limitation Act, 1963 if any case for condonation of delay is made out. Section 5 pertains to extension of the stipulated period.