NCLAT - Pendency of SARFAESI proceedings before DRT does not extend the period of limitation under the IBC
By INSOL India - Editorial Team Posted On : June 01, 2020
It was held by the NCLAT, in Bimal Kumar v. Bank of India(Company Appeal (AT) (Insolvency) No. 1166 of 2019), that pendency of SARFAESI proceedings before Debt Recovery Tribunals (DRT) will not result in the extension of limitation period under the IBC.
The shareholders and the directors of the corporate debtor, M/s Radheshyam Agro Products Pvt Ltd, had argued in appeal that the application filed by Bank of India for initiation of CIRP was time-barred with such submissions being objected to by the respondent Bank of India who submitted that the application filed under Section 7 of the IBC for initiation of CIRP was within the limitation period.
In this matter, no acknowledgment had been issued by the corporate debtor prior to the expiry of three years from the date of default and the respondent, Bank of India, had relied upon submissions made by the corporate debtor before the DRT and the pendency of SARFAESI proceedings before the DRT as a basis for filing an application for initiation of CIRP under section 7 of the IBC.
The NCLAT, after due consideration of the submissions made by the parties and relying on the decision of the Supreme Court in B.K. Educational Services Pvt Ltd v Parag Gupta & Associates, held that the limitation period for the purpose of sections 7 & 9 of the IBC was governed by Article 137 of the Limitation Act, 1963 and the initiation or pendency of proceedings before DRT under the SARFAESI Act, 2002 or the RDDBFI Act, 1993 could not be considered as an extension of the limitation period under the IBC. Accordingly, the NCLT held that the application filed by Bank of India under section 7 of the IBC was time barred and set aside the order of the NCLT.