Facts of the Case:
There was an agreement to let out on hire a 150 MT crane for the erection of equipment at the site of Indian Oil Corporation Ltd. between the Respondent and the Appellant. The Respondent/Operational creditor raised invoices on the Appellant for approximately Rs.38,84,709.
The Respondent called on the Appellant to clear dues by issuing notices. In 2014, the Respondent issued a notice to the Appellant for winding up of Appellant-Company to which the Appellant replied by duly acknowledging his liability.
Subsequently, a winding-up petition was filed by the Respondent in the High Court of Madras which was returned for curing of defects. Once again, the petition was presented but again returned for not complying with the defects.
In 2016, Insolvency Bankruptcy Code (hereinafter referred to as “IBC”) came into force and under Section 8(1) of the same, the Respondent issued a demand notice. Later in 2018, a petition under Section 9 of IBC was filed to initiate a Corporate Insolvency Resolution Process against the Appellant.
Brief History of the Case:
The NCLT rejected the application as being barred by limitation.
NCLAT reversed the finding of NCLT and admitted the case back to NCLT.
Hence, the present appeal.
Observation of the Court:
The question to be investigated was whether the application is barred by limitation and if yes then can the Adjudication Authority i.e., Can the NCLT still entertain it?
The court observed that Limitation Act is to be made applicable to IBC as far as practicable. It is also noted that NCLT/NCLAT has the discretion to hear applications even beyond the expiry of the prescribed period of limitation if there is sufficient cause due to which the application could not be presented within the limitation period. The sufficient cause has to be seen on a case-by-case basis, but it is a prerequisite for condoning delays in filing applications or appeals. The onus of the same is on the Appellant.
With respect to the relevant date for purposes of limitation, the court opined that the material date is when the right to sue accrues and whether the cause of action is continuous. It is the remedy and not the claim which is barred by limitation.
Finding of the Supreme Court:
In the present case, the contention that due to ongoing parallel proceedings there was a delay in filing the application is not enough to prove sufficient cause. On basis of this, the Court set aside the order of NCLAT and allowed the present appeal.
Cause Title: M/S Tech Sharp Engineers Pvt. Ltd. V. Sanghvi Movers Limited
Bench: J.K. Maheshwari J. , Indira Banerjee, J.
Decided on: September 19, 2022
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