The division judge bench of Justice Indira Banerjee and Justice J.K Maheshwari of the apex court in the case of M/S Tech Sharp Engineers Pvt Ltd Vs Sanghvi Movers Limited held that a claim may not be barred by limitation. It is the remedy for the realization of the claim, which gets barred by limitation.
BRIEF FACTS
The factual matrix of the case is that the respondent let out a crane to the appellant and the Respondent/Operational Creditor raised invoices on the Appellant for a sum of Rs.38,84,709/-. Thereafter, the respondent issued a notice to the appellant for the outstanding expenses and the Respondent issued a statutory notice to the Appellant under Sections 433(e), 434, and 439 of the Companies Act, 1956 for Winding Up of the Appellant-Company the same was acknowledged by the appellant. Further, the respondent filed the winding petition before the Madras High Court and the High Court returned the Winding Up petition to the Respondent for curing of defects. Then, the IBC came into force on 1st December 2016 and the Respondent issued a demand notice under Section 8(1) calling upon the Appellant to repay its dues. Furthermore, the respondent filed the petition under section 9 of the IBC before the Corporate Insolvency Resolution Process (CIRP) in the NCLT and the Adjudicating Authority (NCLT) rejected the application as barred by limitation, placing reliance on the judgment of this Court in B.K. Educational Services Pvt. Ltd. v. Parag Gupta and Associates. Then, the decision of the adjudicating authority was appealed before the NCLAT and the decision of the adjudicating authority was set aside.
COURT’S OBSERVATION
The hon’ble apex court considered the judgments titled B.K. Educational Services Pvt. Ltd.v. Parag Gupta and Associates, Radha Export (India) Private Ltd. v. K.P. Jayaram and Anr, Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries Private Ltd. and Anr, Ramlal, Motilal & Chhotelal v. Rewa Coalfields Ltd, and Krishna v. Chathappan and stated that the condition precedent for condonation of the delay in filing an application or appeal, is the existence of sufficient cause. Whether the explanation furnished for the delay would constitute “sufficient cause” or not would be dependent upon the facts of each case. There cannot be any straitjacket formula for accepting or rejecting the explanation furnished by the Appellant/applicant for the delay in taking steps. Further, when an appeal is filed against an order rejecting an application on the ground of limitation, the onus is on the Appellant to make out the sufficient cause for the delay in filing the application. The date of enforcement of the IBC and/or the date on which an application could have first been filed under the IBC is not relevant in the computation of limitation. It would be absurd to hold that the CIRP could be initiated by filing an application under Section 7 or Section 9 of the IBC, within three years from the date on which an application under those provisions of the IBC could have first been made before the NCLT even though the right to sue may have accrued decades ago.
The apex court held that the limitation for initiation of winding up proceedings in the Madras High Court stopped running on the date on which the Winding Up petition was filed. The initiation of proceedings in Madras High Court would not save limitation for initiation of proceedings for initiation of CIRP in the NCLT under Section 7 of the IBC. A claim may not be barred by limitation. It is the remedy for the realisation of the claim, which gets barred by limitation. The impugned order of the NCLAT is unsustainable in law.
CASE NAME- M/S Tech Sharp Engineers Pvt Ltd Vs Sanghvi Movers Limited
CITATION- CIVIL APPEAL NO. 296 OF 2020
CORUM- Justice Indira Banerjee and Justice J.K Maheshwari
DATE- 19.09.22
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