The NCLAT, New Delhi Bench opined that Article 137 of the Limitation Act of 1963 talks about the limitation period for applications, and the same is applied to the limitation period in the case of Sections 7, 9, and 10 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”).
The Bench opined that an application under Section 9 IBC cannot be said to be a suit and the same is strengthened by the fact that Section 5 of the Limitation Act is inapplicable to suits and it does apply to Sections 7 and 9 of the IBC. Based on this, it was ruled that NCLT committed an error in dismissing the Section 9 application on the ground that it was barred by Section 69(2) of the Partnership Act, 1932.
Brief Facts:
The present appeal has been preferred against the order of the NCLT vide which the application of the Appellant under Section 9, IBC was rejected.
The NCLT rejected the application on the ground that it was barred under Section 69(2) of the Partnership Act, 1932.
Contentions of the Appellant:
It was contended that Section 69(2) of the Partnership Act, 1932 cannot be attracted to Section 9 as it is an application that is filed under Section 9 and not a suit. The NCLT committed an error in treating the application like a suit.
Contentions of the Respondent:
It was argued that it was rightly held that a suit against a third party filed by an unregistered partnership is barred.
Observations of the Tribunal:
It was noted that Article 137 of the Limitation Act of 1963 talks about the limitation period for applications and the same is applied to the limitation period in the case of Sections 7, 9, and 10 of the IBC.
The Bench opined that an application under Section 9 IBC cannot be said to be a suit and the same is strengthened by the fact that Section 5 of the Limitation Act is inapplicable to suits and it does apply to Sections 7 and 9 of the IBC.
The Decision of the Tribunal:
Hence, based on the above-mentioned findings, it was ruled that NCLT committed an error in dismissing the application on the ground that it was barred by Section 69(2) of the Partnership Act, 1932. Accordingly, the order of NCLT was set aside and the present appeal was allowed.
Case Title: Rourkela Steel Syndicate v. Metistech Fabricators Pvt. Ltd.
Coram: Justice Ashok Bhushan, Mr. Barun Mitra (Technical Member)
Case No: Company Appeal (AT)(Insolvency) No. 924 of 2022
Advocates for Appellant: Advs. Mr. Milan Negi, Mr. Nikhil Kumar
Advocate for Respondent: Adv. Mr. Sanchit Gawri
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