The Insolvency & Bankruptcy Code, 2016, is silent on the time-period from the date of default within which an application for insolvency resolution must be filed.
In the case of M/s Deem Roll Tech Limited v. M/s. R.L. Steel & Energy Limited (C.A. No. (I.B.) 24/PB/2017, March 31, 2017), the Principal Bench of National Company Law Tribunal considered whether the Limitation Act, 1963 (the “Limitation Act”) was applicable to applications filed under the Code. In this case, the petitioner claimed a sum of money from R.L. Steel & Energy Limited (“R.L. Steel”) arising out of a sale of goods transaction in March 2014. The petitioner initiated a summary suit in civil court for recovery of this money and had been awarded a decree in its favour in 2016.
As R.L. Steel had not honoured the decree, the petitioner also filed a statutory demand notice against R.L. Steel, followed by an application to commence proceedings under the Code. The Tribunal stated that while Section 255 of the Code amended various provisions of the Companies Act, 2013, it had not amended Section 433 of the Companies Act, which made the provisions of the Limitation Act specifically applicable to proceedings before the Tribunal and the Appellate Tribunal. The corporate attorneys can give you legal advice about the inapplicability of time limitation on application under Insolvency and Bankruptcy Code in India.
The Tribunal further noted that the Code contained no prohibition on the application of the Limitation Act. Hence, in the absence of any such bar under the Code, coupled with Section 433 of the Companies Act, the Tribunal concluded that the petitioner’s application was time-barred under the Limitation Act as the invoices for which payment was claimed related to the period from 2011 to 2012. The corporate law advocates can give you legal advice about the inapplicability of time limitation on application under Insolvency and Bankruptcy Code in India.
The tribunal is dealing with a plethora of new interpretations of the insolvency law. So far, the tribunal has interpreted the definition of dispute, financial and operational creditor, etc. A more detailed interpretation is awaited on the applicability of limitation law on IBC.
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