J C Flower Asset Reconstruction Private ... vs Sandeep Vedant

In the matter of: J C Flower Asset Reconstruction Pvt. Ltd. ...Appellant

Vs Mr. Mehul Gor & another ...Respondents

(Arising out of Impugned Order dated 04.04.2024 passed by the Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench) in C.P. (I.B) No. 240/NCLT/AHM/2022)

With

Company Appeal (AT) (Ins) No.1800 of 2024 & I.A. No.6574 of 2024

In the matter of: J C Flower Asset Reconstruction Pvt. Ltd. ...Appellant

Vs Mr. Sandeep Vedant & another ...Respondents

(Arising out of Impugned Order dated 04.04.2024 passed by the Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench) in C.P. (I.B) No. 238/NCLT/AHM/2022) 2

Appellant: Mr. Bendi Raviteja, Mr. Vineeth Reddy, Mr. Nikhil Pathak, Advocates

Respondents: None

JUDGEMENT

Per Justice N. Seshasayee, Member (Judicial)

These two appeals arise out of two independent Orders passed by the

Adjudicating Authority (NCLT, Court -2, Ahmedabad) in two separate

applications which the appellant herein has filed under Sec. 95 of IBC against

the personal guarantors. Needless to mention, both these applications were

dismissed on the point of limitation.

2.1 The relevant facts necessary for the current purpose are identical in both the

cases.

Event Date

Date of default 10 October 2017

Ordinary limitation of 3 years 10 October 2020

Issuance of Demand Notice to the 03 January 2022 Personal Guarantor

Date of filing of Company Petition 17 August 2022

Date of registration of Company 17 August 2022 Petition 3

In ordinary course of events, the debt would become time barred on 10.10.2020.

However, Covid times already had set in started and the Hon'ble Supreme Court,

therefore, had come out with its Order in suo moto Writ Petition (Civil) No. 3 of

2020. The relevant Order came to be passed in MA 21 of 2022, dated 10.01.2022

and it reads as below:

"I. The order dated 23.03.2020 is restored and in continuation of the subsequent orders dated 08.03.2021, 27.04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi- judicial proceedings.

II. Consequently, the balance period of limitation remaining as on

03.10.2021, if any, shall become available with effect from 0 1.03.2022.

III. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply.

IV. It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and

(c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings." 4

2.2 The Adjudicating Authority had taken note of this Order but has held that

after 28.02.2022 only 90 days would be available for the appellant to keep the

cause of action alive for instituting a petition under the IBC but it had instituted

the case only on 17.08.2022 well beyond 90 days. If that is so, the appellant

should have filed it on or before 30th May, 2024. Since the appellant has filed it

only on 17.08.2022, the bar of limitation would intervene. Now this Order is

under challenge.

3. The Notice was said to be served to the respondent but they did not respond.

Eventually, substituted service through paper publication was ordered and the

respondent was set ex-parte.

4. The learned Counsel for the appellant submitted that in terms of the suo moto

Order in suo moto WP(C) 3 of 2020, the time between 15.3.2020 to 28.2.2022

needs to be excluded. And how it needs to be dealt with is delineated in the Order

extracted and reproduced above. In terms of the same, only where the period of

limitation is less than 90 days, then 90 days were given after 28.2.2022.

However, where period of limitation available owing during the operation of the

Order of the Hon'ble Supreme Court in suo moto WP (C) 3 of 2020, the actual

period itself would be available after 28.2.2022, and if so reckoned, as on

15.03.2020 the appellant had 208 days remaining which has to be reckoned

from 01.03.2020. This will end only on 25.9.2022 whereas the petition for

initiating PIRP against both the respondents in each of the appeals were laid on

17.8.2022.

5

5. The working of the above extracted suo motu is Order is explained in Prakash

Corporates Vs Dee Vee Projects Ltd., [(2022)5 SCC 112] where the Hon'ble

Supreme Court has equated the eclipsed period due to above extracted suo motu

Order to the period of exclusion as provided in Sec.12 to 15 of the Limitation Act.

It has held:

"28.... A look at the scheme of the Limitation Act, 1963 makes it clear that while extension of prescribed period in relation to an appeal or certain applications has been envisaged under Section 5, the exclusion of time has been provided in the provisions like Sections 12 to 15 thereof. When a particular period is to be excluded in relation to any suit or proceeding, essentially the reason is that such a period is accepted by law to be the one not referable to any indolence on the part of the litigant, but being relatable to either the force of circumstances or other requirements of law (like that of mandatory two months' notice for a suit against the Government [ Vide Section 15 of the Limitation Act, 1963.] ). The excluded period, as a necessary consequence, results in enlargement of time, over and above the period prescribed."

In IL & FS Financial Services Ltd., Vs Adhunik Meghalaya steels Pvt. Ltd.,

[2025 SCC OnLine SC 1567] has held:

"46. We have no manner of doubt that sub-para 1 of para 5 of the order of this Court dated 10.01.2022 would apply and the entire period from 15.03.2020 to 28.02.2022 would stand excluded, which would mean that the limitation would, reckoning the acknowledgement of 12.08.2020, commence on 01.03.2022 and continue till 28.02.2025."

(emphasis supplied) 6

6. The authoritative statements of the Hon'ble Supreme Court in the above cases

implies that the present PIRP is well within time. Necessarily, both the Orders

of the Adjudicating Authority are set aside. The Adjudicating Authority is now

required to proceed according to law. No costs.

In conclusion both the appeals are allowed and the judgements of the

Adjudicating Authority in C.P. (I.B) No. 240/NCLT/AHM/2022 dated 4th April,

2024 and C.P. (I.B) No. 238/NCLT/AHM/2022 dated 4th April, 2024, are hereby

set aside. The matter is remanded back to the Adjudicating Authority to admit

the CIRP on record and to proceed as per law.

[Justice N. Seshasayee] Member (Judicial)

[Arun Baroka] Member (Technical) rs/sk