M/S.Rourkela Steel Syndicate (A ... vs Metistech Fabricators Private Limited

IN THE MATTER OF: Rourkela Steel Syndicate ...Appellant

Versus

Metistech Fabricators Pvt. Ltd. ...Respondent

Present: For Appellant : Mr. Milan Negi and Mr. Nikhil Kumar, Advocates.

For Respondent : Mr. Sanchit Gawri, Advocate

ORDER

06.02.2023: Heard learned Counsel for the parties.

2. This appeal has been filed against the order dated 09.06.2022 passed by

the Adjudicating Authority (NCLT, Cuttack) by which order the Application filed

by the Appellant under Section 9 of IBC, the Operational Creditor has been

rejected on the ground that the application is barred by Section 69(2) of the

Partnership Act. The Adjudicating Authority took the view that Section 69(2) of

the Partnership Act bars a suit by an unregistered partnership, hence the

present Application which was filed by the Appellant against the third party for

enforcing a right arising out of contract is barred.

Section 69(2) of the Partnership Act provides as under:

"Section 69(2) in The Indian Partnership Act, 1932 (2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm".

3. Learned Counsel for the Appellant challenging the order of the

Adjudicating Authority submits that although the Adjudicating Authority

accepted the submission of the Appellant, that the Application is not barred by

Limitation, however, on interpretation of Section 69(2) of the Partnership act,

1932, error has been committed in treating the Application akin to a Suit. It is

submitted that Section 69(2) of Partnership Act is not attracted where an

Application under Section 9 IBC is filed since Section 9 Application is not a suit

so as to apply Section 69(2) of the Partnership Act.

4. Learned Counsel for the Respondent refuting the submissions, contends

that there are judgments of the Hon'ble Supreme Court, which has been

referred by the Adjudicating Authority holding that a suit by unregistered

partnership is barred filed against the third party. Learned Counsel for the

Respondent supports the impugned order.

5. We have considered the submissions of the Counsel of the parties and

perused the records. The IBC provides for filing of the Application under

Sections 7 & 9 and it is now settled position of law that for limitation for filing

Application under Sections 7,9 & 10 are Article 137 of the Limitation Act, 1963

which is attracted. Article 137 of the Limitation Act provides for filing of

Company Appeal(AT)(Insolvency) No. 924 of 2022 Page 2 of 4 Application, where no period of limitation is provided. Learned Counsel for the

Appellant relied on a judgment of the Hon'ble Supreme Court- (2019) 10 SCC

572 titled "Gaurav Hargovindbhai Dave Vs. Asset Reconstruction

Company (India) Limited and Anr.' where Hon'ble Supreme Court had

occasion to consider the provision of Limitation Act, 1963 as well as

Application under Section 7 of IBC. In paragraph-6 of the Judgment, following

have been laid down:

..

"6. Having heard the learned counsel for both sides, what is apparent is that Article 62 is out of the way on the ground that it would only apply to suits. The present case being 'an application' which is filed under Section 7, would fall only within the residuary Article 137. As rightly pointed out by the learned counsel appearing on behalf of the appellant, time, therefore, begins to run on 21-7-2011, as a result of which the application filed under Section 7 would clearly be time-barred. So far as Mr Banerjee's reliance on para 11 of B.K. Educational Services (P) Ltd., suffice it to say that the Report of the Insolvency Law Committee itself stated that the intent of the Code could not have been to give a new lease of life to debts which are already time-barred."

..

6. An application under Section 9 of IBC cannot be said to be a suit and

analogy of Hon'ble Supreme Court judgment in Hargovindbhai Dave's case,

supra, is fully applicable to the application filed under Section 9 IBC also. Further, also it is well settled by the judgment of the Hon'ble Supreme Court in

B.K. Educational Services (P) Ltd. v. Parag Gupta and Associates, (2019)

Company Appeal(AT)(Insolvency) No. 924 of 2022 Page 3 of 4 11 SCC 633 that provision of Section 5 Limitation Act are also fully applicable

in Section 7 & 9 IBC applications. Section 5 Limitation Act is not applicable in

a suit which is also a clear indication that Application under Section 7 & 9 are

not a suit.

7. The Judgments of Hon'ble Supreme Court relied by the Adjudicating

Authority regarding bar of Section 69(2) is not attracted in the present case

since the application under Section 9 cannot be treated as suit.

8. We are thus of the view that the Adjudicating Authority has committed

error in rejecting Section 7 Application on the ground that it is barred by 69(2)

of the Partnership Act. We are thus in view that the order impugned cannot be

sustained and deserves to the set aside.

9. In result, the present appeal is allowed and the impugned order dated

09.06.2022 is set aside. Application under Section 9 of IBC CP(IB) No.

14/CB/2021 is revived before the Adjudicating Authority to be heard and

decided in accordance with law.

The Appeal is allowed accordingly.

[Justice Ashok Bhushan] Chairperson

[Mr. Barun Mitra] Member (Technical) akc/nn

Company Appeal(AT)(Insolvency) No. 924 of 2022 Page 4 of 4