Skyway Rmc Plants Pvt. Ltd vs Tnans Tech Turnkey Pvt. Ltd
- CitationCompany Appeal (AT) (Insolvency) No. 81 of 2018
Ratio decidendi
The rule this decision rests on
The Limitation Act, 1963 does not govern the initiation of the Corporate Insolvency Resolution Process; rather, the doctrine of limitation and prescription, and the principle of laches, is to be applied in determining whether an application under Section 7 or Section 9 may be entertained after a long delay. Where more than three years have elapsed from the date of the cause of action, the applicant may be called upon to explain the delay, and where there is a continuing cause of action no application may be rejected on the ground of delay. A stale claim without explanation of the delay should normally not be entertained to trigger the process under Section 7 or Section 9, whereas the principle does not apply to an application by a corporate applicant under Section 10.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Skyway RMC Plants Pvt. Ltd. ...Appellant
Vs
Trans Tech Turnkey Pvt. Ltd. ....Respondent
Present: For Appellant: Mr. Rahul Chitnis and Mr. Samrat Krishnarao Shinde, Advocates.
ORDER
25.04.2018: The appellant ('Operational Creditor') filed an application
under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter
referred to as the, "I&B Code') after invoking the provisions of Section 8(1) OF
the I & B Code. The Adjudicating Authority (National Company Law Tribunal),
Mumbai Bench by impugned order dated 29th January, 2018 rejected the
application on the ground that the petition filed on 13th November, 2017 is hit
by the law of limitation, as the matter pertains to claim for the year 2014.
2. Notices were issued on respondent. One Mr. Vatsalya Vigya along with
Mr. Sandeep S. Deshmukh, advocates appeared on behalf of the respondent
and prayed for time to file reply along with Vakalatnama. But in spite of the
same, no reply has been filed nor anybody appears on behalf of the
respondent. The averments made in the appeal has not been disputed. 2
3. Similar issue fell for consideration before this Appellate Tribunal in
"M/s. Speculum Plast Pvt. Ltd. vs. PTC Techno Pvt. Ltd. - 2017 SCC ONLINE
NCLAT 319" wherein this Appellate Tribunal observed and held as follows:
"71. From Article 137 of the Limitation Act, 1963, it is clear
that the period of three years' is to be counted from the
date right to apply accrues to a 'Financial Creditor' or
'Operational Creditor' or 'Corporate Debtor'.
xxx xxx xxx
80. In view of the settled principle, while we hold that the
Limitation Act, 1963 is not applicable for initiation of
'Corporate Insolvency Resolution Process', we further
hold that the Doctrine of Limitation and Prescription is
necessary to be looked into for determining the question
whether the application under Section 7 or Section 9 can
be entertained after long delay, amounting to laches and
thereby the person forfeited his claim.
81. If there is a delay of more than three years from the date
of cause of action and no laches on the part of the
Applicant, the Applicant can explain the delay. Where
there is a continuing cause of action, the question of
rejecting any application on the ground of delay does not
arise.
Company Appeal (AT) (Insolvency) No. 81 of 2018 3
82. Therefore, if it comes to the notice of the Adjudicating
Authority that the application for initiation of 'Corporate
Insolvency Resolution Process' under section 7 or Section
9 has been filed after long delay, the Adjudicating
Authority may give opportunity to the Applicant to explain
the delay within a reasonable period to find out whether
there are any laches on the part of the Applicant.
83. The stale claim of dues without explaining delay,
normally should not be entertained for triggering
'Corporate Insolvency Resolution Process' under Section
7 and 9 of the 'I&B Code'.
84. However, the aforesaid principle for triggering an
application under Section 10 of the 'I&B Code' cannot be
made applicable as the 'Corporate Applicant' does not
claim money but prays for initiation of 'Corporate
Insolvency Resolution Process' against itself, having
defaulted to pay the dues of creditors."
4. The impugned order dated 29th January, 2018 passed by the
Adjudicating Authority being against the decision of this Appellate Tribunal
in 'M/s. Speculum Plast Pvt. Ltd.' (Supra), we set aside the order passed in C.P.
No. 1591/I&BP/2017 and remit the case to the Adjudicating Authority,
Mumbai Bench for appropriate orders. If the application is complete and
Company Appeal (AT) (Insolvency) No. 81 of 2018 4
there is no defect, after notice and hearing the parties, it will admit the
application. If there is defect, appropriate time be granted to the appellant to
remove the defects.
3. It will be open to the respondent to settle the dispute before admission of
the application. The appeal is allowed with the aforesaid observations. No
costs.
[Justice S.J. Mukhopadhaya] Chairperson
[Justice Bansi Lal Bhat] Member (Judicial) ns/uk
Company Appeal (AT) (Insolvency) No. 81 of 2018
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free