Supreme Court today set aside the Order of NCLAT that allowed the insolvency petition filed after 3 years by applying Article 62 of Limitation Act, permitting the application to be within limitation period.
In Jignesh Shah and another versus Union of India after hearing both the senior counsels, Court allowed appeal today on 18 September 2019.
Senior Counsel appearing for petitioner, Abhishek Manu Singhvi argued that the suit filed by respondent is not maintainable under Limitation Act. The debt is a disputable debt and it existed in 2011. It was to be filed in year 2011 but suit was filed in 2014, thus Order of NCLAT is impugned.
Sr Advocate Neeraj Kishan Kaul appearing for Respondent argued that Winding up can be filed when debt and commercial insolvency exist and within 3 years of limitation. In this case application u/s 7 of Insolvency Act was filed by SBI for recovery of Rs 124 Crore is totally justified and within limitation period. A suit was filed in appropriate time. Sr advocate Debal Banerjee further added that Article 62 of Limitation Act will be applicable in this case that is for 12 years and valid for banking debt matters. He added that Insolvency Act is an umbrella legislation for banking debt, and other mortgage and debt cases. Thus 12 years will be limitation and application filed within this period will be considered to be within Limitation Act.
After hearing both the counsel Court held SBI filed two original applications (OA) in debt recovery tribunal in 2012 to recover Rs 50 crore. DRT held that OA filed before was not maintainable. An independent proceeding was initiated in 3rd October 2017 by Respondent by filing Application u/s 7 of Insolvency Act for an amount of Rs 124 Crore. NCLAT allowed the application as maintainable under Article 62 of Limitation Act. Justice Rohinton Nariman said that Sr Counsel for appellant rightly said that right to Sue accrued in 2011, 3 years elapsed in 2014 and now suit is out of time. Sr Advocate Banerjee for Respondent supported the order of NCLAT that Article 62 of Limitation Act will be attracted in this case. Court held that time will begin to run in 2011 and thus limitation will apply. Para 7 of VK Educational Case relied by Ld Counsel Debal Bannerjee will not apply to this case and Article 62 shall not be applicable. Thus Appeal was allowed and Judgment of NCLAT was set aside.
— India Legal Bureau