B. Prashanth Hegde Vs State Bank of India & Anr. (Supreme Court of India)
In the Supreme Court upheld admission of CIRP u/s 7 of IBC against the Corporate Debtor, holding that the application was within limitation due to repeated acknowledgements of debt through restructuring agreements, consortium arrangements & balance-sheet entries.
The Court ruled that although the account was initially classified NPA earlier, subsequent working-capital consortium agreements and balance-sheet disclosures (signed on 30-09-2015) constituted valid acknowledgements u/s 18 of the Limitation Act, thereby extending limitation. Since the Sec 7 application was filed on 25-04-2018, it was within the renewed limitation period.
Key findings:
- Application u/s 7 need only be substantially compliant with Form-1; minor defects or later amendments will not defeat maintainability.
- Acknowledgement of liability in balance-sheets or restructuring documents gives a fresh lease of limitation.
- Counter-claims, FIRs or parallel SARFAESI/DRT proceedings do not bar CIRP admission once debt & default are established.
- After default is shown, NCLT has very limited discretion to refuse admission.
Accordingly, the SC affirmed that the financial creditors established financial debt, default & limitation compliance, and the CIRP admission was valid.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. This appeal, under Section 62 of the Insolvency and Bankruptcy Code, 20161, impugns judgment and order of the National Company Law Appellate Tribunal, Principal Bench at New Delhi2, dated 17.12.2021, passed in Company Appeal (AT) (Ins) No. 68 of 2019 and I.A. No. 1078 of 2021.
