Vasavi Power Services Pvt. Ltd Vs Promac Engineering Industries Ltd. (NCLAT Chennai)
Conclusion: Application under section 9 of IBC against the corporate debtor was dismissed for being exceeded the limitation period prescribed by law.
Held: Assessee-company had challenged an order passed by the National Company Law Tribunal ( NCLT ) which dismissed its Section 9 application under the IBC, against the corporate debtor for being time-barred. NCLT held that the application exceeded the limitation period prescribed by law. Assessee had filed the application on April 17, 2023, alleging a payment default of ₹2.43 crore by the corporate debtor, with the default dated back to September 7, 2019, as per Form 5 submitted with the petition. NCLT ruled that the limitation period, calculated as three years from the default date, expired on September 6, 2022. While the Supreme Court had excluded the period from March 15, 2020, to February 28, 2022, due to COVID-19 disruptions, NCLT determined that this extension did not save assessee’s petition. Assessee argued that the limitation period should be computed by excluding 190 days ( pre-COVID lapse ) and applying the balance 905 days from March 1, 2022, thereby extending the deadline to August 22, 2024. However, NCLAT rejected this contention, citing the Supreme Court’s ruling in Suo Moto WP(C) No. 3/2020. Tribunal noted that the actual balance limitation period from March 1, 2022, was 190 days, which extended only up to September 6, 2022. It was held that assessee had admittedly e-filed the Company Petition only on 10.04.2023 and had physically filed the Company Petition on 17.04.2023. Even if filing of the Company Petition was construed from 10.04.2023, it would be much beyond the end date of the limitation period. The determination of period of limitation as it had been sought to be impressed upon by assessee, in which he was attempting to compute the end date of the limitation period by adding 905 days from 01.03.2022 on the premises that 905 days was the actual balance period of limitation remaining was absolutely a misconceived notion because the actual balance period of limitation had to be calculated from 03.2022. Therefore, as the Company Petition was filed only on 17.04.2023, it was clear that it had been filed much beyond 06.09.2022, the end date of limitation period and accordingly, the rejection of the Company Petition did not suffer from any error. The proceedings which were held under the I & B Code,2016, were to be strictly construed in a straight jacketed formula, so far it related to the aspect and computation of limitation, because period of limitation invariably in all the proceedings under the I & B Code, 2016 had an objective to be attained and it could not be stretched according to the expectation of assessee to defeat the very objective of the Act, which itself contemplated that, the proceedings of CIRP has had to be concluded in the specified time frame.
