Limitation Period under IBC 2016
Limitation Period under IBC 2016
This application filed by Corporate Debtors to restructure the debt or payment of the interest doesn’t amount to an acknowledgment of debt.
(C. Shiv Kumar Reddy Vs. Dena Bank and Other, 2019)
The minutes of the board meeting of the Corporate Debtors can be considered as an acknowledgment u/s 18 of the Limitation Act, 1963.
(Rupesh Kumar Gupta vs. PNB (NCLAT), 2020)
One time settlement letters, the Corporate Debtors accepted the jural relationship between the Creditor and Debtor than the Financial Creditors, and thus, it is the acknowledgment of debt.
(Ashish Kumar vs. Vinod Kumar Pukhraj Ambavat, 2020)
An acknowledgment must be made before the deadline of the limited duration as mentioned under section 18 of the Limitation Act, 1963.
(Vivek Jha vs. Daimler Financial Services India, 2020)
The application of the recovery proceeding before the Debts Recovery Tribunals and the eventually decreed claim does not change the default date.
(Rajendra Kumar Tekriwal vs. BOB, 2020)
Steps were taken under subsection (2) under Section 13 of the ‘SARFAESI Act, 2002’ can’t be counted for the purpose of exclusion of the limitation period under subsection (2) under Section 14 of the Limitation Act, 1963.
(Ishrat Ali vs. Cosmos Cooperative Bank Ltd. 2020)
The default period is extended by the debit confirmation letters assured by the borrower from the CD to the o/s debt.
(Yogesh Kr. Jashwantlal Thakkar vs. IOB, 2020)
Keeping that balance sheet entry would not amount to an acknowledgment of responsibility for the purpose of limitation, the position of law which has long been acknowledged by separate courts and tribunals has been disturbed.
The dissenting view of Hon’ble Justice AIS Cheema is in line with the established example for the acknowledgment of debt for restriction in respect of balance sheet/annual return entries as well as in the one-time settlement proposal.
Thus, the Reflection of the Debt in the BS/Annual Return of the Corporate Debtors can’t be considered as an acknowledgment under Section 18 of the Limitation Act, 1963.
(V. Padmakumar vs. SASF, 2020)
Steps were taken under subsection (2) under Section 13(2) of the ‘SARFAESI Act, 2002′ can’t be counted for the intention of exclusion the restriction period under subsection (2) under Section 14 of the Limitation Act.
(Ishrat Ali vs. Cosmos Cooperative Bank Ltd., 2020)
Applicability of Limitation Act to Insolvency and Bankruptcy Code
“The purpose of the Code should not have been to grant a new lease of life to debts that are time-barred. It is established law that, since the debt is restricted by time, the right to remedy is time-barred.
The provisions of the Limitation Act, 1963 shall, as far as possible, apply to proceedings or appeals before the Adjudication Authority, the NCLAT, the DRAT, as the case may be.’-Section 238A of IBC
“The Limitation Act is applicable to applications submitted Under section 7 and section 9 of the IBC Code from the inception of the Code and same would be filed within three years from the date of default” –
(Supreme Court in B.K. Educational Services, Jignesh Shah, Gaurav Hargovindbhai Dave, Babulal Vardhaji Gurjar)
An application under section 10 of the insolvency and bankruptcy Code can’t be made applicable as the ‘Corporate Applicant’ does not clam money buts prays for Initiation of ‘Corporate Insolvency Resolution Process’ against itself, having defaulted to pay the dues of creditors” –
(NCLAT in B.K. Educational Services vs. Parag Gupta)
The notion of the limitation Act
The Law of limitation is based on the fundamental principle of fixing or prescribing a time limit for barring legal action beyond such duration.
Fundamental Principles/concept of Limitation Act
- A fresh period of limitation starts to run at every moment of the time period at which the breach of offense continues.
- The Limitation Act does not extinguish a right, hence its only solution to behind the bars
- Duration of stay is excluded
- Limitation duration to start afresh from the period when the acknowledgment was made,
- Any payment/ interest made towards a legacy, then fresh limitation period begins
Although the limitation Act does not extinguish a right would be a time-barred claim filed by the Financial Creditor/Operational Creditors be allowed during the Corporate Insolvency Resolution Process? If yes, is it not a matter of granting a new lease of life to a time-barred claim?