The National Company Law Appellate Tribunal recently ruled that the Limitation Act, 1963 is not applicable to the Insolvency & Bankruptcy Code, 2016 (“I&B Code”) as the latter is not a code for recovery of money claim, rather it relates to initiation of corporate insolvency resolution process.
“There is nothing on the record that Limitation Act, 2013 is applicable to I & B Code. Learned Counsel for the appellant also failed to lay hand on any of the provision of I & B Code to suggest that the Law of Limitation Act, 1963 is applicable. The I & B Code, 2016 is not an Act for recovery of money claim, it relates to initiation of Corporate Insolvency Resolution Process. If there is a debt which includes interest and there is default of debt and having continuous course of action, the argument that the claim of money by Respondent is barred by Limitation cannot be accepted”, the Tribunal said.
It was also pleaded by the debtor in this case that Section 7(3)(a) of I&B is mandatory in nature and any application by ‘financial creditor’ under Section 7 can only be filed with proper documentation as specified by the Insolvency and Bankruptcy Board of India (“Board”) through regulations and in the absence of the same the proceeding under Section 7 of I & B Code cannot be initiated.
Holding the application maintainable under Section 7, the Tribunal said that a procedural provision cannot override or affect the substantive obligation of the adjudicating authority to deal with applications under Section 7 merely on the ground that Board has not stipulated or framed Regulations with regard to sub-section 3(a) of Section 7.
“…in absence of regulation framed by the Board relating to record of default recorded with the information utility or other record of evidence of default specified, ‘the documents’, ‘record’ and ‘evidence of default’ prescribed at Part V of Form-1, of the Adjudicatory Rules 2016 will hold good to decide the default of debt for the purpose of Section 7 of the ‘I & B Code’,” the tribunal opined.