CIRP plea dismissed as barred by limitation as financial creditor couldn’t substantiate debt fell within limitation

Case Details: Asset Reconstruction Company India Ltd. v. Manoharamma Hotel Investments (P.) Ltd. - [2021] 131 taxmann.com 13 (NCLT- Chennai )

Judiciary and Counsel Details

• • R. Varadharajan, Judicial Member and Anil Kumar B, Technical Member
  • P. Elaya Rajkumar, Adv. for the Appellant. 
  • Shubharanjani Ananth, Adv. for the Respondent.

Facts of  the Case

In 2005, bank sanctioned a term loan to ADPL/principal borrower and in order to secure a loan corporate debtor executed guarantee agreement in favour of the bank in 2006.

Upon failure to repay due amounts by ADPL, bank classified accounts of ADPL as NPA in 2007. Thereafter, bank assigned term loan to ARCIL.

NCLT Held

The Financial creditor/ARCIL filed CIRP application in 2018 alleging that corporate debtor had defaulted in making payment and the Corporate debtor contended that CIRP application was time barred as default had happened in year 2007, and that financial creditor had wilfully chosen not to state ‘Date of default’ in application.

Since the financial creditor had failed to place on record any shred of the document under the law to substantiate that debt fell well within period of limitation, CIRP application filed by financial creditor was to be dismissed as barred by limitation.

List of Cases Referred to

• • Asset Reconstruction Co. (India) Ltd. (ARCIL) v. Anandram Developers (P.) Ltd. [CP/603 (IB)/2017, dated 6-6-2018] (para 9)
  • Dr. Vishnu Kumar Agarwal v. Piramal Enterprises Ltd. [2019] 101 taxmann.com 464/151 SCL 555 (NCL-AT) (para 9)
  • State Bank of India v. Athena Energy Ventures (P.) Ltd. [2021] 123 taxmann.com 82/164 SCL 293 (NCL-AT) (para 10)
  • Edelweiss Asset Reconstruction Co. Ltd. v. Sachet Infrastructure (P.) Ltd. [2019] 111 taxmann.com 115/[2020] 157 SCL 328 (NCL-AT) (para 10)
  • Arivandam v. T.V. Satyapal [1977] 4 SCC 467 (para 12)
  • Gaurav Hargovindbhai Dave v. ARCIL [2019] 109 taxmann.com 395/156 SCL 397 (SC) (para 13)
  • A. Balakrishna v. Kotak Mahindra Bank Ltd. [2021] 125 taxmann.com 215/164 SCL 603 (NCL-AT) (para 13)
  • Bimalkumar Manubhai Savalia v. Bank of India [2020] 117 taxmann.com 227 (NCL-AT) (para 13)
  • State Bank of India v. Krishidhan Seeds (P.) Ltd. [Company Appeal (AT) (Insolvency) No. 972 of 2020, dated 17-11-2020] (para 13)
  • Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries (P.) Ltd. [2020] 118 taxmann.com 323 (SC) (para 15)
  • Sesh Nath Singh v. Baidyabati Sheoraphuli Co-Operative Bank Ltd. [2021] 125 taxmann.com 357 (SC) (para 18)
  • Laxmi Pat Surana v. Union Bank of India [2021] 125 taxmann.com 394 (SC) (para 20)
  • Asset Reconstruction Co. (India) Ltd. v. Bishal Jaiswal [2021] 126 taxmann.com 200/166 SCL 82 (SC) (para 21).