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

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  • Last Updated on 13 October, 2021

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Corporate insolvency resolution process - Limitation period

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

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