CIRP plea filed within 3 years from date of ‘offer of settlement’ was within limitation period: NCLAT

Case details: Vivekanand Jha v. Punjab National Bank - [2021] 131 taxmann.com 221 (NCLAT- New Delhi)

Judiciary and Counsel Details

• • Justice A.I.S Cheema, Officiating Chairperson and Dr. Alok Srivistava, Technical Member
  • Adhitya Srinivasan and Rahul Patel, Advs. for the Appellant.
  • Jigar Tarunkumar Bhatt, and Abhinav Thareja, Advs. for the Respondent.

Facts of the Case

In the instant case, the financial-creditor bank had approved various financial facilities to the corporate debtor but the corporate debtor did not pay installments as per agreement. Consequently, the loan of the corporate debtor was declared a non-performing asset on 27-12-2014.

The financial creditor applied section 7 of the Insolvency and Bankruptcy Code, 2016 on 12-12-2019 against the corporate debtor. However, the Corporate debtor raised a defense that the claim of the bank was time-barred.

NCLAT Held

The NCLT, on the other hand, by impugned order admitted said application and found that an Offer of Settlement (OTS) was entered between parties on 29-3-2016, which failed in execution.

Since OTS had been accepted and signed by directors of the corporate debtor, OTS would amount to acknowledgment. Hence, the acknowledgment was there, an application filed on 12-2-2019 was within limitation and, thus, NCLT was justified in admitting application and rejecting the claim of a corporate debtor that the application was time-barred.

Case Review

• • Innoventive Industries Ltd. v. ICICI Bank [2017] 84 taxmann.com 320/143 SCL 625 (SC) (para 10)
  • Sesh Nath Singh v. Baidyabati Sheoraphuli Co-operative Bank Ltd. [2021] 125 taxmann.com 357/166 SCL 507 (SC) (para 13)
  • Asset Reconstruction Co. (India) Ltd. v. Bishal Jaiswal [2021] 126 taxmann.com 200/166 SCL 82 (SC) (para 13) followed.
  • Punjab National Bank v. Mithilanchal Industries (P.) Ltd. [2021] 131 taxmann.com 220 (NCLT – Ahmedabad) (para 14) affirmed [See annex].

List of Cases Referred to

• • Innoventive Industries Ltd. v. ICICI Bank [2017] 84 taxmann.com 320/143 SCL 625 (SC) (para 8)
  • Sesh Nath Singh v. Baidyabati Sheoraphuli Co-operative Bank Ltd. [2021] 125 taxmann.com 357/166 SCL 507 (SC) (para 8)
  • Asset Reconstruction Co. (India) Ltd. v. Bishal Jaiswal [2021] 126 taxmann.com 200/166 SCL 82 (SC) (para 13).