It was in Bimal Kumar v. Bank of India (Company Appeal (AT) (Insolvency) No. 1166 of 2019) held that the National Company Law Appellate Tribunal (NCLAT) has held that the proceedings before the Debt Recovery Tribunals (DRT) under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002) etc. will not extend limitation period for the purpose of Insolvency & Bankruptcy Code, 2016.
The shareholders and the directors of the Corporate Debtor argued in appeal filed against the initiation of the corporate insolvency resolution process that the application filed by Bank of India, was time- barred. It was submitted by the Respondent that application filed under Section 7 of the Insolvency & Bankruptcy Code, 2016was within limitation. The NCLAT reiterated after considering the submissions made by the parties that the limitation period for the purpose of Section 7 & 9 of the Insolvency & Bankruptcy Code, 2016 was governed by Article 137 of the Limitation Act, 1963.
It is ruled by the National Company Law Appellate Tribunal that the proceedings initiated or pending proceedings before the Debt Recovery Tribunal, initiated either under the SARFAESI Act, 2002 or other debts/ loans, could not be taken into consideration for limitation under the IBC, 2016. No acknowledgement was issued by the Corporate Debtor prior to the expiry of three years from or from the date of default and the NCLAT also held that application filed under Section 7 of the IBC, 2016 was beyond the period of limitation. The appeal was therefore allowed in the favor of the Corporate Debtor.
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