IBC is a complete Code and as per Section 238 of IBC it has overriding effect on other laws: NCLAT
Corporation Bank (Appellant) filed an Application under Section 7 of Insolvency and Bankruptcy Code, 2016 (IBC) before the National Company Law Tribunal (NCLT) against the Corporate Debtor seeking initiation of Corporate Insolvency Resolution Process (CIRP). The Bank contended that they have provided Term Loan Facility and Cash Credit Facility to the Corporate Debtor who failed to repay...
Corporation Bank (Appellant) filed an Application under Section 7 of Insolvency and Bankruptcy Code, 2016 (IBC) before the National Company Law Tribunal (NCLT) against the Corporate Debtor seeking initiation of Corporate Insolvency Resolution Process (CIRP). The Bank contended that they have provided Term Loan Facility and Cash Credit Facility to the Corporate Debtor who failed to repay the amount. The Bank therefore filed an application under Section 7 of IBC.
The Corporate Debtor pleaded before the NCLT that the Application filed by the Bank was time barred stating that the Appellant Bank classified the Respondent (Corporate Debtor) as Non Performing Asset (NPA) in May 2014 whereas the Application was filed by the Appellant Bank in the month of January, 2019. Therefore, the Application was barred by limitation.
The NCLT rejected the petition of the Bank on the grounds that the application was barred as it was not filed within the Limitation period.
The Bank appealed to the National Company Law Appellate Tribunal (NCLAT).
The NCLAT held that the Application filed under Section 7 of IBC by the Appellant Bank is barred by limitation since, the Application under Section 7 IBC was filed in February 2019 whereas three-year period expired in September 2018. In so far as Sections 3(6)(a), 3(11), 3(12) of the IBC are concerned, Section 3(6)(a) of IBC is defined “claim” “means a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured.”
Further the NCLAT held that as per Section 7 of IBC, financial creditor can initiate CIRP either by itself or jointly against the Corporate Debtor before the Adjudicating Authority when a default has occurred. Whilst the Appellant cannot take a stand since the default has occurred, the Adjudicating Authority on satisfaction, the Application should be admitted automatically. Further, the appellate authority also held that before admission of the Application either under Section 7 or 9 of IBC, one has to file the Application within a period of limitation as prescribed under Section 238A of IBC.
The NCLAT went on to hold that, “Even if the learned Counsel for the Appellant intend to take a stand that the pending proceeding before the DRT and other Civil Courts get extends the limitation, we are of the firm opinion that the proceedings before the DRT and other forums, will not get the benefit of extending the limitation period merely on the basis of pending proceedings before the DRT. In this regard, it is unequivocal and settled law that the IBC is a complete Code and as per Section 238 of IBC it has overriding effect on other laws. Therefore, pending proceedings before other forums, the limitation will not get extended.”
Justice Venugopal M, Member (Judicial); and Members (Technical) – Kanthi Narahari and V P Singh presided over the case.