NCLT: Moratorium Period shall be Excluded While Computing Period of Limitation
The Mumbai bench of National Company Law Tribunal (NCLT) ruled that if an entity which itself was admitted into Corporate Insolvency Resolution Process (CIRP) and has undergone moratorium, files an application under Insolvency and Bankruptcy Code, 2016 (IBC), then the period of moratorium shall be excluded while computing limitation of such application.
The division member bench comprising of Shri Kishore Vemulapalli (Judicial Member) and Shri Manoj Kumar Dubey (Technical Member), were adjudicating a petition filed in the matter of Piramal Capital and Housing Finance Ltd. vs. Manpreet Developers Pvt. Ltd.
The Dewan Housing Finance Limited (DHFL) taken over by the M/s Piramal Capital and Housing Finance Limited i.e., Financial Creditor/Applicant had sanctioned credit facilities in favor of the Corporate Debtor/Respondent- Manpreet Developers Pvt. Ltd (MDPL), a loan in the sum of Rs. 620 crores, on the terms and conditions contained under Sanction Letter dated 22nd March 2016.
The Loan Agreement was executed by and between MDPL and DHFL dated 11th April 2016 DHFL, granted loan facility to MDPL on the terms and conditions with respect to disbursal of sanctioned loan amount of Rs.620 crores.
During April 2016 to July 2017 the Financial Creditor disbursed a total sum of Rs. 619,95,00,000 to the Corporate Debtor. Under the revised Sanction Letter dated 24th March 2017, an interest moratorium of 15 months with effect from 1st January 2017 was provided with annual servicing of interest. First such annual interest servicing was to be made on 31st March 2018. In June 2018, the Corporate Debtor paid the Pre-EMI due and payable on 31st March 2018.The Corporate Debtor defaulted in payment of Pre-EMI due and payable on 31st March 2019, thereby constituting an event of default. Apart from the payment of pre-EMI as aforesaid, the Corporate Debtor has not made any other payment to the Financial Creditor towards repayment of loan.
Ld. Counsel for the Financial Creditor submitted despite substituted service in two daily leading newspapers, the Corporate Debtor did not appear, therefore the Corporate Debtor proceeded exparte.
When the application was heard, the NCLT Bench opined that since date of default is 31 March, 2019, the application was time barred as the same was filed on 25 May, 2022.
The Financial Creditor argued that the Supreme Court in 'Suo Motu Writ Petition (C) No. 3 of 2020' had directed that the period from 15th March, 2020 to 28the February, 2022 (1 year 11 months and 13 days) should be excluded while computing limitation, in view of COVID-19. Further, DHFL was admitted into CIRP and was undergoing a moratorium between 3 December 2019 to and 7 June 2021.
The bench discussed Section 60(6) of IBC which provides that in computing limitation period specified for any suit or application, by or against a corporate debtor, for which an order of moratorium has been made, the period during which such moratorium is in place shall be excluded.
The bench noted that the date of default being 31st March 2019, the limitation of 3 years would end on 4th October 2023 after excluding the moratorium period. Therefore, bench opined that the application being filed on 23rd May, 2022 was well within limitation.
The bench noted that DHFL was undergoing a moratorium between the period 3 December 2019 (date of commencement of Moratorium) and 7th June 2021 (date of approval of Resolution Plan) i.e., 1 year 6 months 4 days.
The NCLT observed, "therefore, on the reading of Section 60 Sub-section 6 of the Code, for the purposes of computing limitation, the period between 3rd December 2019 and 7th June 2021 i.e., 1 year 6 months 4 days is statutorily and mandatorily required to be excluded. In the present matter, the period between 3rd December 2019 and 7th June 2021 would have to be excluded while calculating limitation. The date of default in the present case is 31 March 2019 and accordingly, the period of limitation of 3 years (after excluding the period during which the Petitioner was undergoing moratorium) would expire on 4th October 2023. Therefore, ex-facie, the Petition filed on 23rd May, 2022 is sufficiently within limitation and has been filed prior to the expiry of the period of limitation."
As per the given fact that the captioned Petition had been filed on 23rd May 2022, the same had been filed way before the expiry of the limitation period on 13th March 2024. Hence, for the aforesaid reason as well, the captioned Petition was within limitation, stated the NCLT.
The Bench held that the application was well within limitation and also crossed the threshold of Rs. 1 crore. Accordingly, the Corporate Debtor was admitted into CIRP.