PUNJAB NATIONAL BANK versus MR. VIJAY SITARAM DANDNAIK & ANR.

PUNJAB NATIONAL BANK versus MR. VIJAY SITARAM DANDNAIK & ANR.

The Section 7 application by Punjab National Bank was within the period of limitation because the operative right to apply, for the facts of this case, accrued on or after the DRT order dated 01.11.2016 (and subsequent balance/security confirmation), and the petition filed in 2019 was within three years from that accrual; accordingly the NCLAT's finding that the petition was time-barred (relying primarily on Babulal) was incorrect and is set aside.

Parties
Financial Creditor / Appellant: Punjab National Bank; First Respondent (50% Shareholder, Promoter, Director and Creditor of the Corporate Debtor): Mr. Vijay Sitaram Dandnaik; Corporate Debtor / Second Respondent: M/s Jailaxmi Sugar Products Pvt. Limited
Jurisdiction
India
Judgment Date
30 August 2022
Procedural Posture
Civil Appeal / Appeal Against National Company Law Appellate Tribunal Order Dated 02.03.2021 Arising From Admission Order of NCLT Dated 06.11.2019 Under Section 7 of the IBC
Outcome
Appeal allowed
Legal Topics
Section 7 IBC (initiation of Cirp), Section 238 a IBC and Applicability of Limitation Act, Article 137 Limitation Act (three Year Period), Date of Default / NPA and Accrual of Right to Apply, Section 18 Limitation Act (acknowledgement), Effect of DRT Recovery Certificate, Winding Up Vs. IBC Maintainability
Insolvency and Bankruptcy Code, 2016 Limitation Act, 1963 Recovery of Debts (drt) Act, 1993 Companies Act, 2013 SARFAESI Act, 2002 Section 7 IBC (initiation of Cirp) Section 238 a IBC and Applicability of Limitation Act Article 137 Limitation Act (three Year Period) +4 more

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Parties

Punjab National Bank

Financial Creditor / Appellant

Mr. Vijay Sitaram Dandnaik

First Respondent (50% Shareholder, Promoter, Director and Creditor of the Corporate Debtor)

M/s Jailaxmi Sugar Products Pvt. Limited

Corporate Debtor / Second Respondent

Procedural Posture

Civil Appeal / Appeal Against National Company Law Appellate Tribunal Order Dated 02.03.2021 Arising From Admission Order of NCLT Dated 06.11.2019 Under Section 7 of the IBC

Legal Issues

  1. 1 Whether the Section 7 petition filed by the financial creditor was barred by limitation under the Limitation Act, 1963
  2. 2 When the 'right to apply' accrues for the purpose of Article 137 — date of NPA, date of recovery certificate/DRT order, or later acknowledgments
  3. 3 Whether acknowledgments or entries (balance confirmation) invoked Section 18 of the Limitation Act to extend limitation

Ratio Decidendi

The Section 7 application by Punjab National Bank was within the period of limitation because the operative right to apply, for the facts of this case, accrued on or after the DRT order dated 01.11.2016 (and subsequent balance/security confirmation), and the petition filed in 2019 was within three years from that accrual; accordingly the NCLAT's finding that the petition was time-barred (relying primarily on Babulal) was incorrect and is set aside.

Court Disposition

Appeal allowed

Orders

  • Impugned NCLAT order dated 02.03.2021 set aside
  • No order as to costs