KOTAK MAHINDRA BANK LIMITED versus KEW PRECISION PARTS PRIVATE LIMITED & ORS.

KOTAK MAHINDRA BANK LIMITED versus KEW PRECISION PARTS PRIVATE LIMITED & ORS.

The NCLAT erred in closing the CIRP solely on limitation grounds without considering (a) whether a written settlement/promise of 20 December 2018 revived time-barred debt under Section 25(3) Indian Contract Act, and (b) whether the Financial Creditor should have been given opportunity to seek condonation under Section 5 Limitation Act or to cure defects under Section 7(5)(b) IBC. The NCLAT order closing CIRP is set aside to that extent and the matter is remitted to the Adjudicating Authority to consider the Section 7 application afresh after giving parties opportunity to file additional affidavits/documents.

Parties
Appellant (financial Creditor): Kotak Mahindra Bank Limited; Respondent (corporate Debtor): Kew Precision Parts Private Limited
Jurisdiction
India
Judgment Date
05 August 2022
Procedural Posture
Civil Appeal Under Section 62 of the Insolvency and Bankruptcy Code, 2016 / Final Judgment on Appeal Remitting Matter to Adjudicating Authority to Decide Afresh
Outcome
Appeal allowed in part; impugned NCLAT order set aside to the extent CIRP proceedings were closed; matter remitted to Adjudicating Authority to decide the Section 7 application afresh
Legal Topics
Initiation of CIRP Under Section 7 IBC, Limitation Period for Applications Under IBC (article 137), Acknowledgement Under Section 18 Limitation Act, Promise to Pay Time Barred Debt Under Section 25(3) Indian Contract Act, Condonation of Delay Under Section 5 Limitation Act, Application of Limitation Act to Nclt/nclat Under Section 238 a IBC, Moratorium Under Section 14 IBC, Procedure Under Section 7(5)(b) IBC to Rectify Defects
Insolvency and Bankruptcy Limitation Contract Law Securitisation and Reconstruction of Financial Assets (sarfaesi) Negotiable Instruments Initiation of CIRP Under Section 7 IBC Limitation Period for Applications Under IBC (article 137) Acknowledgement Under Section 18 Limitation Act +5 more

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Parties

Kotak Mahindra Bank Limited

Appellant (financial Creditor)

Kew Precision Parts Private Limited

Respondent (corporate Debtor)

Procedural Posture

Civil Appeal Under Section 62 of the Insolvency and Bankruptcy Code, 2016 / Final Judgment on Appeal Remitting Matter to Adjudicating Authority to Decide Afresh

Legal Issues

  1. 1 Whether an application under Section 7 IBC is barred by limitation and Article 137 of the Limitation Act applies
  2. 2 Whether a written settlement/promise executed on 20 December 2018 revived a time-barred debt under Section 25(3) of the Indian Contract Act
  3. 3 Distinction and applicability of acknowledgement under Section 18 Limitation Act versus promise under Section 25(3) Contract Act

Ratio Decidendi

The NCLAT erred in closing the CIRP solely on limitation grounds without considering (a) whether a written settlement/promise of 20 December 2018 revived time-barred debt under Section 25(3) Indian Contract Act, and (b) whether the Financial Creditor should have been given opportunity to seek condonation under Section 5 Limitation Act or to cure defects under Section 7(5)(b) IBC. The NCLAT order closing CIRP is set aside to that extent and the matter is remitted to the Adjudicating Authority to consider the Section 7 application afresh after giving parties opportunity to file additional affidavits/documents.

Court Disposition

Appeal allowed in part; impugned NCLAT order set aside to the extent CIRP proceedings were closed; matter remitted to Adjudicating Authority to decide the Section 7 application afresh

Orders

  • The impugned judgment and order of the NCLAT dated 08.01.2020 set aside to the extent that CIRP proceedings have been closed
  • Adjudicating Authority (NCLT) to consider the Section 7 application afresh in accordance with law and in light of the Supreme Court observations