NCLAT New Delhi: No Fresh Period Of Limitation From The Date Of MSME Order When Application Barred By Time
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, New Delhi comprising of Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member), allowed the appeal filed in Pan Pacific Engineering Services Pvt. Ltd. Vs. Ayyappa Hydro Power Ltd. against the NCLT order dated 25.07.2023 dismissed...
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, New Delhi comprising of Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member), allowed the appeal filed in Pan Pacific Engineering Services Pvt. Ltd. Vs. Ayyappa Hydro Power Ltd. against the NCLT order dated 25.07.2023 dismissed Corporate Insolvency Resolution Process (“CIRP”) under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) by the Appellant.
The Appellate Tribunal held that no Fresh Period of Limitation from the date of the MSME order can be issued when an application is barred by time. Further, no CIRP application can be filed for any default committed during the Section 10A Period.
Background Facts:
The Appellant, an Operational Creditor, is a registered MSME. A work order was issued in 2013 however the amount was not paid and the default was committed on 15.06.2015. The Operational Creditor filed an Application before the Chairman MSME in 2019 for default for an amount of Rs. 49.33 Lakhs which was allowed by an order dated 10.11.2020. Post the said order, when the amount was not paid, a Demand Notice under Section 8 of the IBC was issued and the CIRP application was filed on 12.11.2021.
The Adjudicating Authority had observed that the default had been committed on 15.06.2015 and therefore, the Application is barred by time.
NCLAT Verdict:
The NCLAT dismissed the appeal and held that there is no reason to give a fresh period limitation to the Appellant from the date of the MSME Order dated 10.11.2020 when the NCLT had held the application as barred by time since the date of default is 15.06.2015. Moreover, the right to file a CIRP application under Section 7 of IBC accrued to the Appellant on the date of default i.e., 15.06.2015.
Moreover, even if the date of default is taken as 10.11.2020, the same falls under the prohibited period under Section 10A of IBC, and no CIRP application can be filed for any default committed during the Section 10A Period.
Case Title: Pan Pacific Engineering Services Pvt. Ltd. vs. Ayyappa Hydro Power Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 1239 of 2023