The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Shri Kishore Vemulapalli (Judicial Member) and Shri Manoj Kumar Dubey (Technical Member), while adjudicating a petition filed in Piramal Capital & Housing Finance Ltd. v Manpreet Developers Pvt. Ltd., has held that if an entity which itself was admitted into CIRP and has undergone moratorium, files...
The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Shri Kishore Vemulapalli (Judicial Member) and Shri Manoj Kumar Dubey (Technical Member), while adjudicating a petition filed in Piramal Capital & Housing Finance Ltd. v Manpreet Developers Pvt. Ltd., has held that if an entity which itself was admitted into CIRP and has undergone moratorium, files an application under IBC, then the period of moratorium would be excluded while computing limitation of such application. The Bench has admitted an application under Section 7 of IBC filed by DHFL (taken over by Piramal) against a Corporate Debtor and has excluded the moratorium period undergone by DHFL while computing limitation of the application.
Background Facts
Dewan Housing Finance Limited (DHFL/Original Lender) has been taken over by the M/s Piramal Capital & Housing Finance Limited (“Financial Creditor”).
DHFL had sanctioned credit facilities to Manpreet Developers Pvt. Ltd. (“Corporate Debtor”), which was later taken over by the Financial Creditor. When the Corporate Debtor failed to repay the loan, the Financial Creditor issued a recall notice dated 14.09.2020, demanding the outstanding dues amounting to Rs. 786,28,30,102/- as on 31.03.2020.
Thereafter, the Financial Creditor filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016 (“IBC”), seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The Date of Default was 31.03.2019.
When the application was heard, the NCLT Bench opined that since date of default is 31.03.2019, the application was time barred as the same was filed on 25.05.2022.
Contentions Of Financial Creditor
The Financial Creditor argued that the Supreme Court in ‘Suo Motu Writ Petition (C) No. 3 of 2020’ had directed that the period from 15.03.2020 to 28.02.2022 (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 03.12.2019 to and 07.06.2021. Section 60(6) of IBC 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 date of default being 31.03.2019, the limitation of 3 years would end on 04.10.2023 after excluding the moratorium period. Therefore, the application being filed on 23.05.2022 is well within limitation.
Relevant Law
Section 60(6) of IBC
"60. Adjudicating Authority for corporate persons.
(6) Notwithstanding anything contained in the Limitation Act,1963 or in any other law for the time being in force, in computing the period of limitation specified for any suit or application by or against a corporate debtor for which an order of moratorium has been made under this Part, the period during which such moratorium is in place shall be excluded."
NCLT Verdict
The Bench observed that DHFL (original lender) was admitted into CIRP and was under moratorium for 1 year 6 months and 4 days. Further, the Supreme Court extended the limitation period for 1 year 11 months and 13 days during COVID-19 pandemic. If the period of moratorium and extension of limitation granted by Supreme Court is taken into account, then the limitation period for the Financial Creditor to file the application would expire on 13.03.2024.
“As per the given fact that the captioned Petition has been filed on 23rd May 2022, the same has been filed way before the expiry of the limitation period on 13th March 2024. Hence, for the aforesaid reason as well, the captioned Petition is within limitation.”
The Bench held that the application was well within limitation and also crossed the threshold of Rs. 1 Crore. Accordingly, the Corporate Debtor has been admitted into CIRP and Mr. Jayesh Natvarlal Sanghrajka has been appointed as the Interim Resolution Professional.
Case Title: Piramal Capital & Housing Finance Ltd. v Manpreet Developers Pvt. Ltd.
Case No.: CP (IB) No.700/MB-IV/2022
Counsel For Applicant: Mr. Nausher Kohli, Advocate.