NCLAT Delhi: Benefit Under Section 17 Of Limitation Act Is Not Available When Fraud Was Played In Creditor Company And Not In Company Of Corporate Debtor
Pragya Kriti
8 Nov 2023 2:00 PM IST
The National Company Law Appellate Tribunal (“NCLAT”), Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson), Mr Barun Mitra and Mr Arun Baroka (Technical Members) has rejected an appeal and held that benefits under Section 17 of the Limitation Act, 1963 (“Limitation Act”) for filing a belated claim is not available when the fraud was played in the Creditor Company and not in...
The National Company Law Appellate Tribunal (“NCLAT”), Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson), Mr Barun Mitra and Mr Arun Baroka (Technical Members) has rejected an appeal and held that benefits under Section 17 of the Limitation Act, 1963 (“Limitation Act”) for filing a belated claim is not available when the fraud was played in the Creditor Company and not in the company of the Corporate Debtor.
On 17.12.2019, the National Company Law Tribunal (“NCLT”) admitted an application under Section 9 for the initiation of the Corporate Insolvency Resolution Process (“CIRP”) filed against M/s. Three C Universal Developers Pvt. Ltd (“Corporate Debtor/Respondent”).
Following this, the Interim Resolution Professional (“IRP”) of the Corporate Debtor issued a public notice and invited claims till 31.12.2019.
On 16.01.2021, the Committee of Creditors (“CoC”) approved a Resolution Plan in CIRP from a Resolution Applicant.
On 23.12.2021, NCLT in a separate matter approved the initiation of CIRP of a related company of the Corporate Debtor i.e., M/s Three C Green Developers Pvt. Ltd. On 21.02.2022, the Resolution Professional for M/s Three C Green Developers Pvt. Ltd. (“Appellant”) was appointed.
On 06.04.2022, the Appellant sent a letter to the Resolution Professional of the Corporate Debtor (“RP”) along with a claim form stating that in the List of Creditors of the Corporate Debtor, the name of Three C Green Developers Pvt. Ltd. was not mentioned, nor claim was noticed in the Information Memorandum.
The claim of the Appellant was not accepted by the RP. The Appellant then filed an application IA No.1688 of 2022 challenging the said non-acceptance of the RP.
The NCLT initially rejected the application, but NCLAT asked it to reconsider by an order dated 28.09.2022. The NCLT heard the Application afresh but rejected the Application for the second time. Aggrieved by this, the Appellant filed an appeal before NCLAT.
Contentions of Appellant
The Appellant argued that the delay in filing the claim is due to the previous management of M/s Three C Green Developers Pvt. Ltd. as the same was not filed by the Ex-Management and the Directors of the Company, who have wilfully omitted to lodge their claims with the IRP.
The Appellant further argued that he was appointed as RP of the Company and was authorised by the CoC to file the claim and hence, the claim was filed on 06.04.2022.
Contentions of Respondent
The Respondent opposed the submissions of the Appellant stating that the claim filed by the Appellant was highly belated and was filed after 14 months of approval of the Resolution Plan of the Corporate Debtor by the CoC. The Respondent pointed out that any claim after approval of the Resolution Plan by the CoC, cannot be admitted.
The NCLAT rejected the appeal observing that benefit under Section 17 of the Limitation Act for filing a belated claim is not available when the fraud was played in Creditor Company and not in Company of Corporate Debtor.
“Section 17(1)(a) of the Limitation Act provides that when a suit or application is based upon the fraud of the defendant or respondent or his agent, the period of limitation shall not begin to run until the plaintiff or applicant has discovered the fraud. The present is a case where fraud is being alleged against the Management of 3C Green itself and in which the Appellant is a Resolution Professional. It is not a case of the Appellant that any fraud was played by the Corporate Debtor in whose CIRP belated claim has been filed by the Appellant, so that claim could not be filed by the Appellant. No fraud is alleged against the Corporate Debtor. Hence, we fail to see as to how the benefit of Section 17 of the Limitation Act can be claimed by the Appellant in the present case.”
Case Title: Gyan Chandra Misra RP for Three C Green Developers Pvt. Ltd. Vs. Three C Universal Developers Pvt.
Case No.: Company Appeal (AT) (Insolvency) No.1316 of 2023
Counsel For Appellant: Mr. Gaurav Mitra, Roy Choudhary, Ms. Mrinal Harsh Vardhan, Advocates.
Counsel For Respondent: Mr Abhishek Anand, Mr Mohak Sharma, Mr Shikhar Tiwari, Mr Parveen Kaur Kapoor, Mr Rahul Singhal, Advocates.
