SC Stays NCLAT Order That Said Limitation Act Doesn't Apply To Proceedings Under IBC [Read Petition]

The Supreme Court on Wednesday stayed the order of the National Company Law Appellate Tribunal which said the provisions of the Limitation Act were not applicable for initiation of Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code (IBC).

A bench of Justices Rohinton Fali Nariman and Navin Sinha stayed the November 7, 2017 order of NCLAT and issued notices on an appeal filed by B K Educational Services Ltd, which was represented by advocate Robin R David.

The appellant said the NCLAT order erroneously held that any application before the Adjudicating Authority/NCLT cannot be rejected on the ground of limitation as the right to apply accrues only from the date of coming into force of the IBC.

It also submitted that the NCLAT failed to consider that the IBC Code is mindful of the Limitation Act, 1963 and Section 60(6) specifically excludes the applicability of the Limitation Act,1963 only when an order of moratorium is in force against the corporate debtor.

In this case, the  controversy emanates from falsification of accounts of B K Educational Services which was incorporated with the Registrar of Companies, Delhi, with Authorized share capital of Rs 5 lakh and and issued paid up capital of Rs 1 lakh only.

Parag Gupta and Associates, the respondents, were a partnership frim of chartered accountants.

Based on rosy picture shown by the respondents, one Mukesh Gupta, the promoter director of M/s Shakti Promoters Pvt Ltd made investments in the appellant company.

He was later appointed director of the appellant company before being unlawfully ousted from the said post. Debts were inflicted on the appellant company where the family members of the respondent came in control illegally.