Supreme Court judgement on Sec 07 of IBC which deals initiation of Corporate Insolvency resolution process by Financial Creditors. In Civil Appeal No 8135 of 2023. The basic matter is in between time barred at the time of filing of the matter and facts of the matter.
The matter was related to section 07 of IBC which deals in initiation of corporate insolvency resolution process by Financial Creditors .In Civil Appeal No 8135 of 2023, the matter was in between Maneesh Pharmaceutical Ltd (Appellants) and Export Import Bank of India (Respondents).The application filed by the First Respondent (Bank) u/s 07 of IBC, which was dismissed by NCLT on 25th March 2022 on the
ground that the debt was barred by limitation since the date of NPA in respect of all the four loans are between 2.06.2011 to 31.07.2011 and the Petition has been filed only on 30th August 2019. The Limitation is very pertinent in the matter. The order was challenged by the respondent before NCLAT which was set aside on 09th May 2023,held that the debt was barred by limitation was “patently illegal” however “there is no dispute raised regarding the liability of the corporate debtor towards the Financial Creditors and the guarantee by the Respondent.”
The Judgement of the NCLAT was questioned before the Hon’ble Court in appeal and was dismissed on 4th July 2023. A review petition has been filed before this Hon’ble Court seeking a review and same is pending.
The respondent filed an IA before the NCLT seeking restoration of the application u/s-7 of IBC and initiation of the corporate Insolvency resolution Process. The NCLT allowed the restoration application on 5th July 2023.
The NCLT, by order dated 25th October 2023, declined to adjourn the proceeding on the ground of the pendency of the review petition and also recorded the request of the counsel for the appellant who sought time to file a further affidavit, no leave granted . The respondents filed as appeal before the NCLAT, which has been disposed of by the impugned order dated 6th December 2023. The NCLAT has been directed the NCLT to admit the application u/s 7. That is how the appeal arises before this Hon’ble court.
Supreme Court Judgement;
“The application under section 7 was originally dismissed by the NCLT on the ground that the debt was barred by limitation. When the order of the NCLT was questioned in appeal , the NCLAT set aside the order of the NCLT as being “Patent illegal”. Once the order of the NCLT was set aside, the order would cease to exist. The observations in regard to whether there was a debt due and payable would also not exist with the setting aside of the order. The order of the NCLAT, properly construed , dealt with the issue as to whether the debt was barred by limitation. A passing reference in the order of the NCLAT to whether the debt was in dispute must be read in the context of the nature of the appeal which arose from an order of the NCLT that the nature of the appeal which arose from an order of the NCLT that the debt was barred by limitation. Hence, it would be inappropriate to read the order of the NCLAT as concluding the issue in regard to whether the application u/s 7 was or was not liable to be admitted. A stray observation in the order of the NCLAT cannot be regarded as a conclusive determination on merits. That apart, the order of the NCLT which contained on observation that the debt was not in dispute was set aside in appeal by the NCLAT in its entirety. Consequently, we are of the view that it was inappropriate for the NCLAT to direct the NCLT to admit the application u/s7 straightaway without an evaluation of the rival contentions on merits.
We accordingly allow the appeal and set aside the impugned judgement and order of the NCLAT dated 6th December 2023. The application u/s 7 has already been restored to the file of the NCLT. The NCLT shall , after hearing the parties , determine as to whether the application u/s 7 is liable to be admitted . All the rights and contentions of the parties in that regard are kept open.
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