Shivani Pandey-
Published on August 04, 2021, at 7:38 PM
The Apex Court stated that a Judgment for money in favour of the Financial Creditor, or the issuance of a Certificate of Recovery in its favour, would give rise to a fresh cause of action for the Financial Creditor, to initiate proceedings under Section 7 of the Insolvency and Bankruptcy Code (IBC) for initiation of the Corporate Insolvency Resolution Process (CRIP).
The Court held that the Insolvency Resolution Process can be initiated if the Judgment/decree that may be passed by the Debt Recovery Tribunal, or any other Tribunal or Court, within three years from the date or within three years from the date of issuance of the Certificate of Recovery, if the dues of the Corporate Debtor to the Financial Debtor, or any part thereof remained unpaid.
The bench comprising Justices Indira Banerjee and V. Ramasubramanian also stated that an application under Section 7 of the IBC would not be barred by limitation.
In the instant case, the Adjudicating Authority admitted the Petition under Section 7 of the IBC, filed by the Financial Creditor and appointed an Interim Resolution Professional.
The Court observed,
“In our considered opinion an application under Section 7 of the IBC would not be barred by limitation, on the ground that it had been filed beyond a period of three years from the date of declaration of the loan account of the Corporate Debtor as NPA, if there were an acknowledgement of the debt by the Corporate Debtor before expiry of the period of limitation of three years, in which case the period of limitation would get extended by a further period of three years.”
The Court further added,
“Moreover, a judgment and/or decree for money in favour of the Financial Creditor, passed by the DRT, or any other Tribunal or Court, or the issuance oof a Certificate of Recovery in favour of the Financial Creditor, would initiate a fresh cause of action for the Financial Creditor, to start proceedings under Section 7 of the IBC for initiation of the Corporate Insolvency Resolution Process, within three years from the date of the judgment and/or decree or within three years from the date of issuance of the Certificate of Recovery, if the dues of the Corporate Debtor to the Financial Debtor, under the judgment and/or decree and/or in terms of the Certificate of Recovery, or any part thereof remained unpaid.”
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