Labdhi Enterprises Vs. Baramati Agro Pvt. Ltd. [Company Appeal (AT) (Insolvency) No. 195 of 2017] - Synopsis
Team SoOLEGAL 24 Feb 2021

In this case, Labdhi Enterprises Vs. Baramati Agro Pvt. Ltd. [Company Appeal (AT) (Insolvency) No. 195 of 2017], the appellant had lodged an application under Sections 433, 434(e) and 439 of the Companies Act, 1956 before the Hon'ble Bombay High Court in Mumbai for winding up of the Respondent Company on the basis that the Debtor Company had defaulted on payment of Rs.27,97,696/- to the Appellant. After, by notice dated 7th December 2016, Companies (transfer of pending proceedings) Rules 2016, have come into effect, the petition under Sections 439,434(e) and 439 of the Companies Act, 1956, pending before the Hon'ble Bombay High Court, was referred to the Tribunal, Mumbai Bench, Mumbai. The Adjudicating Authority had declined to deal with the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 on one of the ground that the appellant had not proved that the Debtor Company had admitted the debt due over the last three years, on 27 April 2010, when it was due and therefore the debt was time-barred.
The question as to whether the Limitation Act, 1963 will be applicable for triggering incorporate resolution process under Sections 7 or 9 of the I &B Code.
In the light of the existing theory, National Company Law Appellate Tribunal had held that, the Limitation Act, 1963 may not extend to the initiation of the 'Corporate Insolvency Resolution Process' and that it is appropriate to investigate the Doctrine of Limitation and Prescription in order to decide if the application referred to in Section 7 or Section 9 can be submitted after a long pause, in the form of laches and, thereby the person forfeited his claim. The Bench had held that, if there was a delay of more than three years from the date of the action, and there were no lapses on the part of the claimant, the applicant must justify the delay. Where there is a continuing cause for action, there is no question of refusing any application on the grounds of delay. According to the Bench, the order of the Adjudicating Authority cannot be upheld and the appellant is entitled to file a new application pursuant to section 9 of the Insolvency and Bankruptcy Code, 2016, in compliance with the other provisions of the law.

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