Section 7 IBC application not barred by limitation even if filed 3 years after Corporate Debtor's loan account declared as NPA: Supreme Court

The Supreme Court on Wednesday held that an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) would not be barred by limitation, on the ground that it was filed beyond a period of three years from the date of declaration of the loan account of the Corporate Debtor as Non-Performing Asset (NPA) [Dena Bank vs C Shivakumar Reddy]..However, this is only applicable if there was 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 Bench of Justices Indira Banerjee and V Ramasubramanian also held that a judgment or decree for money in favour of the Financial Creditor, passed by the Debt Recovery Tribunal (DRT) or any other tribunal or court, or the issuance of a certificate of recovery in favour of the financial creditor, would give rise to a fresh cause of action for the Financial Creditor, to initiate proceedings under Section 7 of the IBC for initiation of the Corporate Insolvency Resolution Process, within three years from the date of the judgment if the dues of the Corporate Debtor to the Financial Debtor remained unpaid..The top court stated that there is no bar in law to the amendment of pleadings in an application under Section 7 of the IBC, or to the filing of additional documents, apart from those initially filed along with application under Section 7 of the IBC in Form-1.."In the absence of any express provision which either prohibits or sets a time limit for filing of additional documents, it cannot be said that the Adjudicating Authority committed any illegality or error in permitting the Appellant Bank to file additional documents," the Court said..The two-judge bench further stated that depending on the facts and circumstances of the case, when there is inordinate delay, the Adjudicating Authority might, at its discretion, decline the request of an applicant to file additional pleadings and/or documents, and proceed to pass a final order..The top court was hearing an appeal against an order of the National Company Law Appellate Tribunal (NCLAT) which had allowed an appeal against an order of National Company Law Tribunal wherein the adjudicating authority had admitted a petition filed by Dena Bank against the Corporate Debtor under Section 7 of IBC..The NCLAT had held that the petition by Dena Bank under Section 7 of the IBC, was barred by limitation. .[Read Judgment]