Limitation Act applies to IBC proceedings

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The Supreme Court, while hearing an appeal against an order of National Company Law Appellate Tribunal (NCLAT), held that Limitation Act, 1963, is applicable to applications filed under the Insolvency and Bankruptcy Code, 2016 (IBC). The judgment arose from a batch of cases in which NCLAT held that Limitation Act does not apply to applications made under section 7 and section 9 of IBC from the date of commencement of IBC (i.e. 1 December 2016) until the date on which the IBC was amended to incorporate section 238A of IBC (i.e. 6 June 2018).

In BK Educational Services Private Limited v Parag Gupta and Associates, a dispute regarding liability arose between Parag Gupta & Associates, chartered accountants (the financial creditors) and BK Educational Services Private Limited (the corporate debtor). The corporate debtor, while denying the financial liability, contended that all but one financial claim were false and that the records were tampered and manipulated by the relatives of the financial creditors. Further, the amounts claimed were time-barred and there was nothing on record that would extend the limitation to recover the amount since the period was between 2012 and 2013.

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The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.