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NCLAT Sets Aside NCLT Order and Restores Section 95 IBC Application Applying Supreme Court’s COVID-19 Limitation Exclusion

The NCLAT set aside the NCLT order and restored the Section 95 IBC application by applying the Supreme Court’s COVID-19 limitation exclusion.


The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, comprising Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha (Technical Member), while considering an appeal along with connected interlocutory applications, held that the exclusion of the period from 15.03.2020 to 28.02.2022, as directed by the Hon’ble Supreme Court in suo motu proceedings on extension of limitation, is applicable to applications filed under Section 95 of the Insolvency and Bankruptcy Code, 2016. Accordingly, the Tribunal found that the appellant’s application was filed within the prescribed limitation period. It concluded that the National Company Law Tribunal (NCLT) had erred in dismissing the application on the ground of limitation without taking into account the binding exclusion period.


The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, allowed an appeal challenging the order dated 30.04.2024 passed by the National Company Law Tribunal (NCLT), Ahmedabad, whereby the application filed under Section 95 of the Insolvency and Bankruptcy Code, 2016 (IBC), and the Resolution Professional’s report under Section 99 had been rejected on the ground of limitation.


The NCLT had held that the application filed on 20.02.2024 was time-barred, as the invocation notice, which triggered the cause of action, was dated 26.05.2020. It held that the application exceeded the three-year limitation period as prescribed under Section 238-A of the IBC, read with Article 137 of the Limitation Act, 1963.


In appeal, counsel for the appellant contended that the Tribunal had erroneously calculated the limitation period without applying the exclusion granted by the Hon’ble Supreme Court in In Re: Cognizance for Extension of Limitation (4th Order), REEDLAW 2022 SC 01014. The Supreme Court had directed that the period from 15.03.2020 to 28.02.2022 shall stand excluded for the purposes of limitation under all general or special laws with respect to judicial or quasi-judicial proceedings. It was submitted that since the invocation notice dated 26.05.2020 fell within this excluded period, the limitation should be counted from 01.03.2022, and hence, the application filed on 20.02.2024 was well within the three-year period.


The respondent remained unrepresented throughout the appellate proceedings and had earlier been proceeded against ex parte. After examining the record and hearing the appellant, the NCLAT held that the appellant’s submission had merit. It found that the NCLT had committed an error in rejecting the Section 95 application by failing to apply the binding exclusion of limitation as laid down by the Supreme Court.


Accordingly, the NCLAT allowed the appeal, restored CP No. (IB)/100/AHM/2024, and remanded the matter to the NCLT with a direction to reconsider IA No. 639(AHM)2024 on merits. The appeal was disposed of with no order as to costs, and any pending interlocutory applications were deemed closed.


Ms. Pinki, Advocate, represented the appellant.

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