NCLAT held that if the Appellant had approached the appropriate forum for appropriate remedy in time with the continuous cause of action, then the claim is not barred by Limitation.
In the instant case titled Sanghvi Movers Ltd. Vs. M/s. Tech Sharp Engineers Pvt. Ltd the issue that was raised before the NCLAT was:
Whether the claim of the Appellant barred by limitation?
With regard to the issue, The NCLAT held that the Appellant had addressed an appropriate forum for relief in a timely manner, and hence the application was not limited by limitation, relying on Section 137 of the Limitation Act, 1963.
The NCLAT categorically held that:
“From the facts as narrated above, it will be evident that the winding-up petition was filed before the Hon’ble High Court of Judicature at Madras which had not reached finality and in the meantime, as the ‘I&B Code’ came into force, the demand notice under Section 8(1) was issued on 14th November 2017 for payment of outstanding amount along with the interest. Thus, as we find that there is a continuous cause of action the claim is within the period of limitation. The Appellant had moved before an appropriate forum for appropriate relief in time, in accordance with law and so we hold that the claim of the Appellant is not barred by limitation as to the petition under Section 433 & 434 of the Companies Act, 1956 become infructuous, by operation of law.”
Hence, the current NCLAT decision has made it clearly apparent that if a creditor had already contacted the relevant forum for suitable relief prior to the implementation of the IBC, the application was well inside the limitation period. The essence of two judgements, BK Educational Services Pvt. Ltd. v. Parag Gupta and Associates and Pushpa Shah & Anr v. IL&FS Financial Services Ltd as well as the Limitation Act, has been preserved by the NCLAT.