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Invent Asset Securitisation And Reconstruction Pvt. Ltd. v. Girnar Fibres Ltd. .
Factual and Procedural Background
The appellant, M/s. Invent Asset Securitisation and Reconstruction Pvt. Ltd., filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) against the corporate debtor, M/s. Girnar Fibres Ltd., alleging default on 28 February 2002. The National Company Law Tribunal (NCLT), Chandigarh Bench, dismissed the application as time-barred. On appeal, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, affirmed the NCLT’s decision. The appellant thereafter invoked Section 62(1) of the IBC and approached the Supreme Court of India by way of Civil Appeal No. 3033/2022. After hearing counsel on 25 April 2022, the Supreme Court dismissed the appeal.
Legal Issues Presented
- Whether the Section 7 application filed by the appellant was barred by limitation under the Limitation Act, 1963.
- Whether documents relating to loan restructuring and an alleged revival letter amounted to an acknowledgement of liability under Section 18 of the Limitation Act so as to extend the limitation period.
- Whether the appellant was impermissibly using the IBC as a money-recovery mechanism contrary to its objective of corporate revival.
Arguments of the Parties
Appellant's Arguments
- The appellant relied on documents concerning loan restructuring and a purported revival letter, contending that these materials constituted an acknowledgement of debt that extended the limitation period under Section 18 of the Limitation Act.
Respondent's Arguments
The opinion does not contain a detailed account of the respondent's legal arguments.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Supreme Court concurred with both the NCLT and NCLAT that the right to sue accrued on 28 February 2002, rendering the Section 7 application time-barred. The Court found no material on record demonstrating any valid acknowledgement of liability under Section 18 of the Limitation Act. It reviewed the restructuring documents and the alleged revival letter but held that they did not revive or extend the limitation period for the purpose of insolvency proceedings.
The Court reiterated its consistent stance that the IBC is designed to revive corporate debtors rather than serve as a tool for simple debt recovery. Finding the appellant’s invocation of the IBC motivated primarily by recovery objectives, the Court refused to interfere with the concurrent findings of the lower tribunals. Nonetheless, it clarified that any other proceedings initiated by the appellant may proceed on their own merits in accordance with law.
Holding and Implications
Appeal Dismissed.
All pending applications were disposed of. The immediate consequence is that insolvency proceedings against the respondent do not commence under the IBC, and the appellant must pursue any alternative remedies separately. The decision applies established limitation principles and does not announce a new precedent.
1. Having heard learned counsel for the appellant and having perused the material placed on record, we are satisfied that the National Company Law Tribunal, Chandigarh Bench, Chandigarh and thereafter, the National Company Law Appellate Tribunal, Principal Bench, New Delhi have rightly taken the view that the application as moved by the present appellant under Section 7 of the Insolvency and Bankruptcy Code, 2016 (‘the Code’) was barred by limitation.
2. The Appellate Tribunal has, inter alia, pointed out that as per the averments and allegations, right to sue accrued when the default occurred way back on 28.02.2002; and that the material on record does not evidence any acknowledgement of liability in terms of Section 18 of the Limitation Act, 1963.
3. Learned counsel for the appellant has attempted to refer to the documents towards restructuring of the loan and the alleged revival letter etc. but we are satisfied that the said documents cannot enure to the benefit of the appellant so far as the application under Section 7 of the Code is concerned. The view as taken by the Tribunal and the Appellate Tribunal appears to be a plausible view of the matter on the given set of facts and circumstances of this case and, therefore, we are not inclined to interfere.
4. Time and again, it has been expressed and explained by this Court that the provisions of the Code are essentially intended to bring the corporate debtor to its feet and are not of money recovery proceedings as such. The intent of the appellant had only been to invoke the provisions of the Code so as to enforce recovery against the corporate debtor. We find no fault in the Tribunal and the Appellate Tribunal having declined the prayer of the appellant.
5. However, in the interest of justice, it does appear appropriate and hence observed that if any other proceedings have been or are taken up by the appellant, the same shall be dealt with and proceeded on their own merits and in accordance with law.
6. Subject to the observations foregoing, this appeal stands dismissed.
7. All pending applications stand disposed of.
SUPREME COURT OF INDIA
RECORD OF PROCEEDINGS
Civil Appeal No. 3033/2022
(Appeal under 62(1) of the Insolvency and Bankruptcy Code, 2016 arising out of the impugned judgment dated 18.11.2021 passed by the Hon'ble National Company Law Appellate Tribunal, Principal Bench, New Delhi in Company Appeal (AT)(Insolvency) 556 of 2020)
M/s. Invent Asset Securitisation and Reconstruction Pvt. Ltd.….Appellant(s)
v.
M/s. Girnar Fibres Ltd.….Respondent(s)
(IA No. 60347/2022-EXEMPTION FROM FILING C/C OF THE IMPUGNED JUDGMENT)
Date : 25-04-2022 This appeal was called on for hearing today.
(Before Dinesh Maheshwari and Aniruddha Bose, JJ.)
For Appellant(s) Mr. Harshvir Pratab Sharma, Sr. Adv.
Mr. Anoop Prakash Awasthi, AOR
Mr. P. Singh, Adv.
For Respondent(s)
UPON hearing the counsel the Court made the following
8. The appeal stands dismissed in terms of signed order.
9. All pending applications stand disposed of.
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