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August 9, 2017

Limitation of claims under the IBC: Final opportunity for creditors?

The Law of Limitation has sounded the death knell for many a claim by creditors at the very threshold, regardless of how strong the claim may have been on merits. While traditional legal systems for recovery of debts are bound by the provisions of the Limitation Act, 1963, the newly introduced Insolvency and Bankruptcy Code, 2016 (the Code) has, till date, not attracted the full rigour of the Limitation Act, 1963. The issue of applicability of the Limitation Act, 1963 to the working of the Code was considered by the National Company Appellate Tribunal (NCLAT) in the matter of Neelkanth Township and Construction Pvt. Ltd. vs. Urban Infrastructure Trustee Ltd., numbered as Company Appeal (AT) (Insolvency) No.44 of 2017. In the aforesaid case, the NCLAT had categorically held that the provisions of the Limitation Act, 1963 would not apply to the Code. The relevant findings of the NCLAT are as follows: “The next ground taken on behalf of the appellant is that the claim of the respondent is barred by limitation, as the Debentures were matured between the year 2011 – 2013 is not based on Law. There is nothing on the record that Limitation Act, 2013 is applicable to […]
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