Insolvency and Bankruptcy code Is Not for Money Recovering Proceedings: SC

The Supreme Court in the case Invert Asset Securitisation and Reconstruction Private Limited versus Gimar Fibres Ltd reemphasize that the provisions of Insolvency and Bankruptcy Code are essentially intended to bring the Corporate Debtor to its feet and are not of money recovering proceedings as such.

The Supreme Court observed that the National Company Law Appellate Tribunal (NCLAT) Pointed out that there is no acknowledgement of liability in terms of Section 18 of the limitation Act, 1963, the right to sue accused on the date of declaration of NPA on 28.02.2002.

Further it was emphasized by the Supreme Court at that time and that too again that it has been expressed and explained that the intent of the Insolvency and Bankruptcy Code is essentially to recover money and to bring corporate debtor on its feet.

The provision of the IBC Code so as to enforce recovery against the Corporate Debtor, it only involves the intent of the appellant.

An appeal is filled under Section 62 of The Insolvency and Bankruptcy Code, 2016 against an order dated 18.11.2021 passed by the National Company Law Appellate Tribunal (NCLAT) before the Supreme Court. In an order the NCLAT dismissed the appeal of Invest Asset on the ground that the Section 5 of the IBC Code, 2016 the application filled by the Invest against Gimar is barred by the limitation.

By state Bank Of India on 28.02.2022 declared the account of Gimar Fibres Ltd. (Gimar) as NPA. Under SICA Act, 1989 Gimar was declared sick by BIFR on 25.04.2006. It was decided that the loan of Gimar would be assigned to invest asset by SBI ON 22.09.2011AND THREFORE IT WAS BEING FILLED BY Gimar and was being dismissed on 04.05.2016 By BIFR. After that the invest asset filled the application against Gimar on 01.10.2018 under section 7 of the IBC code.

The NCLAT rejected the application on the ground that the reference before BIFR was abated on 13.08.2015 and also the period between 25.04.2006, rejected the intentions of Invest Asset and it cannot be excluded from computing the limitation period and the section 7 under which an application was made of Invest Asset is barred by the limitation and the appeal is dismissed. On 25.04.2006 Gimar was declared sick by BIRF and on 04.05.2016, BIRF dismissed the reference.

The Bench comprising of Justice Dinesh Maheshwari and Justice Aniruddha Bose reemphasize that the provisions of Insolvency and Bankruptcy Code are essentially intended to bring the Corporate Debtor to its feet and are not as such of money recovering proceedings.

Thereafter the section 7 application was filled within the period of three years as per article 137, Schedule I of the Limitation Act, 1963 on 05.05.2016 it was contended by invest asset before the NCLAT that the first accrual of cause of action contended by Invest asset.

It is expressed and explained by the court that has the provisions of the code are essentially intended to bring the corporate debtor to its feet and are not of money recovering proceedings as such the intention of the appellant had only been to invoke the provisions of the code so as to enforce the recovery against the corporate debtor The Tribunal find no fault and the appellant tribunal having declined the prayer of the appellant.

Further the Court observed that the intent of the appellant had only been to invoke the provisions of the code so as to enforce recovery against the Corporate Debtor.