COVID-19 exclusion period results in enlargement of limitation by adding the entire elapsed balance period after March 1, 2022.

The Appellant (SBI) filed applications under Section 95 of the IBC against Personal Guarantors of two Corporate Debtors: M/s Kandla Energy and Chemicals Ltd. and Shri Jalaram Rice Industries Pvt. Ltd.

In the first set of appeals (893 & 894), the DRT passed a decree on 25.06.2018; the Section 95 application was filed on 24.01.2023.

In the second set (1280 & 1281), the DRT passed a decree on 19.03.2018; Section 95 applications were filed on 25.02.2023.

The Adjudicating Authority (NCLT Ahmedabad) dismissed all applications as barred by time, holding that under the Supreme Court’s Suo Motu extension orders, the limitation expired on 30.05.2022 (90 days from 01.03.2022).

Whether the Appellant was entitled to the "balance period of limitation" remaining as of 15.03.2020 to be available from 01.03.2022, or was restricted to a flat 90-day extension.

The Court primarily applied Section 95 and Section 238A of the IBC, 2016, read with Article 137 of the Limitation Act, 1963, which prescribes a three-year period for filing applications.

It relied extensively on the Supreme Court’s directions in In Re: Cognizance for Extension of Limitation, M.A. No. 21 of 2022, which mandated the exclusion of the period from 15.03.2020 to 28.02.2022 for limitation purposes.

The Court further applied the principles from Prakash Corporates v. Dee Vee Projects Ltd. and Arif Azim Company Ltd. v. Aptech Ltd., which established that such exclusion results in the enlargement of time and that the "balance period" remaining on 15.03.2020 becomes available from 01.03.2022.

The NCLAT found that the NCLT erroneously applied only the 90-day grace period mentioned in Paragraph 5.III of the Supreme Court’s Suo Motu order.

The Appellate Tribunal clarified that the Supreme Court's order contains two distinct benefits: (1) if the limitation expired during the COVID period, the litigant gets the balance period remaining as of 15.03.2020 starting from 01.03.2022; and (2) if that balance is less than 90 days, it is extended to a minimum of 90 days.

In appeals 893 & 894, since 1 year, 3 months, and 9 days of the three-year term remained as of 15.03.2020, that same duration became available from 01.03.2022, extending the deadline to 10.06.2023.

Similarly, in appeals 1280 & 1281, the balance of 1 year and 3 days extended the deadline to 04.03.2023.

Since the SBI filed its applications in January and February 2023, they fell within these extended "longer periods" as permitted by the Supreme Court’s proviso that "the longer period shall apply".

It held that the Section 95 applications were not barred by time because the Appellant was entitled to the full balance of the limitation period remaining as of 15.03.2020, calculated from 01.03.2022, rather than just 90 days.

The Tribunal revived C.P.(IB)/61(AHM)2023, C.P.(IB)/60(AHM)2023, C.P.(IB) No.100/NCLT/AHM/2023, and C.P.(IB) No.101/NCLT/AHM/2023 for fresh consideration on merits.