Facts
The Appellant (SBI) extended financial facilities to Corporate Debtors M/s Kandla Energy and Chemicals Ltd. and Shri Jalaram Rice Industries Pvt. Ltd.
Source reference: p. 3-4The Respondents executed personal guarantees in favor of SBI.
Source reference: p. 3-4Following defaults in 2014, SBI obtained recovery decrees from the Debt Recovery Tribunal (DRT) on 25.06.2018 and 19.03.2018 respectively.
Source reference: p. 4-5SBI subsequently filed applications under Section 95 of the IBC against the Personal Guarantors in early 2023.
Source reference: p. 4-5The Adjudicating Authority (NCLT, Ahmedabad) dismissed these applications as time-barred, holding that under the Supreme Court's Suo Motu extension orders, the limitation period expired on 30.05.2022.
Source reference: p. 4-5, 21-22SBI appealed, contending a misinterpretation of the limitation exclusion rules.
Source reference: no citationIssues
Whether the Adjudicating Authority erred in interpreting the Supreme Court’s directions in Suo Motu Writ Petition (C) No. 3 of 2020 regarding the extension and exclusion of limitation periods due to COVID-19.
Source reference: p. 6-7Whether the Section 95 applications filed by SBI were barred by limitation under Article 137 of the Limitation Act, 1963, read with Section 238A of the IBC.
Source reference: p. 19-21Law Applied
The court applied Section 238A of the IBC, which attracts the Limitation Act, 1963 to insolvency proceedings.
Source reference: p. 21It primarily relied on the Supreme Court’s directions in Cognizance for Extension of Limitation, In re (Suo Motu Writ Petition (C) No. 3 of 2020), specifically the order dated 10.01.2022, which mandated the exclusion of the period from 15.03.2020 to 28.02.2022 for computing limitation.
Source reference: para. 10The court followed the precedent in Prakash Corporates v. Dee Vee Projects Ltd., which established that "exclusion" results in an enlargement of time over the prescribed period.
Source reference: para. 12Arif Azim Company Ltd. v. Aptech Ltd., which clarified that balance limitation remaining as of 15.03.2020 becomes available from 01.03.2022.
Source reference: para. 14Reasoning
The Tribunal found that the NCLT erroneously applied a flat 90-day extension from 01.03.2022.
Source reference: no citationIt reasoned that Paragraph 5.III of the Supreme Court’s 10.01.2022 order explicitly states that if the "actual balance period" remaining is greater than 90 days, the longer period applies.
Source reference: para. 10, 20In the first set of appeals, since the three-year limitation was set to expire on 24.06.2021, the period of 1 year, 3 months, and 9 days that intersected with the COVID-19 exclusion period (15.03.2020 to 28.02.2022) remained as "balance."
Source reference: para. 25Adding this balance to 01.03.2022 extended the deadline to 10.06.2023.
Source reference: para. 25Similarly, for the second set, the balance was 1 year and 3 days, extending the deadline to 04.03.2023.
Source reference: para. 25Consequently, the applications filed in January and February 2023 were well within the legally computed limitation periods.
Source reference: para. 25-26Holding
The Appellate Tribunal held that the SBI’s applications were not barred by time because the "exclusion" of the COVID-19 period entitled the Appellant to the full remaining balance of the three-year limitation period starting from 01.03.2022, rather than just 90 days.
The NCLT's orders were set aside, and the Section 95 applications were revived for fresh consideration on merits.
Source reference: para. 29The appeals were allowed.
Source reference: para. 27Original Court PDF
State Bank of India v. Sanjay Baleshwar Rai [Company Appeal (AT) (Insolvency) No. 893, 894, 1280 & 1281 of 2024]
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