Limitation for Section 7 applications commences from the date of issuance of the Recovery Certificate.

The Appellant, ARCIL, is a financial creditor by virtue of assignment deeds dated 28.03.2014 and 10.02.2015 from OBC and IOB

The loans were originally disbursed to the principal borrower, M/s. Anandram Developers Pvt. Ltd., for which the Respondents served as corporate guarantors

Following default, recovery proceedings were initiated before the DRT.

The DRT passed final orders on 31.10.2016 and 13.03.2018, and a Recovery Certificate was issued on 03.12.2016

The principal borrower was subsequently admitted into CIRP and liquidation

ARCIL filed Section 7 applications against the Respondents (Guarantors) on 07.12.2018

The Adjudicating Authority (NCLT) dismissed these applications, holding that the debt was time-barred as the account was classified as NPA in 2007 and the Appellant failed to specify a "date of default" in Part IV of the application

1. Whether the Section 7 application was barred by limitation given that the NPA occurred in 2007 but a Recovery Certificate was issued in 2016

2. Whether the absence of a specific "date of default" in Part IV of Form-1 is fatal to the application when judicial orders/Recovery Certificates are attached

3. Whether a corporate guarantor can raise the plea of limitation after the liability has been fastened by a judicial order (DRT) and the principal borrower has already been admitted into liquidation on the same debt

Section 3(11) defining "debt" and Section 3(12) defining "default" under the IBC

a liability arising from a recovery certificate constitutes a "financial debt" under Section 5(8) and initiates a fresh period of limitation of three years from the date of issuance of the certificate

Rule 4(1) of the I&B (Application to Adjudicating Authority) Rules, 2016 regarding the filing of Form-1

The Appellate Tribunal found the NCLT's reasoning regarding limitation erroneous.

It observed that while the NPA occurred in 2007, the debt was subsequently adjudicated by the DRT, resulting in a Recovery Certificate dated 03.12.2016

Per Kotak Mahindra Bank, this certificate provides a fresh cause of action; thus, the Section 7 filing on 07.12.2018 was within the three-year limitation period

The Tribunal further noted that since the Respondents did not challenge the limitation during the DRT proceedings or when the principal borrower was admitted into CIRP, they were precluded from raising it now

Regarding the omission of the "date of default" in Form-1, the Tribunal held that Part IV of the application clearly referenced the DRT orders and Recovery Certificates, which constitutes sufficient pleading of default

Rigid construction of the form should not override the substantive evidence of a judicially determined debt

The Tribunal held that the applications were not barred by limitation as the cause of action commenced from the date of the Recovery Certificate

The matter was remitted back to the Adjudicating Authority to decide the Section 7 applications against the corporate guarantors on their merits, without being influenced by the issue of limitation or the format of the date of default