Limitation period calculation must exclude the entire COVID-19 pandemic period and grant the remaining balance thereafter.

In brief

The question

Whether the Appellant was entitled only to a fixed 90-day extension from 01.03.2022 or the full balance period of limitation remaining as of 15.03.2020.

The court held

The NCLAT allowed the appeals, setting aside the impugned orders and reviving the Section 95 applications for fresh consideration.

It also directed

The Court held that when the balance period of limitation remaining (calculated by excluding the pandemic period) is greater than 90 days, the litigant is entitled to that longer period starting from 01.03.2022.

The applications were declared to be within the period of limitation.

01Facts

The Appellant (SBI) filed applications under Section 95 of the IBC against several Personal Guarantors following defaults by Corporate Debtors.

In Appeals 893 and 894, the DRT passed a decree on 25.06.2018.

p. 4

The Section 95 application for Appeals 893 and 894 was filed on 24.01.2023.

p. 4

In Appeals 1280 and 1281, the DRT decree was passed on 19.03.2018.

p. 5

The Section 95 application for Appeals 1280 and 1281 was filed on 25.02.2023.

p. 8

The Adjudicating Authority (NCLT Ahmedabad) dismissed all applications as time-barred, holding that under the Supreme Court’s Suo Motu extension orders, the limitation for cases expiring during the pandemic ended on 30.05.2022 (90 days from 01.03.2022).

p. 4, 22

02Issues

i.Whether the Appellant was entitled only to a fixed 90-day extension from 01.03.2022 or the full balance period of limitation remaining as of 15.03.2020.

¶ 7 / p. 17

ii.Whether the Adjudicating Authority correctly interpreted the Supreme Court's directions in *In Re: Cognizance for Extension of Limitation*.

¶ 20 / p. 18

03Law Applied

Section 95 and Section 238A of the IBC regarding the limitation period for insolvency proceedings.

p. 3, 22

Supreme Court’s directions in *MA No. 21 of 2022 in Suo Motu Writ Petition (C) No. 3 of 2020*, specifically Paragraph 5(III), which stipulates that if the balance period of limitation remaining as of 01.03.2022 is greater than 90 days, the longer period shall apply.

p. 11

The ruling in *Prakash Corporates v. Dee Vee Projects Ltd.*, clarifying that the excluded period results in an enlargement of time over the prescribed period.

p. 12

The judgment in *Arif Azim Company Ltd. v. Aptech Ltd.*, which affirmed that balance limitation as of 15.03.2020 becomes available from 01.03.2022.

p. 13

Provisions in the judgment · 12 · Linked ones open on LawLens

Insolvency and Bankruptcy Code, 2016. Section 95 Section 9 Section 10 Section 7

Arbitration and Conciliation Act, 1996 Section 23

Negotiable Instruments Act, 1881 Section 138

Limitation Act, 1963 Section 5 Section 12 Section 13 Section 14 Section 15 Section 1

04Reasoning

The NCLAT reasoned that the Adjudicating Authority erred by restricting the extension to a flat 90 days.

Under Paragraph 5 of the Supreme Court's *Suo Motu* order, the period from 15.03.2020 to 28.02.2022 must be excluded from the three-year limitation period.

¶ 11, 26

For Appeals 893/894, the limitation was set to expire on 24.06.2021; as of the COVID-19 "freeze" date (15.03.2020), 1 year, 3 months, and 9 days of the limitation period remained unused.

¶ 25

Consequently, this "balance" became available starting 01.03.2022, extending the deadline to 10.06.2023 for Appeals 893/894.

¶ 25

Similarly, for Appeals 1280/1281, the balance of 1 year and 3 days extended the deadline to 04.03.2023.

¶ 25

Since the SBI filed its applications in January and February 2023 respectively, they fell within these extended "longer periods" as permitted by the Apex Court.

¶ 26