Limitation For Filing Application Under IBC Is Three Years If No Extension Is Sought, Even If Such Application Is Filed Based On Court's Decree: NCLAT

The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench of Justice Ashok Bhushan and Mr. Barun Mitra (Technical Member) has held that the time period for filing an application under the IBC remains three years, even if it is based on a court decree. It is not extended merely because the limitation period for executing the decree is 12 years. The present two appeals have been filed by the IDBI Bank against orders passed by the National Company Law Tribunal (NCLT) Indore by which it rejected the application under section 95 of the Insolvency and Bankruptcy Code, 2016 (IBC) as time barred. The Appellant submitted that the Supreme Court in Tottempudi Salalith' Vs. 'State Bank of India & Ors.' held that decree passed by Court shall remain valid for a period of 12 years and during which claim can be filed in the IBC.In view of the judgment of the Hon'ble Supreme Court in the above case, limitation for filing Section 95 application has to be treated as 12 years hence the application filed was not barred by time. The Tribunal noted that the Supreme Court in Kotak Mahindra Bank Ltd.' Vs. 'A. Balakrishnan' held that since the acknowledgement under section 18 of the Limitation Act came after 3 years from the date of cause of action, it would not extend the time period. It relied on its own judgment in B.K. Educational Services Pvt. Ltd. v. Parag Gupta & Associates where it was held that the limitation period for filing an insolvency application was 3 years as per Article 137 of the Limitation Act. It also held that the date on which a recovery certificate is issued gives rise to a fresh cause of action and the application filed within 3 years of its issuance is maintainable. Accordingly, the Apex Court found the applications filed based on recovery certificates to be maintainable. The Supreme Court further held that although Article 136 of the Limitation Act prescribes a 12 year time period for executing a decree, the applications under the IBC are governed by Article 137 of the Limitation Act that is they have to be filed within 3 years. Referring to section 11(22A) of the 1993 Act, it observed that a claim under the IBC retains the character of a decree. Accordingly, the appellant's contention that the application was time barred was rejected. It held that “submission of the appellant relying on the above judgment that Hon'ble Supreme Court held that limitation will be 12 years with respect to a decree is wholly incorrect and is not borne out from the judgment.” In light of the above discussion, it concluded that there is no merit in the Appellant's contention that the limitation period for filing an application under the IBC based on court's decree is 12 years. It upheld the impugned order passed by the Adjudicating Authority which dismissed the Appellant's application as it was filed beyond three year limitation period. Accordingly, the present appeals were dismissed. Case Title: IDBI Bank Ltd. Versus Hemangi Patel Case Number:Company Appeal (AT) (Insolvency) No. 991 of 2025 Judgment Date: 08/08/2025 For Appellant : Mr. Vaibhav Gaggar and Shreedhar Gaggar, Advocates. Click Here To Download Order/Judgement

Limitation For Filing Application Under IBC Is Three Years If No Extension Is Sought, Even If Such Application Is Filed Based On Court's Decree: NCLAT

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Limitation For Filing Application Under IBC Is Three Years If No Extension Is Sought, Even If Such Application Is Filed Based On Court's Decree: NCLAT

Mohd Malik Chauhan

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