Limitation period for IBC in case of proceeding under SARFEASI

As per Section 14(2) of Limitation Act in computing the period of limitation, the time spent in SARFEASI against the Corporate Debtor be excluded for the purpose of limitation for application under Section 7 of I&B Code.

In the matter of Sesh Nath Singh & Ors. vs. Baidyabati Sheoraphuli Cooperative Bank Ltd., Company Appeal (Insolvency) No. 672 of 2019, learned counsel for the Respondent submitted that the Respondent exercised the remedy under the existing law within the prescribed limit and demand notice under Section 13(2) of SARFEASI Act was issued to the Corporate Debtor and thereafter the respondent bonafidely prosecuted the application under the SARFEASI Act. Meanwhile the appellant/corporate debtor has filed the Writ Petition under Article 226 before the Hon’ble Kolkata High Court and the Hon’ble High Court of Kolkata ordered not to proceed under SARFEASI Act.

The respondent has bonafidely prosecuted his application under SARFEASI Act. Therefore, as per Section 14(2) of Limitation Act in computing the period of limitation the time during which the respondent has been prosecuting with due diligence another civil proceedings against the corporate debtor for the same relief shall be excluded. The period spent in SARFEASI be excluded then the application filed under Section 7 of the I&B Code is within limitation period.

The Hon’ble NCLAT considering the submissions made by the party considered the Respondent has bonafidely prosecuted within limitation period under SARFEASI Act. Therefore, the Respondent is entitled for the exclusion of time period under Section 14(2) of Limitation Act and after exclusion of said period, the application filed under Section 7 of I&B Code is within limitation period.

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