Black Pearl Hotels Pvt. Ltd. Vs Planet M. Retail Ltd. [Company Appeal (AT) (Insolvency) No. 91 of 2017] - Synopsis
Team SoOLEGAL 11 Feb 2021

FACTS:
In this case, Black Pearl Hotels Pvt. Ltd. Vs Planet M. Retail Ltd. [Company Appeal (AT) (Insolvency) No. 91 of 2017], in the month of February, 2008, the Operational Creditor that is Black Perl Hotel pvt ltd had entered into an agreement of Business Conducting Agreement with the Corporate Debtor that is Planet M Ltd. However, according to the Operational Creditor, the Corporate Debtor had failed to pay the fees which were required to be paid under the said agreement. Under that basis, the Operational Creditor had submitted a demand notice pursuant to Section 8(1) of the Insolvency Bankruptcy Code, 2016 to the Corporate Debtor. The Corporate Debtor had replied to the said notice by rejecting all the allegations made against them by the Operational Creditor. After waiting for a period of 10 days the Operational Creditor had filed an application under Section 9 of Insolvency Bankruptcy Code, 2016, for initiation of Corporate Insolvency Resolution Process before NCLT Mumbai Bench. However, NCLT had dismissed the application on the ground that said application was barred by limitation. Being aggrieved, the appellant had filed an appeal to NCLAT.
DECISION OF THE COURT:
The question of the applicability of the Limitation Act to the Code was not discussed by the NCLAT. Rather, it followed on the ground that, even though the Limitation Act of 1963 was applied, the creditor's application was within the specified limitation period. NCLAT was of the view that Article 137 of the Schedule to the Limitation Act will apply. Article 137 provides for a limitation period of three years from the date on which the right of application shall accrue to the applicant. According to the Bench, the Adjudicating Authority had acknowledged that the Insolvency Bankruptcy Code, 2016, had come into effect on 1st December 2016. The right to apply pursuant to the Code therefore accrued only on 1st December 2016 and not before that date. NCLAT, therefore, had held that the application which was filed well before the end of three years from 1st December 2016 was not prohibited by limitation. The order of the NCLT was set aside by the Appellate Court.

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