Summary
The Supreme Court sustained admission of SBI’s composite insolvency application insofar as it relied on two 2017 recovery certificates. A later settlement letter could not cure limitation in an existing proceeding without appropriate pleadings. The Court directed examination of the 2015 certificate as a deemed decree and, if it could not support initiation of CIRP, segregation and consideration of that debt as a claim in the ongoing process.
Issues
- Whether recovery certificates supplied a fresh limitation starting point for a Section 7 application.
- Whether a post-filing settlement letter cured limitation and prior DRT proceedings barred CIRP.
- How the older recovery certificate should be treated within the composite claim.
Provisions considered
- Sections 7 and 238A, Insolvency and Bankruptcy Code, 2016The application based on the 2017 recovery certificates was within the three-year period; limitation applied to insolvency proceedings. (¶¶ 5–7, 10, 14–15)
- Section 18; Articles 136 and 137, Limitation Act, 1963The later acknowledgement could not cure the existing application without amendment. Three years governed CIRP initiation, while the deemed decree’s twelve-year enforceability required separate consideration. (¶¶ 6–10, 12–15)
- Section 19(22A), Recovery of Debts and Bankruptcy Act, 1993The recovery certificate’s deemed-decree character was relevant to the continued claim represented by the 2015 certificate. (¶ 13–15)
Held
- A recovery certificate gives a financial creditor a fresh cause to initiate CIRP within three years. The 2017 certificates therefore supported maintainability of the application filed in September 2019. (¶¶ 5, 10, 15)
- The January 2020 letter post-dated institution. Without appropriate averments or amended pleadings, neither acknowledgement nor a promise to pay could cure limitation in that pre-existing action; a qualifying promise could create an independent cause. (¶ 6–9)
- Prior DRT proceedings did not trigger an election barring CIRP. The remedies differed, and a moratorium would suspend enforcement proceedings. (¶ 11)
- The Appellate Tribunal must address the 2015 certificate as a deemed decree. If it could not support CIRP initiation, the Court’s Article 142 direction required its segregation and treatment by the committee of creditors as a claim following public announcement. (¶ 12–15)
Result
Appeal dismissed with the specified directions concerning the 2015 recovery certificate. Interim orders dissolved; no costs.