The limitation for filing a company winding-up petition is triggered by the debtor's default, not by the filing of recovery suits.

JUDGMENT :

D.K. SINGH, J.

1. The present Original Side Appeal has been filed impugning the judgment and order dated 09.02.2024 passed in Company Petition No.231/2011 whereby the learned Company Court has allowed the company petition filed under section 433 (e) and (f) and 434(1) read with Section 439 of the COMPANIES ACT , 1956 (Hereinafter referred to as the 'Act, 1956' for short).

2. The Appellant Company had taken loan (cash credit), letter of credit and bank guarantee from the SBI Bank for a sum of Rs.1,05,00,000/- (Rupees One Crore Five Lakhs only). The Appellant Company failed to discharge its loan liability. The outstanding amount rose to a sum of Rs.3,91,50,487/- (Rupees Three Crore Ninety One Lakh Fifty thousand Four hundred and Eighty seven only) as on 10.10.2011.

3. The said loan liability was assigned by the SBI vide the agreement dated 23.03.2006 in favour of the Kotak Mahindra Bank.

4. It appears that the SBI has also filed an original application in O.A.No.525/2002 before the DRT, Bengaluru. The said OA is still pending for final adjudication.

5. When the said OA was pending, respondent No.1-the Kotak Mahindra Bank has filed the company petition No.231/2011 for winding up of the Appellant Company on the ground that the Appellant Company has failed to discharge its liability towards the loan advanced by the SBI.

6. The only question which arises for consideration in this appeal is whether the company petition filed by the respondent-Bank is within the limitation as prescribed under Article 137 of the LIMITATION ACT , 1963 i.e., within the three years from the date of right to file company petition.

7. Section 238A of the Insolvency And Bankruptcy Code, 2016 specifically provides that provisions of LIMITATION ACT would apply to the Company Petition as well.

8. Section 238A of the Insolvency And Bankruptcy Code, 2016, on reproduction reads as hereunder:

238A. Limitation.

"The provisions of the LIMITATION ACT , 1963 (36 of 1963) shall, as far as may be, apply to the proceedings or appeals before the Adjudicating Authority, the National Company Law Appellate Tribunal, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal, as the case may be."

9. The Supreme Court has an occasion to consider the applicability of the LIMITATION ACT , 1963, in proceedings under Section 433 of COMPANIES ACT , 1956, in the case of JIGNESH SHAH AND ANOTHER VS UNION OF INDIA AND ANOTHER reported in (2019) 10 SCC 750 .

10. Paragraphs 13, 21 and 28 of the said judgment which are relevant are extracted hereunder:

"13. Dr Singhvi relied upon a number of judgments in which proceedings under Section 433 of the COMPANIES ACT , 1956 had been initiated after suits for recovery had already been filed. These judgments have held that the existence of such suit cannot be construed as having either revived a period of limitation or having extended it, insofar as the winding up proceeding was concerned. Thus, in Hariom Firestock Ltd. v. Sunjal Engg. (P) Ltd., a Single Judge of the Karnataka High Court, in the fact situation of a suit for recovery being filed prior to a winding-up petition being filed, opined: (SCC OnLine Kar para 8)

"8. …To my mind, there is a fallacy in this argument because the test that is required to be applied for purposes of ascertaining whether the debt is in existence at a particular point of time is the simple question as to whether it would have been permissible to institute a normal recovery proceeding before a civil court in respect of that debt at that point of time. Applying this test and dehors that fact that the suit had already been