NCLAT: Intervention Application Filed After Three-Year Limitation Period in Voluntary Liquidation Not Maintainable
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Principal Bench at New Delhi, comprising Justice Rakesh Kumar Jain (Judicial Member) and Mr. Indevar Pandey (Technical Member), has held that an intervention application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC), filed beyond the prescribed limitation period of three years, cannot be entertained. The ruling came in an appeal filed by the Corporate Person through its Liquidator, challenging the order passed by the National Company Law Tribunal (NCLT) that had allowed a creditor to intervene at the stage when the dissolution application under Section 59(7) of the IBC was pending consideration.
The appeal arose in the context of voluntary liquidation proceedings of M/s Nextgen Procon Pvt. Ltd., where M.R.A. Associates Pvt. Ltd. sought to intervene based on an invoice dated 18.09.2015, claiming an unpaid amount of ₹49,32,917/-. The agreement between the parties, dated 10.02.2013, pertained to quality surveying and project management services, which was later terminated within 18 months. The Corporate Person disputed the invoice amount through its email dated 18.11.2015, citing that the services were rendered only partially and were not in accordance with the contract terms.
Despite several communications, including a reply by the Corporate Person on 16.03.2016 to a notice under Section 434 of the Companies Act, and two demand notices issued by the Respondent under Section 8 of the IBC, the Respondent did not initiate proceedings under Section 9. Subsequently, the Corporate Person commenced voluntary liquidation proceedings in 2018, and the Appellant (Liquidator) published the public announcement for submission of claims on 07.02.2018, fixing 07.03.2018 as the last date for submitting claims. The Respondent, however, did not file any claim within this timeframe.
Following the completion of the liquidation process—including distribution of proceeds to stakeholders, closure of the liquidation bank account on 04.05.2019, and submission of the final report to the RoC and IBBI on 23.05.2019—the Liquidator filed an application for dissolution under Section 59(7) of the Code on 28.05.2019. On the same date, the Respondent sent an email referring to the invoice dated 18.09.2015 and expressed intent to file its claim, but no claim or proof of claim was submitted. Instead, an intervention application under Section 60(5) of the IBC was filed on 28.08.2019.
The NCLT initially dismissed the intervention application as time-barred. However, in a prior appeal, the Appellate Tribunal had remanded the matter to the NCLT for fresh consideration of an email dated 18.07.2016, allegedly containing an admission of liability by the Corporate Person. After reconsideration, the NCLT allowed the intervention, prompting the present appeal by the Liquidator.
The Appellant argued that the intervention application was filed beyond the three-year limitation period applicable under Article 137 of the Limitation Act, 1963. It was submitted that even if the limitation was calculated from the date of the invoice (18.09.2015), or from subsequent acknowledgements including emails dated 18.11.2015 or 18.07.2016, the period expired much before the filing date of 28.08.2019. Specifically, the Tribunal observed that “if the limitation is counted from 18.09.2015 when the invoice was raised it would expire on 18.09.2018 and if it is to be counted from 18.07.2016 even then the same expired on 17.07.2019 whereas the application... was filed on 28.08.2019.”
It was further contended that the Respondent never filed a formal claim before the Liquidator nor placed a proof of claim on record before the Tribunal. The only action was the filing of an intervention application, which was not maintainable after the voluntary liquidation process had been concluded and the application for dissolution was already pending. The Appellant asserted that once the process under Section 59, including preparation of the final report and remittance of funds, was complete, no claim could be entertained, and there was no adjudicatory function left for the Tribunal akin to the processes under Part II of the Code.
On the other hand, the Respondent argued that the Tribunal had merely allowed intervention without adjudicating on the merits of the claim and that the email dated 18.07.2016 extended the limitation period. It was also submitted that the Respondent qualified as a creditor under Section 59(3)(c) and that its claim was legitimate.
After examining the factual background and legal position, the NCLAT held that limitation for such an application falls under Article 137 of the Limitation Act and carries a limitation period of three years. It noted that the Liquidator had invited claims through a public notice on 07.02.2018, with a deadline of 07.03.2018. Despite being aware of the claim since 2015, the Respondent neither filed any proof of claim nor pursued legal remedies in time. The Tribunal emphasized that permitting an intervention at this late stage would disrupt the finality of the liquidation process and defeat the object of a time-bound mechanism.
The Appellate Tribunal concluded that the NCLT had committed an error in entertaining the intervention application filed on 28.08.2019, which was clearly beyond the limitation period. The Tribunal observed that “in our considered opinion, the Tribunal has committed an error in entertaining the application for intervention filed by the Respondent despite the fact that it was beyond the period of limitation of three years.” Accordingly, the appeal was allowed, and the impugned order permitting the intervention was set aside.
Appearance
For Appellant: Mr. Arpit Dwivedi, Advocate.
For Respondents: Mr. Saurabh Kalia & S. Shishir, Advocates.
Cause Title: Nextgen Procon Pvt. Ltd. (Through Its Liquidator Rajesh Panayanthatta) V. M.R.A Associates Pvt. Ltd.
Case No: Comp. App. (AT) (Ins) No. 1894 of 2024
Coram: Justice Rakesh Kumar Jain [Judicial Member], Mr. Indevar Pandey [Technical Member]
