The National Company Law Tribunal dismissed State Bank of India’s ₹430.12 crore personal insolvency application under Section 95 of the Insolvency and Bankruptcy Code, holding it was barred by limitation. The bank failed to justify the delay or establish grounds for condonation of delay.
NCLT Rejects SBI’s Personal Insolvency Application Over Limitation
The National Company Law Tribunal (NCLT) dismissed a ₹430.12 crore personal insolvency application filed by the State Bank of India (SBI) under Section 95 of the Insolvency and Bankruptcy Code (IBC), ruling that it was filed beyond the statutory limitation period and without sufficient grounds for condonation of delay. The tribunal held that SBI failed to discharge its burden of justifying the inordinate delay in initiating proceedings.
Section 95 of the IBC permits financial creditors to initiate insolvency proceedings against individuals and proprietary firms. However, such applications are subject to the limitation period prescribed under the Limitation Act, 1963—typically three years from the date of default. The NCLT observed that SBI did not provide a valid explanation for the delay and further failed to demonstrate "sufficient cause" under Section 5 of the Limitation Act to warrant condonation.
The Tribunal held that "the applicant has not established any grounds which could justify the extension of limitation period," emphasizing strict adherence to procedural timelines in insolvency matters.
This decision reinforces the importance of timely initiation of insolvency proceedings under the IBC framework. Practitioners must ensure that personal insolvency applications under Section 95 are filed within the limitation period and accompanied by compelling evidence if seeking condonation of delay. The ruling may have implications for other legacy cases involving delayed creditor applications.
Citations
- Insolvency and Bankruptcy Code, 2016, Section 95
- Limitation Act, 1963, Section 5
