Court extends limitation period for insolvency petitions in light of Supreme Court's COVID-19 directives
In a landmark judgment, the Bombay High Court, presided over by Justice Jitendra Jain, ruled in favor of M/s. M. A. Castle Infrastructure Company in an insolvency petition case. The judgment, delivered on April 2, 2026, extends the limitation period for filing insolvency petitions under Section 12(1)(c) of the Presidency Towns Insolvency Act, 1909, in light of the Supreme Court's directions during the COVID-19 pandemic.
The case involved a petition filed by Anil Kainya, the petitioning creditor, against M/s. M. A. Castle Infrastructure Company, a partnership firm, and its partners, for failing to comply with a consent decree to hand over flats or pay a sum of Rs. 7.45 crores with interest. The issue arose when the insolvency petition was filed after the standard three-month period due to the COVID-19 pandemic.
The court addressed several pivotal issues, including whether the service of an insolvency notice on different dates for the firm and its partners should be considered for calculating the limitation period and whether the Supreme Court's directions on the extension of limitations apply to the preconditions of filing insolvency petitions.
Justice Jain concluded that the service on one partner or the firm is deemed valid for all partners, according to Rule 152 of the Bombay (Presidency Towns) Insolvency Rules, 1910. Thus, the act of insolvency is considered from the earliest date of service. Furthermore, the court determined that the Supreme Court's directions in "Cognizance for Extension of Limitation" extend not only to limitation periods but also to statutory preconditions, thereby validating the petition filed within the extended timeframe.
The judgment also emphasized that during the pandemic, courts were deemed "closed," allowing creditors to benefit from the proviso to Section 12(1)(c) of the Presidency Towns Insolvency Act, 1909. This ruling marks a significant precedent in interpreting insolvency laws during unprecedented times.
The decision underscores the judiciary's role in adapting legal interpretations to ensure justice amidst global crises, reaffirming the extended timeframes granted by the Supreme Court for judicial and quasi-judicial proceedings during COVID-19.
Bottom Line:
The limitation period for filing an insolvency petition under Section 12(1)(c) of the Presidency Towns Insolvency Act, 1909, stands extended in light of the Supreme Court's directions in "Cognizance for Extension of Limitation" during the COVID-19 pandemic.
Statutory provision(s):
Presidency Towns Insolvency Act, 1909 Sections 12(1)(c), 9(2); Bombay (Presidency Towns) Insolvency Rules, 1910 Rule 152; Limitation Act, 1963; Supreme Court directions in "Cognizance for Extension of Limitation."
M/s. M. A. Castle Infrastructure Company v. Anil Kainya, (Bombay) : Law Finder Doc id # 2877957
