SC sets aside insolvency of Jignesh Shah’s firm

The Supreme Court (SC) on Wednesday set aside an order of the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT), thereby quashing the insolvency proceedings against Jignesh Shah and Pushpa Shah’s La-fin Financial Services.

A three-judge Bench of the high court said since the winding up petition filed by IL&FS Financial Services was more than three years after the debt had occurred, it had to be struck down since it did not pass the muster of time limitation mentioned in Article 137 of the Limitation Act.

The Limitation Act sets deadlines for different cases within which a petitioner must approach the court seeking justice, failing which the case can be stuck down by the court for falling outside limitation period. IL&FS Financial Services Limited, a subsidiary of Infrastructure Leasing & Financial Services (IL&FS), had filed a winding up petition against the La-fin for failing to honour a Letter of Undertaking (LOU) signed by the latter on behalf of its group company Multi-commodity Exchange (MCX).

In 2009, IL&FS Financial Services purchased 44.2 million equity shares of MCX Stock Exchange from MCX. After this agreement, La Fin gave a LOU to IL&FS Financial Services that either the former or it nominees “would offer to purchase from IL&FS Financial Services the shares of MCX-SX after a period of one year, but before a period of three years, from the date of investment”.

Apex court says petition moved by IL&FS Financial Services filed after three years, falls outside the limitation period