Gaurav Hargovindbhai Dave v. Asset Reconstruction Company (india) Ltd. & Anr.
The Judgement of the Court was delivered by
R. F. NARIMAN, J.
1. In the present case, the Respondent No.2 was declared NPA
on 21.07.2011. At that point of time, the State Bank of India filed two
O.As in the Debt Recovery Tribunal in 2012 in order to recover a total
debt of 50 Crores of rupees. In the meanwhile, by an assignment dated
28.03.2014, the State Bank of India assigned the aforesaid debt to
Respondent No.1. The Debt Recovery Tribunal proceedings reached
judgment on 10.06.2016, the Tribunal holding that the O. As filed before
it were not maintainable for the reasons given therein.
2. As against the aforesaid judgment, Special Civil Application
Nos. 10621-10622 were filed before the Gujarat High Court which
resulted in the High Court remanding the aforesaid matter. From this
order, a Special Leave Petition was dismissed on 25.03.2017.
3. An independent proceeding was then begun by Respondent
No.1 on 03.10.2017 being in the form of a Section 7 application filed
under the Insolvency and Bankruptcy Code in order to recover the original
debt together with interest which now amounted to about 124 Crores of
rupees. In the Form-I that has statutorily to be annexed to the Section 7
GAURA V HARGOVINDBHAI DA VE v. ASSET RECONSTRUCTION
COMPANY (INDIA) LTD.
application in Column II which was the date on which default occurred,
the date of the NPA i.e. 21.07.2011 was filled up. The NCLT applied
Article 62 of the Limitation Act which reads as follows:-
Description of suit Period of
limitation
Time from which
period begins to run
To enforce payment of
money secured by a
mortgage or otherwise
charged upon
immovable property
Twelve
years
When the
money sued
for becomes
due
Applying the aforesaid Article, the NCLT reached the conclusion
that since the limitation period was 12 years from the date on which the
money suit has become due, the aforesaid claim was filed within limitation
and hence admitted the Section 7 application. The NCLAT vide the
impugned judgment held, following its earlier judgments, that the time of
limitation would begin running for the purposes of limitation only on and
from 01.12.2016 which is the date on which the Insolvency and
Bankruptcy Code was brought into force. Consequently, it dismissed the
appeal.
4. Mr. Aditya Parolia, learned counsel appearing on behalf of the
appellant has argued that Article 137 being a residuary article would
apply on the facts of this case, and as right to sue accrued only on and
from 21.07.2011, three years having elapsed since then in 2014, the
Section 7 application filed in 2017 is clearly out of time. He has also
referred to our judgment in B.K. Educational Services Private Limited
vs. Parag Gupta and Associates , 2018 SCC OnLine SC 1921 in order
to buttress his argument that it is Article 137 of the Limitation Act which
will apply to the facts of this case.
5. Mr. Debal Banerjee, learned Senior Counsel, appearing on
behalf of the respondents, countered this by stressing, in particular, para
7 of the B.K. Educational Services Private Limited (supra) and
reiterated the finding of the NCLT that it would be Article 62 of the
Limitation Act that would be attracted to the facts of this case. He
further argued that, being a commercial Code, a commercial interpretation
has to be given so as to make the Code workable.
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6. Having heard the learned counsel for both sides, what is
apparent is that Article 62 is out of the way on the ground that it would
only apply to suits. The present case being “an application” which is
filed under Section 7, would fall only within the residuary article 137. As
rightly pointed out by learned counsel appearing on behalf of the appellant,
time, therefore, begins to run on 21.07.2011, as a result of which the
application filed under Section 7 would clearly be time-barred. So far as
Mr. Banerjee’s reliance on para 7 of B.K. Educational Services Private
Limited (supra), suffice it to say that the Report of the Insolvency Law
Committee itself stated that the intent of the Code could not have been
to give a new lease of life to debts which are already time-barred.
7. This being the case, we fail to see how this para could possibly
help the case of the respondents. Further, it is not for us to interpret,
commercially or otherwise, articles of the Limitation Act when it is clear
that a particular article gets attracted. It is well settled that there is no
equity about limitation - judgments have stated that often time periods
provided by the Limitation Act can be arbitrary in nature.
8. This being the case, the appeal is allowed and the judgments of
the NCLT and NCLAT are set aside.
Kalpana K. Tripathy Appeal allowed.
GAURA V HARGOVINDBHAI DA VE v. ASSET RECONSTRUCTION
COMPANY (INDIA) LTD. [R. F. NARIMAN, J.]