Gaurav Hargovindbhai Dave vs Asset Reconstruction Company (India) Limited

REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4952 OF 2019

GAURAV HARGOVINDBHAI DAVE Appellant(s)

VERSUS

ASSET RECONSTRUCTION COMPANY (INDIA)LTD.& ANR.Respondent(s)

J U D G M E N T

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 Signature Not Verified Digitally signed by R NATARAJAN Date: 2019.09.23 16:43:19 IST Reason: aforesaid matter. From this order, a Special Leave

Petition was dismissed on 25.03.2017.

2

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 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 Period of Time from suit limitation which period begins to run To enforce Twelve years When the payment of money money sued secured by a for becomes mortgage or due otherwise charged upon immovable property

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. 3

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.

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 4

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.

.......................... J.

(ROHINTON FALI NARIMAN)

.......................... J.

(R. SUBHASH REDDY)

.......................... J.

(SURYA KANT) New Delhi;

September 18, 2019.