Skip to main content

Application under IBC is not a suit, limitation is of 3 years as per Article 137 of the Limitation Act

In CIVIL APPEAL NO. 4952 OF 2019, GAURAV HARGOVINDBHAI DAVE vs ASSET RECONSTRUCTION COMPANY (INDIA)LTD., the Respondent No.2 was declared NPA on 21.07.2011 and an application Section 7 application filed under the Insolvency and Bankruptcy Code on 03.10.2017 and the date of the NPA was declared as 21.07.2011. NCLT allowed the application while applying Article 62 of the Limitation Act under which the limitation period was 12 years from the date on which the money suit has become due. NCLAT following its earlier judgments dismissed the appeal holding 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. Appeal was filed before Supreme Court against this order.

The appellants quoting Supreme Court judgment in B.K. Educational Services Private Limited vs. Parag Gupta and Associates, 2018 SCC OnLine SC 1921 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.

The Supreme Court held that Article 62 is not applicable here as 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. Agreeing with the appellant, the Supreme Court decided that 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.

Comments

Post a Comment

Most viewed this month

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more

Winding-Up Petition Can’t Be Used If Bona Fide Payment Disputes Pending

The Karnataka High Court, in the case of M/s Uttam Industrial Engineering Ltd vs  M/s Shree Basaveshwar Sugars Ltd, has held that a winding-up petition has serious  ramifications on the financial standing of a company and cannot be used in cases  where there is a bona fide dispute regarding the amount owed by one party to the  other and in such cases the company court should relegate the matter either to the  civil court or arbitral tribunal. In this case, Uttam Industrial Ltd entered into a contract with Basaveshwar Sugars Ltd  to provide machinery and equipment for a sugar plant. Article referred:  http://www.livelaw.in/remedy-winding-petition-cant-relied-upon-bona-fide-payment-disputes-karnataka-hc/
Post a Comment
Read more

A liquidator must pay GST on sale of assets of a defunct company

The West Bengal Authority of Advance Ruling has ruled that a National Company Law Tribunal appointed liquidator must have the GST registration till all liabilities cease to exist and that the liquidator must pay goods and services tax (GST) on sale of assets of a defunct company under liquidation, as the sale is effectively supply of goods. 
Post a Comment
Read more