GAURAV HARGOVINDBHAI DAVE versus ASSET RECONSTRUCTION COMPANY (INDIA) LTD. & ANR. on 18 September 2019

1. In the present case, the Respondent No.2 was declared NPAon 21.07.2011. At that point of time, the State Bank of India filed twoO.As in the Debt Recovery Tribunal in 2012 in order to recover a totaldebt of 50 Crores of rupees. In the meanwhile, by an assignment dated28.03.2014, the State Bank of India assigned the aforesaid debt toRespondent No.1. The Debt Recovery Tribunal proceedings reachedjudgment on 10.06.2016, the Tribunal holding that the O. As filed beforeit were not maintainable for the reasons given therein.

2. As against the aforesaid judgment, Special Civil ApplicationNos. 10621-10622 were filed before the Gujarat High Court whichresulted in the High Court remanding the aforesaid matter. From thisorder, a Special Leave Petition was dismissed on 25.03.2017.

3. An independent proceeding was then begun by RespondentNo.1 on 03.10.2017 being in the form of a Section 7 application filedunder the Insolvency and Bankruptcy Code in order to recover the originaldebt together with interest which now amounted to about 124 Crores ofrupees. In the Form-I that has statutorily to be annexed to the Section 7

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Aapplication 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 appliedArticle 62 of the Limitation Act which reads as follows:-

Applying the aforesaid Article, the NCLT reached the conclusionthat since the limitation period was 12 years from the date on which themoney suit has become due, the aforesaid claim was filed within limitationDand hence admitted the Section 7 application. The NCLAT vide theimpugned judgment held, following its earlier judgments, that the time oflimitation would begin running for the purposes of limitation only on andfrom 01.12.2016 which is the date on which the Insolvency andBankruptcy Code was brought into force. Consequently, it dismissed theappeal.E

4. Mr. Aditya Parolia, learned counsel appearing on behalf of theappellant has argued that Article 137 being a residuary article wouldapply on the facts of this case, and as right to sue accrued only on andfrom 21.07.2011, three years having elapsed since then in 2014, theSection 7 application filed in 2017 is clearly out of time. He has alsoFreferred to our judgment inB.K. Educational Services Private Limitedvs. Parag Gupta and Associates, 2018 SCC OnLine SC 1921 in orderto buttress his argument that it is Article 137 of the Limitation Act whichwill apply to the facts of this case.

5. Mr. Debal Banerjee, learned Senior Counsel, appearing onGbehalf of the respondents, countered this by stressing, in particular, para7 of the B.K. Educational Services Private Limited (supra)andreiterated the finding of the NCLT that it would be Article 62 of theLimitation Act that would be attracted to the facts of this case. Hefurther argued that, being a commercial Code, a commercial interpretationHhas to be given so as to make the Code workable.

GAURAV HARGOVINDBHAI DAVE v. ASSET RECONSTRUCTIONCOMPANY (INDIA) LTD. [R. F. NARIMAN, J.]

6. Having heard the learned counsel for both sides, what isapparent is that Article 62 is out of the way on the ground that it wouldonly apply to suits. The present case being “an application” which isfiled under Section 7, would fall only within the residuary article 137. Asrightly 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 theapplication filed under Section 7 would clearly be time-barred. So far asMr. Banerjee’s reliance on para 7 ofB.K. Educational Services PrivateLimited (supra),suffice it to say that the Report of the Insolvency LawCommittee itself stated that the intent of the Code could not have beento 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 possiblyhelp the case of the respondents. Further, it is not for us to interpret,commercially or otherwise, articles of the Limitation Act when it is clearthat a particular article gets attracted. It is well settled that there is noequity about limitation - judgments have stated that often time periodsprovided by the Limitation Act can be arbitrary in nature.

8. This being the case, the appeal is allowed and the judgments ofthe NCLT and NCLAT are set aside.

Kalpana K. Tripathy

Appeal allowed.

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