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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

aforesaid  matter.   From  this  order,  a  Special  Leave

Petition was dismissed on 25.03.2017.

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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  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.

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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

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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.