1

REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 11020 OF 2018

VASHDEO R BHOJWANI                                 Appellant(s)

                               VERSUS

ABHYUDAYA CO-OPERATIVE BANK LTD & ANR.             Respondent(s)

J U D G M E N T

R.F. Nariman, J.

1) In the facts of the present case, at the relevant time, a

default of Rs. 6.7 Crores was found as against the respondent No.2.

The  respondent  No.2  had  been  declared  a  NPA  by  Abhyudaya  Co-

operative  Bank  Limited  on  23.12.1999.   Ultimately,  a  Recovery

Certificate dated 24.12.2001 was issued for this amount.  A Section

7 petition was filed by the Respondent No.1 on 21.07.2017 before

the NCLT claiming that this amount together with interest, which

kept ticking from 1998, was payable to the respondent as the loan

granted  to  Respondent  No.2  had  originally  been  assigned,  and,

thanks  to  a  merger  with  another  Cooperative  Bank  in  2006,  the

respondent became a Financial Creditor to whom these moneys were

owed.  A petition under Section 7 was admitted on 05.03.2018 by the

NCLT,  stating  that  as  the  default  continued,  no  period  of

limitation would attach and the petition would, therefore, have to

be admitted.

2

2) An  appeal  filed  to  the  NCLAT  resulted  in  a  dismissal  on

05.09.2018, stating that since the cause of action in the present

case was continuing no limitation period would attach.  It was

further held that the Recovery Certificate of 2001 plainly shows

that there is a default and that there is no statable defence.   

3) Having heard learned Counsel for both parties, we are of the

view that this is a case covered by our recent judgment in  B.K.

Educational  Services  Private  Limited vs.  Parag  Gupta  and

Associates,  2018  (14)  Scale  482,  para  27  of  which  reads  as

follows:-

“27. It is thus clear that since the Limitation Act is applicable to applications filed under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted. “The  right  to  sue”,  therefore,  accrues  when  a default  occurs.  If  the  default  has  occurred  over three  years  prior  to  the  date  of  filing  of  the application, the application would be barred under Article 137 of the Limitation Act, save and except in  those  cases  where,  in  the  facts  of  the  case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application.”  

4) In order to get out of the clutches of para 27, it is urged

that Section 23 of the Limitation Act would apply as a result of

which  limitation  would  be  saved  in  the  present  case.   This

contention is effectively answered by a judgment of three learned

Judges of this Court in Balkrishna Savalram Pujari and Others vs.

Shree  Dnyaneshwar  Maharaj  Sansthan  &  Others,  [1959]  Supp.  (2)

S.C.R. 476.  In this case, this Court held as follows:

“… …. In dealing with this argument it is necessary to bear in mind that s.23 refers not to a continuing right  but  to  a  continuing  wrong.  It  is  the  very essence  of  a  continuing  wrong  that  it  is  an  act

3

which  creates  a  continuing  source  of  injury  and renders the doer of the act responsible and liable for  the  continuance  of  the  said  injury.  If  the wrongful  act  causes  an  injury  which  is  complete, there is no continuing wrong even though the damage resulting from the act may continue. If, however, a wrongful act is of such a character that the injury caused  by  it  itself  continues  then  the  act constitutes a continuing wrong. In this connection it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described as the effect of the said injury. It is only  in  regard  to  acts  which  can  be  properly characterised as continuing wrongs that s.23 can be invoked.  Thus  considered  it  is  difficult  to  hold that  the  trustees’  act  in  denying  altogether  the alleged  rights  of  the  Guravs  as  hereditary worshippers and in claiming and obtaining possession from them by their suit in 1922 was a continuing wrong.  The decree obtained by the trustees in the said  litigation  had  injured  effectively  and completely  the appellants’ rights though the damage caused by the said decree subsequently continued...” (at page 496)

Following  this  judgment,  it  is  clear  that  when  the  Recovery

Certificate dated 24.12.2001 was issued, this Certificate injured

effectively and completely the appellant’s rights as a result of

which limitation would have begun ticking.   

5) This being the case, and the claim in the present suit being

time barred, there is no doubt that is due and payable in law.  We

allow the appeal and set aside the orders of the NCLT and NCLAT.

There will be no order as to costs.

   .......................... J.     (ROHINTON FALI NARIMAN)

   .......................... J.          (SURYA KANT)

New Delhi; September 02, 2019.