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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7673 OF 2019

SAGAR SHARMA & ANR.                               Appellant(s)

                               VERSUS

PHOENIX ARC PVT. LTD. & ANR.                      Respondent(s)

J U D G M E N T

R. F.  Nariman,  J.

1) By  our  judgment  dated  11.10.2018  in  B.K.  Educational

Services Private Limited vs. Parag Gupta and Associates (2018

SCC OnLine SC 1921 in paragraphs 2, 20, 38, 43, 48 & 49) we had

made it clear that the Insolvency and Bankruptcy Code’s coming

into force on 01.12.2016 is wholly irrelevant to the triggering

of  any  limitation  period  for  the  purposes  of  the  Code.

However, we find that in the impugned judgment the following

statement is made:

“13. Admittedly, ‘I&B Code’ has come into force

since 1st December, 2016, therefore, the right to

apply accrued to 1st Respondent on 1st December,

2016.  Therefore, we hold that the application

under Section 7 was not barred by limitation.”

2) We  had  also  made  it  clear  beyond  any  doubt  that  for

applications that will be filed under Section 7 of the Code,

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Article 137 of the Limitation Act will apply.  However, we find

in the impugned judgment that Article 62 (erroneously stated to

be Article 61) was stated to be attracted to the facts of the

present case, considering that there was a deed of mortgage

which was executed between the parties in this case.  We may

point out that an application under Section 7 of the Code does

not  purport  to  be  an  application  to  enforce  any  mortgage

liability.  It is an application made by a financial creditor

stating that a default, as defined under the Code, has been

made, which default amounts to Rs. 1,00,000/- (one lakh) or

more which then triggers the application of the Code on settled

principles that have been laid down by several judgments of

this Court.

3) Article 141 of the Constitution of India mandates that

our judgments are followed in letter and spirit.  The date of

coming into force of the IBC Code does not and cannot form a

trigger point of limitation for applications filed under the

Code.  Equally, since “applications” are petitions which are

filed under the Code, it is Article 137 of the Limitation Act

which will apply to such applications.

4) Accordingly, we set aside the judgment under appeal and

direct that the matter be determined afresh.  It will be open

for both sides to argue the case on facts on the footing that

Article 137 of the Limitation Act alone will apply.   

5) The appeal is allowed in the aforesaid terms.

6) The NCLT order dated 29.01.2019 shall remain stayed until

further orders from the NCLAT.

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7) Mr.  Rakesh  Dwivedi,  learned  Senior  Counsel,  wishes  to

raise a plea based on Section 22 of the Limitation Act before

the NCLAT.  We record this statement.   

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

  .......................... J.              (V. RAMASUBRAMANIAN)

New Delhi; September 30, 2019.