VASHDEO R BHOJWANI versus ABHYUDAYA CO-OPERATIVE BANK LTD & ANR.

Citation: [2019] 12 S.C.R. 75 · Decided: 02-09-2019 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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VASHDEO R BHOJWANI
v.
ABHYUDAYA CO-OPERATIVE BANK LTD & ANR.
(Civil Appeal No. 11020 of 2018)
SEPTEMBER 02, 2019
[R. F. NARIMAN AND SURYA KANT, JJ.]
Limitation Act, 1963:
s.23 and Article 137 – Applicability of the Limitation Act – To
the application u/s.7 of Insolvency and Bankruptcy Code, 2016 –
It was held in the impugned order that as the default continued, no
period of limitation would be attracted – Appeal to Supreme Court
– Held: Limitation Act is applicable to the applications filed u/s.7 –
Petition u/s. 7 filed after 3 years from the date of default, would be
barred u/Art. 137 of the Limitation Act – The limitation would not
be saved by virtue of s.23 of the Limitation Act – Appeal allowed –
Insolvency and Bankruptcy Code, 2016 – s.7.
B.K. Educational Services Private Limited vs. Parag
Gupta and Associates, 2018 (14) SCALE 482;
Balkrishna Savalram Pujari and Others vs. Shree
Dnyaneshwar Maharaj Sansthan & Others, [1959]
Suppl. 2 S.C.R. 476 – relied on.
Case Law Reference
2018 (14) SCALE 482
relied on
Para 3
[1959] Suppl. 2 S.C.R. 476
relied on
Para 4
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 11020
of 2018
From the Judgment and Order dated  05.09.2018  of the National
Company Law Appellate Tribunal, New Delhi in Company Appeal (AT)
(Insolvency) No. 372 of 2018
Anand Landge, Jay Kishor Singh, Advs. for the Appellant.
Rajeev K. Panday, Rajeev Maheshwaranand Roy, P. Srinivasan,
Hrishikesh Chitaley, Ashish Verma, Chandra Prakash, Advs. for the
Respondents.
 [2019] 12 S.C.R. 75
75
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SUPREME COURT REPORTS
[2019] 12 S.C.R.
The Judgment of the Court was delivered by
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. 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
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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 which creates a continuing source of injury and renders
the doer of the act responsible and liable for the continuance
of t

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