VASHDEO R BHOJWANIversusABHYUDAYA CO-OPERATIVE BANK LTD & ANR.

                        [2019] 12 S.C.R. 75                              75


                     VASHDEO R BHOJWANI                                  A
                                  v.
      ABHYUDAYA CO-OPERATIVE BANK LTD & ANR.
                  (Civil Appeal No. 11020 of 2018)
                       SEPTEMBER 02, 2019                                B
          [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 –          C
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
                                                                         D
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]                      E
      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            F
      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)
                                                                         G
(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.                                                             H
                               75
76             SUPREME COURT REPORTS                          [2019] 12 S.C.R.


A          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
B    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
C    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.
D
           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.
E
           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:-

F              “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
G              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
H    Section 23 of the Limitation Act would apply as a result of which limitation
  VASHDEO R BHOJWANI v. ABHYUDAYA CO-OPERATIVE                                   77
        BANK LTD & ANR. [R. F. NARIMAN, J.]

would be saved in the present case. This contention is effectively               A
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         B
          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 the said injury. If the wrongful act causes an injury which is
          complete, there is no continuing wrong even though the damage          C
          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            D
          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            E
          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               F
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 debt that is due and payable in law. We allow the            G
appeal and set aside the orders of the NCLT and NCLAT. There will be
no order as to costs.


Kalpana K. Tripathy                                            Appeal allowed.
                                                                                 H