Full Judgment Text
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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
st
since 1 December, 2016, therefore, the right to
st st
apply accrued to 1 Respondent on 1 December,
2016. Therefore, we hold that the application
under Section 7 was not barred by limitation.”
Signature Not Verified
Digitally signed by R
NATARAJAN
Date: 2019.10.01
17:12:34 IST
Reason:
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.