BABULAL VARDHARJI GURJAR versus VEER GURJAR ALUMINIUM INDUSTRIES PVT. LTD. & ANR.

BABULAL VARDHARJI GURJAR versus VEER GURJAR ALUMINIUM INDUSTRIES PVT. LTD. & ANR.

The Court held that applications under Section 7 of the IBC are governed by Article 137 of the Limitation Act (three years from accrual of right), the right to apply accrues on the date of default (date when debt became due and payable), and where the Section 7 application affirmatively pleads an earlier date of default (here 08.07.2011) and no pleading/evidence of any acknowledgment resetting limitation under Section 18 was made, the application filed in March 2018 was barred by limitation and must be rejected.

Parties
Appellant: Babulal Vardharji Gurjar; Corporate Debtor: Veer Gurjar Aluminium Industries Pvt. Ltd.; Financial Creditor: JM Financial Assets Reconstruction Company Pvt. Ltd.
Jurisdiction
India
Judgment Date
14 August 2020
Procedural Posture
Civil Appeal / Appeal From NCLAT Against NCLT Order
Outcome
Appeal allowed
Legal Topics
Limitation, Section 7 IBC, Section 238 a IBC, Section 18 Limitation Act, Acknowledgment of Debt, Date of Default, Corporate Insolvency Resolution Process (cirp), Mortgage Security
Insolvency and Bankruptcy Code, 2016 Limitation Act, 1963 Companies Act, 2013 Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 Recovery of Debts Due to Banks and Financial Institutions Act, 1993 Limitation Section 7 IBC Section 238 a IBC +5 more

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Parties

Babulal Vardharji Gurjar

Appellant

Veer Gurjar Aluminium Industries Pvt. Ltd.

Corporate Debtor

JM Financial Assets Reconstruction Company Pvt. Ltd.

Financial Creditor

Procedural Posture

Civil Appeal / Appeal From NCLAT Against NCLT Order

Legal Issues

  1. 1 Whether the application under Section 7 of the IBC is barred by limitation
  2. 2 Whether Article 137 of the Limitation Act governs limitation for Section 7 applications
  3. 3 Whether acknowledgments in balance sheets invoke Section 18 of the Limitation Act to extend limitation

Ratio Decidendi

The Court held that applications under Section 7 of the IBC are governed by Article 137 of the Limitation Act (three years from accrual of right), the right to apply accrues on the date of default (date when debt became due and payable), and where the Section 7 application affirmatively pleads an earlier date of default (here 08.07.2011) and no pleading/evidence of any acknowledgment resetting limitation under Section 18 was made, the application filed in March 2018 was barred by limitation and must be rejected.

Court Disposition

Appeal allowed

Orders

  • Impugned order of NCLAT dated 14.05.2019 set aside
  • Order of NCLT dated 09.08.2018 admitting the Section 7 application set aside