Saturday, 14 September 2019

Supreme Court: Non Payment Of Debt After Issuance Of Recovery Certificate Not A Continuing Wrong

 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.”

Following this judgment, it is clear that when the Recovery
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.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 11020 OF 2018

VASHDEO R BHOJWANI  Vs ABHYUDAYA CO-OPERATIVE BANK LTD 

Dated:September 02, 2019.
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 Cooperative
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 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 the said injury. If the
wrongful act causes an injury which is complete,
there is no continuing wrong even though the damage
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 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
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
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 doubt that is due and payable in law. We
allow the appeal and set aside the orders of the NCLT and NCLAT.
There will be no order as to costs.
.......................... J.
(ROHINTON FALI NARIMAN)
.......................... J.
(SURYA KANT)
New Delhi;
September 02, 2019.

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