Summary
A bank’s insolvency application filed in 2017 relied on a 1999 default and a 2001 recovery certificate. The tribunals treated non-payment as a continuing cause unaffected by limitation. Applying B.K. Educational Services and the distinction between continuing wrong and continuing effects, the Court held the application time-barred. The recovery certificate did not make the claim perpetually enforceable through insolvency proceedings.
Issues
- Whether continued non-payment prevented limitation from running against the insolvency application.
- Whether the continuing-wrong argument saved the application filed long after the recovery certificate.
Provisions considered
- Article 137, Limitation Act, 1963The three-year period applies to insolvency applications from accrual on default, subject to legally available condonation. (¶ 3)
Held
- B.K. Educational Services governed: the Limitation Act applied from the Code’s inception and an application based on a default over three years earlier was barred absent a basis for condonation. (¶ 3)
- A continuing wrong must itself supply continuing injury; persistence of the consequences of a completed wrong is insufficient. The 2001 recovery certificate marked a completed event from which limitation ran on the reasoning applied here, not an indefinitely continuing cause. (¶ 4)
- The time-barred claim was not a debt due and payable in law for the present insolvency application. (¶ 5)
Result
The appeal was allowed and the NCLT and NCLAT orders admitting and sustaining the insolvency application were set aside. No costs were ordered.