Judgment Summaries (Supreme Court) Sagar Sharma v. Phoenix ARC

  February 27, 2022

Case Summary:

Sagar Sharma & Anr. v. Phoenix Arc Pvt. Ltd. & Anr.

{Supreme Court of India; September 30, 2019}

ABBREVIATIONS & ACRONYMS USED

Committee of Creditors CoC
Corporate Debtor CD
Corporate Insolvency Resolution Process CIRP
Financial Creditor FC
The Insolvency and Bankruptcy Board of India IBBI
Insolvency and Bankruptcy Code, 2016 the Code
National Company Law Appellate Tribunal NCLAT
National Company Law Tribunal NCLT
Operational Creditor OC

 

The Court began by discussing judgement rendered by the Supreme Court in the case of B.K. Educational Services Private Limited vs. Parag Gupta and Associates wherein it was held that the Code had come into force without becoming the trigger point of beginning of a limitation period for the Code. Article 137 of the Limitation Act, 1963 was applicable to applications filed under the Code, including the Section 7 application filed in the present case, since these ‘applications’ are a form of ‘petitions’.

The impugned judgement was found to erroneously hold that since the Code was enacted only on December 1, 2016, the Section 7 application filed by the FC was not barred by limitation. Further, it applied Article 62 of the Limitation Act, 1963 to the application made under Section 7 of the Code. The same was held to be erroneous because a Section 7 application is an application filed by an FC in the event of default and cannot enforce a mortgage liability.

The judgement was set aside and the matter was to be decided afresh by NCLAT applying Article 137 of the Limitation Act.

 

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Related Posts