BK Educational Services Pvt Ltd Vs. Parag Gupta and Associates (Civil Appeal No. 23988/2017) - Synopsis
Team SoOLEGAL 20 Oct 2020

In this particular case, BK Educational Services Pvt Ltd Vs. Parag Gupta and Associates (Civil Appeal No. 23988/2017), Supreme Court of India had answered some questions regarding the applicability of Limitation Act, 1963 in proceedings of Insolvency and Bankruptcy Code prior to its amendment which enacted in the year 2018. Section 238A has been inserted in Insolvency and Bankruptcy Code (Amendment) Act, 2018 and it states that “The provision of the Limitation Act, 1963 shall, as far as may be, apply to the proceedings or appeal before the Adjudicating Authority, the National Company Law Appellate Tribunal, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal, as the case may be”. The main issue which took place is that, whether the Limitation Act applies to applications made under Section 7 and Section 9 of the Code from its inception on 1st December 2016 to 6th June 2018, that is when the amendment of the act was enacted.
Supreme Court was of the view that the Limitation Act should apply to all NCLT proceedings and as per Section 238A, it should be applied in a reflective manner. The Court also held that right to sue accrues when a default happens. If the default happened more than three years past the date of registration of the application, the application will be forbidden according to Article 137 of the Limitation Act. Finally, Supreme Court had held that Limitation Act, 1963 will be applicable to the application which has been filed under section 7 and 9 of IBC by financial and operational creditors from the time when the principal act was enacted.

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