Name of student: N Rohit Mohun Raju

Registration Number: 20DBALB033

Programme: B.A., L.L.B

Semester: 5th semester

Course Name: Banking Law

Course Code: 5BAL523

Component: Case Study

Date of submission: 12-10-2022

Submitted to: Prof. Anuja Paul

 B.K Educational Services Pvt Ltd vs Parag Gupta and
Associates

Introduction

In a recent decision, the Supreme Court of India, while continuing to close several
loopholes in the Insolvency and Bankruptcy Code, 2016 ("Code"), determined an
important legal question pertaining to the meaning of Section 5(20) of the Code,
which defines "operational creditor."

Since its enactment in 2016, the Insolvency & Bankruptcy Code (IBC) has greatly
strengthened the ability of stakeholders to maximize recovery through India's
insolvency regime.

Facts and Arguments

· Section 238A of the Insolvency and Bankruptcy Code, 2016, which was added by the
Insolvency and Bankruptcy Code (Second Amendment) Act, 2018, with effect from
06.06.2018, was examined on October 11 in the matter of B.K. Educational Services
Private Limited v. Parag Gupta and Associates. According to Section 238A, "Actions
or appeals before the Adjudicating Authority, the National Company Law Appellate
Tribunal, the Debt Recovery Tribunal, or the Debt Recovery Appellate Tribunal shall,
to the extent permitted by law, be governed by the provisions of the Limitation Act,
1963 (36 of 1963)." This case was the result of several appeals filed against various
NCLAT limitations rulings before the Report was published, one of which being the
Speculum Plast Pvt. Ltd.

· The Limitation Act is certainly relevant to the IBC, the Supreme Court went on to
rule, and this was the court's decision even without referring to the Second
Amendment. The Supreme Court added, however, that such applicability would be
restricted to the IBC's beginning.
· The plaintiff argued that Section 238A must be deemed retroactive because,
according to the Insolvency Law Committee's March 2018 Report, the Amendment
Act's goal in including Section 238A in the Code was to clarify the law.

· They further contended that the law of limitation in the context of procedure must be
taken to apply retroactively in every instance. They referenced many judgements,
which will be quoted later in this opinion, in support of this claim.

· ICICI Bank & Anr, that the Code is a full Code dealing with insolvency and not debt
collection, and that, as a result, the periods of limitation that are indicated therein
would establish that the Limitation Act would not apply. In any event, the Limitation
Act cannot apply to the NCLT since it is a tribunal and not a court, as has been stated
in several decisions of this Court.

· Argument made that because Section 238 of the Code states that it applies
"notwithstanding anything conflicting therewith contained in any other law for the
time being in effect," it must also be applied to keep an intrusive statute like the
Limitation Act out.

Issues

whether the Limitation Act is applicable to requests submitted in accordance with

Sections 7 and/or 9 of the Code from its inception on December 1, 2016, until June 6,
2018—the date the Amendment Act entered into force.

Judgement

According to a ruling by the Supreme Court, Article 137 of the Limitation Act is
triggered since petitions submitted under Sections 7 and 9 of the Code have been
subject to the Limitation Act since the Code's establishment. The Court effectively
decided that beginning on December 1, 2016, applications made under Sections 7
and/or 9 of the Code will be covered by Section 238A of the Act. There is no issue
with the judgement at this point because it further said that art. 238A must be
established as retrospective in order to achieve its goals for the statute of limitations
to be applied.

Conclusion and Analysis

The Supreme Court of India has made progress in eliminating gaps in the Insolvency
Laws with the aforementioned decision. By deciding that consumers, not merely
suppliers or service providers, are operational creditors, the Court was able to
address another disagreement regarding operational debt and operational creditors.
It was also declared that for a debt to be subject to the provisions of the Code, it had
to be both due and paid.

Additionally, evidence suggests that on the day the application for a loan under
sections 7, 9, or 10 of the I &B Code is filed, there must be debt and default. It has
nothing to do with the I&B Code's start date. Therefore, when a default occurs, "the
right to sue" becomes available against the corporate debtor. Defaults that happened
previous to the implementation of the I&B Code are also eligible to cause insolvency.
There is no obstacle for the petitioner/financial creditor to initiate proceedings under
the Insolvency and Bankruptcy Code, 2016, concurrently with the initiation of
proceedings before the Debt Recovery Tribunal, even though the application would
be barred if the default occurred more than three years prior to the date of filing
under Article 137 of the Limitation Act.