# In the matter of Sabarmati Gas Limited vs. Shah Alloys Limited.

> SC judgment dated 2023-01-04. Citation: TCN-2023-SC-00105. This is an appeal against the final judgment dated 19.12.2019 of the National Company Law Appellate…

- **Court:** SC
- **Order date:** 4 Jan 2023
- **Citation:** TCN-2023-SC-00105
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/sabarmati-gas-limited-vs-shah-alloys-limited-df370d56

## Summary

### Background

This is an appeal against the final judgment dated 19.12.2019 of the National Company Law Appellate Tribunal (NCLAT), which dismissed the appeal preferred by Sabarmati Gas Limited against the order dated 27.06.2019 of the National Company Law Tribunal (NCLT), Ahmedabad Bench. The NCLT had dismissed the application filed by Sabarmati Gas Limited under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC), on the grounds of being barred by limitation and the existence of a pre-existing dispute between the parties. The dispute arises from a Gas Sales Agreement (GSA) between Sabarmati Gas Limited (appellant) and Shah Alloys Limited (respondent), where the appellant was obligated to supply natural gas. The respondent defaulted on payments, leading to the appellant

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## Facts

Sabarmati Gas Limited (appellant) and Shah Alloys Limited (respondent) entered into a Gas Sales Agreement (GSA) on 2008-05-30, where the appellant was to supply natural gas to the respondent. The respondent defaulted on payments from November 2011. The respondent approached the Board for Industrial and Financial Reconstruction (BIFR) and was declared a 'sick company' on 2010-08-31. The appellant stopped gas supply on 2012-08-07. The appellant sought permission from BIFR to initiate proceedings against the respondent, which was disposed of on 2015-09-09. The Sick Industrial Companies Act (SICA) was repealed on 2016-12-01. The appellant issued a demand notice on 2017-04-01 under Section 8 of the IBC, demanding payment of Rs. 4,71,56,094.76. The respondent replied on

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## Issues and analysis

### Issue 1: Whether in computation of the period of limitation in regard to an application filed under Section …

**Ratio:** The period of suspension of legal proceedings under Section 22(1) of SICA is excludable

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**Reasoning:** The court reasoned that Section 22(1) of SICA imposed a statutory bar on proceedings

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**Interpretation:** The court interpreted Section 22 of SICA to mean that there was a statutory bar

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**Application:** The court applied the ratio to the facts by stating that the delay in filing

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## Parties

- **Judges:** C.T. RAVI…
- **Appellants:** Sabarmati Gas…
- **Respondents:** Shah Alloys…

## Timeline

- **2008-05-30 — Gas Sales Agreement…**: Sabarmati Gas Limited and Shah Alloys Limited…
- **2010-08-31 — Declared Sick…**: Shah Alloys Limited was…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 62 — Appeal to Supreme Court](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-62)

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