2011 (3) TMI 1484 - HC - Companies Law

Whether the appellant had notice of the decree and the delay has been satisfactorily explained? Held that - The learned single judge did not keep in view the averments in the rejoinder filed by the appellant. In any event, in view of the BIFR proceedings, the effect of the decree passed has to be considered. We are of the view that even though the delay is a long range of delay, the same has been satisfactorily explained by the appellant and the order of the learned single judge is liable to be interfered with. Appeal allowed.

Summary

Issues:
- Condonation of delay in filing an application to set aside an ex parte decree.
- Effect of the Sick Industrial Companies (Special Provisions) Act, 1985 on court proceedings.
- Consideration of sufficient cause for delay under section 5 of the Limitation Act, 1963.

Analysis:
1. The appeal stemmed from the dismissal of an application under section 5 of the Limitation Act, 1963, by a learned single judge, declining to condone a delay of 1,932 days in filing to set aside an ex parte decree dated April 5, 2005.

2. The appellant argued that the proceedings were affected by the Sick Industrial Companies (Special Provisions) Act, 1985, as the company was declared sick by the BIFR, leading to a bar under section 22 of the SICA, which should have influenced the delay condonation decision.

3. The respondent contended that the delay was inadequately explained, citing a letter sent in 2006 requesting settlement of dues, which the appellant allegedly received but did not act upon promptly, indicating knowledge of the decree.

4. The court emphasized the need to establish sufficient cause for delay under section 5 of the Limitation Act, focusing on the appellant's awareness of the decree and the diligence in addressing it promptly.

5. The legal principles governing the condonation of delay were underscored, emphasizing the importance of a satisfactory explanation, vigilance in protecting rights, and the liberal construction of "sufficient cause" to advance substantial justice.

6. The appellant's argument rested on the fact that the employee who received the letter notifying of the decree had left the company before the alleged receipt, indicating a lack of notice and justifying the delay.

7. Ultimately, the court found that the delay had been satisfactorily explained by the appellant, considering the circumstances and the impact of BIFR proceedings, leading to the setting aside of the earlier order and allowing the appeal.

This detailed analysis showcases the legal intricacies involved in the judgment, focusing on the key issues of delay condonation, statutory provisions affecting court proceedings, and the application of legal principles to determine sufficient cause for delay under the relevant laws.