2015 (9) TMI 1700 - HC - Indian Laws

Condonation of delay in filing appeal before the AAIFR - power of appellate authority to condone the delay - It was submitted that the period of 60 days expired on or around 15th September 2013 and the appeal was affirmed on 18th January 2014 and was actually filed 27th January 2014 which was clearly beyond the period of 60 days - HELD THAT - The order of BIFR was dated 17th July 2013. Considering the maximum period of 60 days available under the aforesaid provisions the appeal was required to be filed as per the submission on behalf of the petitioner latest by 15th September 2013. The appeal was however filed on 27th January 2014. It is stated by the petitioner that the appeal memo was affirmed on 18th January 2014 and the appeal was filed thereafter on 27th January 2014. The period prescribed in Section 25 being a period of 45 days extendable upto 60 days is a special period of limitation and therefore the contention was that the same was not further extendable or the delay was not condonable and the appeal was preferred after the expiry of the said period. The impugned order passed by the Appellate Authority for Industrial and Financial Reconstruction New Delhi cannot sustain for the only consideration that it does not contain reasons and does not deal with the various contentions of the parties and findings after considering all those contentions including the aspect of limitation raised by the petitioner. On the said ground alone the same is deserved to be set aside and it is hereby set aside - The proceedings of appeal are remanded to the appellate authority for rendering a fresh decision by it in accordance with law. While undertaking the exercise of deciding the appeal anew and passing a reasoned order thereupon the AAIFR shall give due opportunity of hearing to both the sides - Petition allowed by way of remand.

Summary

Issues Involved:
1. Maintainability of the appeal filed by Respondent No.1 before AAIFR due to limitation period.
2. Requirement of reasons in the order passed by AAIFR.
3. Rights and obligations of unsecured creditors under SICA.
4. Validity of the AAIFR's order permitting Respondent No.1 to proceed with its civil suit.

Issue-Wise Detailed Analysis:

1. Maintainability of the Appeal Filed by Respondent No.1 Before AAIFR Due to Limitation Period:
The petitioner contended that the appeal filed by Respondent No.1 before AAIFR was not maintainable as it was filed beyond the permissible period of limitation under Section 25 of the SICA Act. The petitioner argued that the appeal should have been filed within 45 days, extendable to a maximum of 60 days with sufficient cause, but the appeal was filed 190 days after the BIFR order. Respondent No.1 countered that the appeal period should start from the date the order was issued or communicated, which they claimed never occurred within the stipulated time. The court noted the importance of the exact issuance and communication of the order for computing the limitation period.

2. Requirement of Reasons in the Order Passed by AAIFR:
The court emphasized the necessity for the AAIFR to provide reasons in its orders, citing various Supreme Court judgments that underscore the importance of reasoned orders to ensure transparency, fairness, and accountability in judicial and quasi-judicial decisions. The impugned order by AAIFR was found to be a non-speaking order lacking detailed reasons, which is a fundamental requirement for any judicial or quasi-judicial decision-making process. The court highlighted that providing reasons helps in rationalizing the decision and ensuring that the decision-making process is transparent and accountable.

3. Rights and Obligations of Unsecured Creditors Under SICA:
The petitioner argued that under SICA, the consent of unsecured creditors is not required for sanctioning a rehabilitation scheme and that unsecured creditors must wait until the scheme is implemented to recover their dues. The petitioner also noted that Respondent No.1, being an unsecured creditor, had the option to either accept the scaled-down value of its dues or wait until the rehabilitation was complete to recover its debts. The BIFR had already permitted Respondent No.1 to approach the civil court for adjudication of its dues, with the condition that any decree would not be executed without prior BIFR approval.

4. Validity of the AAIFR's Order Permitting Respondent No.1 to Proceed with its Civil Suit:
The AAIFR's order allowing Respondent No.1 to proceed with its civil suit was challenged on the grounds that it modified the BIFR's sanctioned scheme without providing adequate reasons. The court found that the AAIFR's order did not address the various contentions raised by the parties, including the aspect of limitation and the specific provisions under SICA regarding the rights of unsecured creditors. The court concluded that the AAIFR's order was unsustainable due to the lack of detailed reasoning and directed that the appeal be reconsidered by the AAIFR with a reasoned order.

Conclusion:
The court set aside the AAIFR's order dated 17th September 2014 and remanded the appeal back to the AAIFR for a fresh decision. The AAIFR was directed to provide a reasoned order after giving due opportunity of hearing to both sides, and to complete this exercise within three months. The court clarified that it did not express any opinion on the merits of the case and that the AAIFR should decide the appeal independently based on its own merits and in accordance with the law.