9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (7) TMI 365 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - time limitation - Seeking condonation of delay of 358 days in filing of the application - Section 5 of the Limitation Act, 1963 - whether the delay caused in filing of an application under Section 9 of the Code can be condoned by filing an application under Section 5 of the Act? - HELD THAT - Although the issue is no more res-integra as it has been held in the cases of SESH NATH SINGH ANR. VERSUS BAIDYABATI SHEORAPHULI CO-OPERATIVE BANK LTD AND ANR. 2021 (3) TMI 1183 - SUPREME COURT that an application filed under Section 5 of the Act is maintainable. Section 3 of the Act deals with the Bar of limitation which says that every suit instituted, appeal preferred, and application made after the prescribed period shall be dismissed, although limitation has not been set up as a defence. - Since, there is no dispute that the period of limitation shall be three years from the date when the right to file accrues i.e. date when the default occurs, the Adjudicating Authority shall be well within its right not to entertain the application filed under Section 7 or 9 of the Code as the case may be but the delay, if any, can be condoned in terms of the Section 5 of the Act. Since Section 5 is an enabling provision for the purpose of extending the period of limitation for the suiter to pursue his claim made in the Code, it applies only in the case of application or appeal but it does not apply to a suit - the provisions of Section 5 of the Act shall apply to the application filed under Section 9 of the Code and hence, the order passed by the Adjudicating Authority is patently illegal and erroneous. It is not the case that the application has been dismissed by the Adjudicating Authority on the ground that the Appellant could not have shown sufficient cause for the purpose of seeking condonation of delay rather the case before us is that the Adjudicating Authority has dismissed the application only on the ground of maintainability - Appeal allowed.
Issues involved:
1. Condonation of delay in filing an application under Section 9 of the Insolvency and Bankruptcy Code, 2016. Detailed Analysis: 1. The appeal was against an order dismissing an application under Section 5 of the Limitation Act, 1963 seeking condonation of delay in filing an application under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Appellant, an Operational Creditor, alleged default in payment by the Corporate Debtor and filed the application under Section 9. The delay in filing was 358 days, leading to the dismissal of the application under Section 5 by the Adjudicating Authority. 2. The Appellant filed a Miscellaneous Application to amend the Memo of Appeal to challenge the subsequent order dated 04.12.2020, in addition to the initial order dated 25.09.2020. The Counsel for the Appellant argued that the application under Section 9 falls under the 3rd Division of the Schedule of the Limitation Act, making Section 5 applicable for condonation of delay. 3. The main issue was whether the delay in filing an application under Section 9 of the Code could be condoned by filing an application under Section 5 of the Act. The Counsel relied on Supreme Court decisions to support the maintainability of such applications under Section 5. 4. The Tribunal analyzed the provisions of the Limitation Act, emphasizing that the period of limitation is crucial and applications filed after the prescribed period should be dismissed. The trigger point for limitation in Insolvency and Bankruptcy Code applications is the date of default. 5. The Tribunal referred to Residuary Article 137 of the Limitation Act for applications with no specific limitation period, which allows a three-year period from the accrual of the right to apply. Section 5 of the Act enables the extension of the prescribed period if sufficient cause is shown. 6. The Tribunal concluded that Section 5 applies to applications or appeals but not to suits. Since the proceeding was initiated by filing an application under Section 9 of the Code, the provisions of Section 5 of the Act were deemed applicable. The Adjudicating Authority's dismissal based on maintainability was deemed incorrect. 7. The Tribunal allowed the appeal, set aside both orders, and remanded the matter to the Adjudicating Authority for reconsideration. No observation was made on the case's merits, and the Parties were directed to appear before the Adjudicating Authority on a specified date. 8. The Registry was directed to send a copy of the order to the concerned Adjudicating Authority for further action.
|
