2024 (1) TMI 1266 - AT - Insolvency and Bankruptcy

Condonation of delay in filing the Appeal - ground taken in the Application for condonation is that the Order passed by the Adjudicating Authority was passed without giving an opportunity to the Appellant - Violation of principles of natural justice. Whether Appellant is entitled for benefit of Section 14 of the Limitation Act for excluding the period during which the two applications were pending before the Adjudicating Authority? HELD THAT - Hon ble Supreme Court in KALPRAJ DHARAMSHI ANR. VERSUS KOTAK INVESTMENT ADVISORS LTD. ANR. 2021 (3) TMI 496 - SUPREME COURT had occasion to consider Section 14 of the Limitation Act in reference to Appeal filed under Section 61 of the Code before the Appellate Tribunal. In the above case, Appeal was filed before the Appellate Tribunal against the Order dated 20th November, 2019 on 18.02.2020 - The Hon ble Supreme Court considered the submissions, noticed the ambit and scope of the Section 14 of the Limitation Act and after noticing the judgments of the Hon ble Supreme Court in MP. STEEL CORPORATION VERSUS COMMISSIONER OF CENTRAL EXCISE 2015 (4) TMI 849 - SUPREME COURT and CONSOLIDATED ENGG. ENTERPRISES VERSUS PRINCIPAL SECY. IRRIGATION DEPTT. ORS. 2008 (4) TMI 668 - SUPREME COURT held that benefit of Section 14 of the Limitation Act can be extended in Appeal filed under Section 61 of the IBC. Ultimately after elaborate discussion and after noticing the facts of the present case, it was held that Appellant was entitled to exclusion of period during which he was bona fide prosecuting before the High Court with due diligence. The judgment of Hon ble Supreme Court thus clearly establishes that benefit of Section 14 of the Limitation Act can be extended in Appeal filed under Section 61 of the IBC. Thus the applicability of Section 14 of the Limitation Act with regard to Appeal under Section 61 is no more res integra. Hon ble Supreme Court in Kalpraj Dharamshi has also held that even if Section 14 is not strictly applicable, the principles under Section 14 are attracted. Section 14 of the Limitation Act is applicable in IBC proceeding which is now settled by several judgments of the Hon ble Supreme Court as well as by virtue of Section 238A of the Code which clarifies about the applicability of limitation act. Thus, even Section 14 is not attracted the benefit of Section 5 of the limitation act can be extended and the cause can be considered for condonation of delay by applying Section 5 but in the IBC there is a cap on the jurisdiction in condoning the delay as per Section 61(2) proviso, jurisdiction to condone the delay is only of 15 days. Period during which application was pending before the Adjudicating Authority is not excluded under Section 14 of the Limitation Act, the delay in filing the Appeal is beyond 15 days which is not within condonable limit. Thus, delay is beyond 15 days and cannot be condoned. This Appeal has been filed challenging the Order beyond 45 days. The jurisdiction to condone the delay being limited to 15 days and having held that benefit of Section 14 of the Limitation Act cannot be extended to exclude period during which I.A. No. 2337 of 2023 and I.A. No. 3270 of 2023 remained pending before the Adjudicating Authority, the Delay Condonation Applications which prays condonation of 74 days delay deserves to be dismissed. Application dismissed.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Applicability of Section 14 of the Limitation Act for excluding the period during which applications were pending before the Adjudicating Authority.

Summary:

1. Condonation of Delay in Filing the Appeal:
The appellant filed an application (I.A. No. 5497 of 2023) for condonation of delay in filing the appeal against the order dated 20th March 2023 passed by the National Company Law Tribunal (NCLT), New Delhi Bench (Court-II). The appeal was e-filed on 2nd July 2023, resulting in a delay of 74 days. The appellant argued that the delay should be condoned as the order was passed without giving an opportunity to the appellant, who only gained knowledge of the order on 3rd April 2023. Subsequently, the appellant filed applications for recalling the order, which were dismissed for non-prosecution and later withdrawn.

2. Applicability of Section 14 of the Limitation Act:
The appellant contended that the period during which I.A. No. 2337 of 2023 and I.A. No. 3270 of 2023 were pending before the Adjudicating Authority should be excluded under Section 14 of the Limitation Act. The appellant argued that these applications were prosecuted in good faith and with due diligence, and hence, the delay in filing the appeal falls within the condonable period of 45 days.

The respondent, representing the Liquidator, opposed the application, arguing that the appellant is not entitled to the benefit of Section 14 of the Limitation Act. The respondent cited a judgment from the Tribunal in Harish Kumar vs. Solitaire Infomedia Private Limited & Anr., asserting that the period during which the applications were pending cannot be excluded, and the appeal was filed beyond the permissible delay period.

Tribunal's Analysis and Conclusion:
The Tribunal examined whether the appellant is entitled to the benefit of Section 14 of the Limitation Act. The Tribunal referred to several judgments, including Kalpraj Dharamshi Vs Kotak Investment Advisors Ltd., where the Supreme Court held that the benefit of Section 14 could be extended in appeals filed under Section 61 of the IBC.

The Tribunal identified five conditions necessary to attract Section 14:
1. Both prior and subsequent proceedings are civil proceedings prosecuted by the same party.
2. The prior proceeding was prosecuted with due diligence and in good faith.
3. The failure of the prior proceeding was due to a defect of jurisdiction or other cause of a like nature.
4. Both proceedings relate to the same matter in issue.
5. Both proceedings are in a court.

The Tribunal found that conditions (i), (ii), (iv), and (v) were fulfilled. However, condition (iii) was not met as the applications were dismissed for non-prosecution and withdrawn, not due to a defect of jurisdiction or other cause of a like nature. Therefore, the benefit of Section 14 could not be extended.

The Tribunal also considered whether the delay could be condoned under Section 5 of the Limitation Act but concluded that the delay exceeded the condonable limit of 15 days as stipulated under Section 61(2) of the IBC.

Final Decision:
The Tribunal dismissed the delay condonation application and consequently rejected the memo of appeal, as the appeal was filed beyond the permissible delay period.