2021 (2) TMI 1147 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP by Operational Creditors - Adjudicating Authority has dismissed the application under Section 9 of IBC filed by the Operational Creditor (Appellant) as being barred by limitation of time - non-fulfilment of conditions of Limitation Act - HELD THAT - Under Sub-Section 2 of Section 14 of the Limitation Act in computing the period of limitation exclusion of time can be claimed when in the court of first instance or of Appeal or revision against the same party and for the same relief such proceedings are prosecuted in good faith which the said court is unable to entertain from defect of jurisdiction or other cause of like nature - Admittedly the Appellant was not party in the winding up Petition. Thus this case may be of non-joinder of parties and not the mis-joinder of parties. The Petition was dismissed by the Hon ble High Court on the ground that the question of fact involved in the petition as to whether the Respondent Company is liable to pay the amount or not which can only be proved by detailed evidence. Thus the Appellant has not fulfilled any of the conditions enumerated in Sub-Section 2 of Section 14 of the Limitation Act - thus it is not correct to accept the contention of the Appellant that the winding-up petition No.6 of 2015 was dismissed on the ground of mis-joinder of parties and the benefit of Section 14 of the Limitation Act 1963 cannot be allowed to appellant. Date of filing application under Section 9 of the IBC - HELD THAT - In the impugned order the winding up petition was filed in the High Court of Allahabad on 10.7.2015. Since it was taken up for hearing we accept that the winding up petition was filed within three years from the date of default which appears to be 12.7.2012 (which is the date of clearing of the last payment cheque dated 10.6.2012). Since the benefit of Section 14 of the Limitation Act 1963 is not available to the Appellant and no exclusion of time period spent in prosecuting the winding-up petition is possible the time period starting from the date of default i.e. 12.07.2012 to the date of filing of application under Section 9 of IBC i.e. 06.01.2020 needs to be explained for deriving the benefit of extension of limitation under Section 5 of Limitation Act 1963. Relaxation under Section 5 of the Limitation Act 1963 cannot be allowed for unexplained period of about two years and ten months. The delay in filing the application was not adequately explained as required in law - application filed by the Appellant under Section 9 of the IBC is very clearly out of limitation - appeal dismissed.

Summary

Issues Involved:
1. Whether the application under Section 9 of the IBC was barred by limitation.
2. Whether the time spent in prosecuting the winding-up petition should be excluded under Section 14 of the Limitation Act, 1963.
3. Whether the delay in filing the application under Section 9 of the IBC can be condoned under Section 5 of the Limitation Act, 1963 due to the illness of the authorized signatory.

Issue-Wise Detailed Analysis:

1. Whether the application under Section 9 of the IBC was barred by limitation:
The Adjudicating Authority dismissed the application under Section 9 of the IBC filed by the Operational Creditor as being barred by limitation. The last payment received was on 12.07.2012, and the application under Section 9 was filed on 06.01.2020. The Appellant argued that the period during which the winding-up petition was being prosecuted in good faith should be excluded in accordance with Section 14 of the Limitation Act, 1963. However, the Tribunal found that the application under Section 9 was clearly out of limitation.

2. Whether the time spent in prosecuting the winding-up petition should be excluded under Section 14 of the Limitation Act, 1963:
The Appellant contended that the period spent prosecuting the winding-up petition before the High Court of Allahabad should be excluded under Section 14 of the Limitation Act, 1963. The Tribunal noted that the winding-up petition was dismissed on merits and not on the ground of misjoinder of parties. The Tribunal concluded that the Appellant did not fulfill the conditions enumerated in Sub-Section 2 of Section 14 of the Limitation Act, as the petition was dismissed due to the inability to prove the liability of the Respondent Company.

3. Whether the delay in filing the application under Section 9 of the IBC can be condoned under Section 5 of the Limitation Act, 1963 due to the illness of the authorized signatory:
The Appellant argued that the authorized signatory was ill and indisposed, which prevented the timely filing of the application under Section 9 of the IBC. The Tribunal considered the illnesses and granted a maximum extension of one hundred eighty days (180) days. However, the Tribunal found that the Appellant failed to explain the delay of about two years and ten months convincingly. Consequently, the Tribunal did not grant relaxation under Section 5 of the Limitation Act, 1963 for the unexplained period.

Conclusion:
The Tribunal concluded that the application filed by the Appellant under Section 9 of the IBC was barred by limitation. The time spent in prosecuting the winding-up petition could not be excluded under Section 14 of the Limitation Act, 1963, and the delay due to the illness of the authorized signatory was not adequately explained to warrant condonation under Section 5 of the Limitation Act, 1963. As a result, the appeal was dismissed with no order as to costs.