2021 (7) TMI 680 - AT - Insolvency and Bankruptcy

Condonation of delay of 241 days in filing the Company Petition - applicability of Section 5 of the Limitation Act, 1963 where there are cases of filing Company Petition beyond the limitation period - case of Appellant is that the Adjudicating Authority in the impugned Order had failed to appreciate that in as much as Section 238 A of the Insolvency and Bankruptcy Code, 2016 provides that the Limitation Act, 1963 shall apply as far as may be to the proceedings under the Code before the Adjudicating Authority or the Appellate Tribunal - HELD THAT - It is to be pointed out that Section 433 of the Companies Act and Section 238 of the I B Code apply to the Provisions of the Limitation Act, as far as may be. As such, the Limitation period mentioned in the Code will not apply notwithstanding anything to the contrary mentioned in the Limitation Act - Indeed, the Limitation Act, 1963 is applicable to all applications filed under Section 7 and 9 of the I B Code from the inception of the Code. Therefore, Article 137 of the Limitation Act, 1963 gets attracted. It is significantly pointed out that the condonation of delay cannot be claimed as a matter of right. Of course, the condonation of delay is a matter of discretion of the Court/Tribunal. It cannot be forgotten that limitation is a prescription of repose and unless the statute allows the Court, an element of discretion, by way of an application for condonation of delay, the Court/Tribunal has no power to find out a method in granting relief to a person who may appear to have suffered. When there is want of due care and attention or want of due diligence, the Tribunal may decline to entertain an application, as there is no sufficient cause for the delay. Notwithstanding the fact that the Limitation Act, 1963 is applicable to the Applications projected under Section 7 and 9 of the Code from the I B Code and hence, the ingredients of Article 137 of the Limitation Act, gets attracted. As such, the Right to sue accrues when a Default occurs and if the Default had occurred beyond three years, the Limitation period for filing of an application under Sections 7 and 9 starts sticking from the date of Default committed by the Corporate Debtor. Section 5 of the Limitation Act, 1963 may be pressed into service to condone the delay in filing necessary interlocutory application, in the considered opinion of this Tribunal. However, it is for the Applicant/Appellant to explain the delay that has occasioned to the subjective satisfaction of the Tribunal - In the instant case, this Tribunal is not subjectively satisfied as to the occurrence of the long and inordinate delay of 241 days and therefore, this Tribunal is not inclined to extend its helping hand of judicial arm of generosity , based on the facts and circumstances of the case which float on the surface. The Appeal is devoid of merits - Appeal dismissed.

Summary

Issues Involved:
1. Applicability of Section 5 of the Limitation Act, 1963 to proceedings under the Insolvency and Bankruptcy Code (IBC), 2016.
2. Whether the delay of 241 days in filing the Company Petition should be condoned.
3. Interpretation of 'sufficient cause' for condonation of delay.
4. Application of Section 14 of the Limitation Act, 1963 for exclusion of time.

Issue-wise Analysis:

1. Applicability of Section 5 of the Limitation Act, 1963 to proceedings under the Insolvency and Bankruptcy Code (IBC), 2016:
The Appellant contended that Section 238A of the IBC mandates the application of the Limitation Act, 1963 to proceedings under the Code. The Appellant argued that the Adjudicating Authority failed to appreciate this provision, which should allow for the condonation of delay under Section 5 of the Limitation Act.

2. Whether the delay of 241 days in filing the Company Petition should be condoned:
The Appellant sought condonation of a 241-day delay in filing the Company Petition. The Adjudicating Authority dismissed the application for condonation, stating that Section 5 of the Limitation Act does not apply to petitions filed beyond the limitation period under the IBC. The Appellant argued that the delay was due to complex legal scenarios and changes in judicial authority, which should be considered 'sufficient cause' for condonation.

3. Interpretation of 'sufficient cause' for condonation of delay:
The Appellant cited several judicial precedents to argue that 'sufficient cause' should be interpreted liberally to advance substantial justice. The Appellant referred to the Supreme Court's decisions in Sesh Nath Singh v. Baidyabati Sheoraphuli Co-operative Bank Ltd., N. Balakrishnan v. M. Krishnamurthy, Ram Nath Sao @ Ram Nath Sahu v. Gobardhan Sao, and GMG Engineering v. Isa Green Power Solution, which emphasize a liberal interpretation of 'sufficient cause' to avoid injustice due to procedural delays.

4. Application of Section 14 of the Limitation Act, 1963 for exclusion of time:
The Appellant argued that the time spent in pursuing remedies before other authorities and courts should be excluded under Section 14 of the Limitation Act. The Appellant contended that the period from the order of the High Court on 20.07.2015 to the operationalization of the IBC should be excluded, as the Appellant was pursuing remedies before the BIFR, which later abated with the coming into force of the IBC.

Analysis:
The Tribunal noted that the Limitation Act, 1963 applies to applications filed under Sections 7 and 9 of the IBC from the inception of the Code, attracting Article 137 of the Limitation Act. The Tribunal emphasized that condonation of delay is a matter of discretion and not a right. The Tribunal found that the Appellant had not satisfactorily explained the long and inordinate delay of 241 days. The Tribunal also noted that the 'right to sue' accrues when a default occurs, and if the default occurred beyond three years, the limitation period starts from the date of default.

Conclusion:
The Tribunal dismissed the appeal, stating that the Appellant had not provided a satisfactory explanation for the delay. The Tribunal was not inclined to condone the delay based on the facts and circumstances presented. The appeal was dismissed without costs, and connected interlocutory applications were closed.