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TMI Blog2022 (1) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... gent in prosecuting its remedies for recovery of its debt. To find out sufficient cause for condonation of delay, all facts, circumstances and sequence of events have to be taken into consideration. In the present case, it cannot be held that Financial Creditor i.e. State Bank of India was negligent in prosecuting the proceedings for recovery of its debt. It did initiate the proceedings under SARFAESI Act and also filed an Application for recovery of debt under Section 19 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 in the year 2014. The Corporate Debtor having acknowledged the liability in its balance sheet as on 31st March, 2015, the Financial Creditor shall have a fresh period of limitation, which came to an end only on 31st March, 2018 - In the facts and circumstances of the present case, the delay of less than two years period has been condoned by the Adjudicating Authority, exercising its discretion under Section 5 of the Limitation Act. It cannot be said that discretion exercised by Adjudicating Authority in condoning the delay is perverse or against any provisions of law or violates any principle of law for determining the sufficient cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CP(IB)1382/MB/2020 on 22nd January, 2020 before the Adjudicating Authority. An Application under Section 5 of the Limitation Act was also filed praying for condonation of delay by the Applicant. Section 5 Application stated that there was delay of 1392 days in filing the Application. (vii) The Application under Section 7 of the IB Code was filed by the State Bank of India on the ground that Corporate Debtor committed default to the extent of ₹ 681.87 crores. The State Bank of India has also lodged an FIR with the Central Bureau of Investigation on 30.09.2016 against the Corporate Debtor after declaring the account of Corporate Debtor as fraud. (viii) The Directors of the Corporate Debtor had by letter dated 16.05.2019 approached the State Bank of India with a compromise offer to settle the loan account, which offer was rejected by the Bank. (ix) The State Bank of India had put up Corporate Debtor s one of the property for sale through auction on 12.12.2019 and 26.02.2020, but no bids were received. (x) Notice was issued in the Section 7 Application to the Corporate Debtor, who appeared before the Adjudicating Authority and opposed the Application filed under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allenging the order of Adjudicating Authority admitting Section 7 Application of the State Bank of India against the Corporate Debtor. 5. The learned Counsel for the Appellant submits that there was no explanation for condoning the delay of 1392 days in filing Section 7 Application. By Section 238A, which was inserted in the IB Code from 06.06.2018, the applicability of principles of limitation for filing applications under Section 7 was more than clear and the contention of the Respondent that from 06.06.2018 to 22nd January, 2020, it was exploring the options available under the law for recovery of this dues cannot be accepted. The Adjudicating Authority has wrongly observed that delay is only 662 days, whereas the delay in filing the Application is 1392 days. 6. The State Bank of India has filed a reply. It is submitted on behalf of the State Bank of India that Appellant was not party in the proceedings before the Adjudicating Authority and it has filed the Appeal solely with the purpose of stalling the CIRP proceedings in respect of Corporate Debtor, as being one of the creditors, it is entitled to file its claim with the Resolution Professional. It was submitted that dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent is within the meaning of Section 18 of the Limitation Act. We, thus, do not find any error in the finding of Adjudicating Authority that delay is only 662 days. 10. The Adjudicating Authority has returned a finding that Applicant- State Bank of India had acted with due diligence and had shown sufficient cause. 11. Before proceeding further, we need to notice the expression sufficient cause as occurs in Section 5 of the Limitation Act, 1963. The Hon ble Supreme Court in (1987) 2 SCC 107 Collector, Land Acquisition, Anantnag and Anr. vs. Mst Katiji and Ors., has held that the expression sufficient cause is adequately elastic to enable the Courts to apply the law in a meaningful manner, which subserves the ends of justice, following has been laid down in paragraph 3: 3. The legislature has conferred the power to condone delay by enacting Section 5 [ Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atment and the law is administered in an even-handed manner. There is no warrant for according a step-motherly treatment when the State is the applicant praying for condonation of delay. In fact experience shows that on account of an impersonal machinery (no one in charge of the matter is directly hit or hurt by the judgment sought to be subjected to appeal) and the inherited bureaucratic methodology imbued with the note-making, file-pushing and passing-on-the-buck ethos, delay on its part is less difficult to understand though more difficult to approve. In any event, the State which represents the collective cause of the community, does not deserve a litigant-non-grata status. The courts therefore have to be informed with the spirit and philosophy of the provision in the course of the interpretation of the expression sufficient cause . So also the same approach has to be evidenced in its application to matters at hand with the end in view to do even-handed justice on merits in preference to the approach which scuttles a decision on merits. Turning to the facts of the matter giving rise to the present appeal, we are satisfied that sufficient cause exists for the delay. The order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to trigger the Code. 11. Having heard the learned counsel for both sides, it is important to first set out the reason for the introduction of Section 238-A into the Code. This is to be found in the Report of the Insolvency Law Committee of March 2018, as follows: 28. application of limitation act, 1963 28.1. The question of applicability of the Limitation Act, 1963 (the Limitation Act) to the Code has been deliberated upon in several judgments of NCLT and Nclat. The existing jurisprudence on this subject indicates that if a law is a complete code, then an express or necessary exclusion of the Limitation Act should be respected. [Ravula Subba Rao v. CIT, 1956 SCR 577 : AIR 1956 SC 604] In light of the confusion in this regard, the Committee deliberated on the issue and unanimously agreed that the intent of the Code could not have been to give a new lease of life to debts which are time-barred. It is settled law that when a debt is barred by time, the right to a remedy is time-barred. [Punjab National Bank v. Surendra Prasad Sinha, 1993 Supp (1) SCC 499 : 1993 SCC (Cri) 149 : AIR 1992 SC 1815] This requires being read with the definition of debt and claim in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own in paragraph 42: 42. It is thus clear that since the Limitation Act is applicable to applications filed under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted. The right to sue , therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application. 14. When we look into the facts of the present case and advert to the reasons given by State Bank of India for seeking condonation of delay, we cannot lose sight of the fact that after the account of the Corporate Debtor was declared NPA on 28th June, 2013, immediately i.e. in the next month itself i.e. 22nd July, 2013 notice under Section 13 sub-section (2) of SARFAESI Act, 2002 was given by the State Bank of India to the Corporate Debtor and thereafter under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 being O.A. No.726 of 2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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