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TMI Blog2023 (4) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... and Bankruptcy Code, 2016 has been filed in this Tribunal on 07.01.2023 (e-filed) challenging the order dated 08.10.2021 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Court No.-I in I.A. No. 1921 of 2021 in C.P. (IB) No. 494/MB/2019. The limitation for filing an Appeal under Section 61 is 30 days and under proviso to Section 61(1) the jurisdiction of this Tribunal to condone the delay is of only 15 days. In the application for condonation of delay, condonation of delay has been sought relying on Section 14 of the limitation Act. 2. Before we consider the respective submissions of learned counsel for the parties, brief facts giving rise to this Appeal and application for condonation of Appeal needs to be noted: i. A Memorandum of Understanding dated 28.06.2004 was executed between the Shree Ram Urban Infrastructure Ltd. (Corporate Debtor), Kalpataru Properties Pvt. (Respondent No.1 to this Appeal) and Vijay Infrastructure Technology Pvt. Ltd. (a sister concern of the Corporate Debtor) for sale of a plot of land measuring 20,955.40 sq. m. situated at Plot No. 5A of Lower Parel Division of District Mumbai City. ii. An Arbitral Award dated 29. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order was passed by this Tribunal on 28.10.2021. Challenging the interim order dated 28.10.2021, the Respondent No.1 filed Civil Appeal No. 7050 of 2022 before the Hon'ble Supreme Court, where the Hon'ble Supreme Court disposed of the Appeal on 14.11.2022. Following order was passed by the Hon'ble Supreme Court: "C.A. No. 7050/2022 Learned senior counsel for the appellant, on instructions states that the appellant is willing to bring in the money in terms of the arbitral award, approximately Rs.75.30 crores in the corporate debtors' account and the Resolution Professional will execute the sale deed on the said amount being so deposited. He submits on instructions that the amount will be deposited within 10 days. On the aforesaid statement taken on record, learned counsel for respondent no. 1 who is the appellant before the NCLAT submit that if the amount is brought in, the sale deed can be executed by the Resolution Professional and the appeal filed by the Respondent No. 1 before the NCLAT would stand withdrawn. In view of the aforesaid, we direct as under: 1) The amount be deposited within a period of 10 days stipulated, as aforesaid; 2) On the amount being depos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mment on the merits of the order of the NCLT at the behest of an intervener. We further make it clear that we are not expanding the array of parties before the NCLAT as a number of entities seems to have jumped into the picture as the matter has gone on before this Court. We make it clear that only the parties/existing interventionist before the NCLAT will have the right of hearing. In view of the orders passed in Civil Appeal No.9062/2022, this appeal will also to be listed before the Bench presided over by the Chairman. In view thereof, the final picture which would emerge would be before the NCLAT and to that extent the order passed by us on 14.11.2022 would be kept in abeyance till the NCLAT resolves the issue. List on 07.02.2023." xiii. In pursuance of the order passed by the Hon'ble Supreme Court dated 09.12.2022, the Company Appeal (AT) (Ins.) No. 880 of 2021 alongwith I.A. No. 2623 of 2021 was heard by this Tribunal and decided by judgment dated 03.01.2023. By judgment dated 03.01.2023, Company Appeal (AT) (Ins.) No. 880 of 2021 was dismissed as withdrawn and I.A. No. 2623 of 2021 was rejected. xiv. Against the judgment of this Tribunal dated 03.01.2023, the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be granted by this Tribunal, hence, the order passed by this Tribunal on 03.01.2023 in I.A. No.2623 of 2021 is covered within the expression 'other cause of like nature' occurring in Section 14 of the Limitation Act. 8. Shri Arun Kathpalia, learned senior counsel for the Respondent No.1 refuted the submissions of learned counsel for the Appellant and submits that Appellant cannot claim benefit of Section 14 of the Limitation Act in facts of the present case. Order dated 08.10.2021 was passed by the Adjudicating Authority allowing the application filed by the Respondent No.1 directing for execution of the sale deed by the Resolution Professional, which was well within knowledge of the Appellant. Appellant chose not to file an appeal against the said order in this Tribunal and only filed an Intervention Application, which Intervention Application came to be rejected by this Tribunal on 03.01.2023. It is submitted that the Appellant is not entitled for claiming any benefit under Section 14 of the Limitation Act. Ingredients of Section 14 of the Limitation Act are not attracted in the present case. The Appellant cannot be said to be prosecuting the I.A. bona fide or with due diligence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it. (3) Notwithstanding anything contained in rule 2 of Order XXIII of the Code of Civil Procedure, 1908 (5 of 1908), the provisions of sub-section (1) shall apply in relation to a fresh suit instituted on permission granted by the court under rule 1 of that Order where such permission is granted on the ground that the first suit must fail by reason of a defect in the jurisdiction of the court or other cause of a like nature. Explanation.- For the purposes of this section,- (a) in excluding the time during which a former civil proceeding was pending, the day on which that proceeding was instituted and the day on which it ended shall both be counted; (b) a plaintiff or an applicant resisting an appeal shall be deemed to be prosecuting a proceeding; (c) misjoinder of parties or of cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is to advance public welfare. In other words as observed by Crawford in his book on Statutory Constructions the entire legislative process is influenced by considerations of justice and reason. Justice and reason constitute the great general legislative intent in every piece of legislation. Consequently where the suggested construction operates harshly, ridiculously or in any other manner contrary to prevailing conceptions of justice and reason, in most instances, it would seem that the apparent or suggested meaning of the statute, was not the one intended by the law- makers. In the absence of some other indication that the harsh or ridiculous effect was actually intended by the legislature, there is little reason to believe that it represents the legislative intent."" 15. In the judgment of Hon'ble Supreme Court which arose out of Insolvency and Bankruptcy Code, 2016 i.e. "(2021) 10 SCC 401, Kalpraj Dharamshi & Anr. vs. Kotak Investment Advisors Ltd. & Anr.", Hon'ble Supreme Court while considering the question of applicability of principles under Section 14 of the Limitation Act in an appeal filed under Section 61 of I&B Code has held that principles underlying Section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied while considering exclusion of period under Section 14. Thus, we proceed to examine the contentions of the parties on the premise that principles underlying Section 14 are also attracted in an appeal filed under Section 61 of I&B Code. 17. For taking benefit of Section 14 of the Limitation Act several conditions need to be fulfilled cumulatively. In Kalpraj Dharamshi (supra), the Hon'ble Supreme Court relying on its earlier judgment in "(2008) 7 SCC 169, Consolidated Engineering Enterprises vs. Principal Secretary, Irrigation Department and others", in Para 59 has noted conditions which may be satisfied before Section 14 can be pressed into service, which is to the following effect: "59. The conditions that are required to be fulfilled for invoking the provisions of Section 14 of the Limitation Act have been succinctly spelt out in various judgments of this Court including the one in Consolidated Engineering Enterprises vs. Principal Secretary, Irrigation Department and others, which read thus: "21. "Section 14 of the Limitation Act deals with exclusion of time of proceeding bona fide in a court without jurisdiction. On analysis of the said section, it becomes evident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due diligence another civil proceeding, whether in a Court of first instance or in a Court of Appeal, against the defendant shall be excluded, where the proceeding is founded upon the same cause of action and is prosecuted in good faith in a Court which, from defect of jurisdiction, or other cause of a like nature, is unable to entertain it. (2) ......................................... Explanation I........................ Explanation II ...................... Explanation III. - For the purpose of this section misjoinder of parties or of causes of action shall be deemed to be a cause of a like nature with defect of jurisdiction." The High Court having found that the present claim of the plaintiffs was also included in the previous suit the condition that the previous proceeding should be founded upon the same cause of action must be held to have been satisfied. The High Court has further held that the previous suit had been prosecuted in good faith and with due diligence. In order to attract the applicability of Section 14(1), therefore, all that has to be determined is whether the court in which the previous suit was filed was unable to entertain the claim relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of until the statutory conditions laid down had been satisfied or fulfilled." 20. The Hon'ble Supreme Court in the same judgment further held that the words "or other cause of a like nature" must be construed liberally. In Para 7 following has been held: "7. It is well settled that although all questions of limitation must be decided by the provisions of the Act and the courts cannot travel beyond them the words "or other cause, of a like nature" must be construed liberally. Some clue is furnished with regard to the intention of the legislature by the Explanation III in Section 14(2). Before the enactment of the Act in 1908 there was a conflict amongst the High Courts on the question whether misjoinder and non-joinder were defects which were covered by the words "or other cause of a like nature". It was to set at rest this conflict that Explanation III was added. An extended meaning was thus given to these words. Strictly speaking misjoinder or non- joinder of parties could hardly be regarded as a defect of jurisdiction or something similar or analogous to it." 21. Next judgment to be noticed is judgment of Hon'ble Supreme Court in "(1975) 4 SCC 628, Roshanlal Kuthalia and ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the submission of the learned senior counsel, filing of civil writ petition claiming money relief cannot be said to be a proceeding instituted in good faith and secondly, dismissal of writ petition on the ground that it was not an appropriate remedy for seeking money relief cannot be said to be "detect of jurisdiction or other cause of a like nature' within the meaning of Section 14 of the Limitation Act. It is true that the writ petition was not dismissed by the High Court on the ground of defect of jurisdiction. However, Section 14 of the Limitation Act is wide in its application, inasmuch it is not confined in its applicability only to cases of defect of jurisdiction but it is applicable also to cases where the prior proceedings have failed on account of other causes of like nature. The expression "Other cause of like nature" came up for the consideration of this Court in Roshanlal Kuthalia and Ors. v. R.B. Mohan Singh Oberoi [(1975) 4 SCC 628] and it was held that Section 14 of the Limitation Act is wide enough to cover such cases where the defects are not merely jurisdictional strictly so called but others more or less neighbours to such deficiencies. Any circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more clear by the explicit language of Section 14 by which a civil proceeding can even be a revision which may be to a quasi-judicial tribunal under a particular statute." 24. Last judgment relied by learned counsel for the Appellant is Kalpraj Dharamshi (supra), in which case after order of the NCLT dated 28.11.2019, KIAL filed a Writ Petition before the Bombay High Court, which Writ Petition was dismissed by the High Court on 28.01.2020 on the ground that KIAL had an alternate and efficacious remedy of filing an appeal before NCLAT. Thereafter, KIAL filed appeals before NCLAT on 18.02.2020. The Appeals were allowed by NCLAT vide its judgment dated 05.08.2020, which judgment was challenged before the Hon'ble Supreme Court in the Civil Appeals, which were decided by the Hon'ble Supreme Court. One of the arguments which was raised before the Hon'ble Supreme Court was that appeal was barred by time, which argument was repelled holding that the KIAL was entitled to the benefit of principles underlying Section 14. In Para 65 and 78, the Hon'ble Supreme Court laid down following: "65. In Consolidated Engineering Enterprises31, it has been observed, that while considering the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment relegating KIAL to the alternate remedy available to it in law. As such, the conditions which enable a party to invoke the provisions of Section 14 of the Limitation Act are very much available to KIAL. If the period during which KIAL was bona fide prosecuting the writ petition before the High Court and that too with due diligence, is excluded applying the principles underlying Section 14 of the Limitation Act, the appeals filed before NCLAT would be very much within the limitation. We find, that KIAL would be entitled to exclusion of the period during which it was bona fide prosecuting the remedy before the High Court with due diligence." 25. From the law laid down by Hon'ble Supreme Court, it is clear that principles underlying Section 14 can be claimed in appeal filed under Section 61 of I&B Code also by the Appellant. 26. After noticing the law on the subject, we now come to the condition which is required to be fulfilled for extending the benefit of Section 14 i.e. whether the Court in earlier proceeding prosecuted was unable to entertain it for defect of jurisdiction or other cause of like nature. The key words are "unable to entertain it". 27. We may first examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation No. 2623 of 2021 was considered on merits in the judgment of this Tribunal, relevant case laws cited by the counsel for the Intervenor was noted and considered. After detailed consideration of judgment of Hon'ble Supreme Court relied by learned counsel for the Intervenor, ultimately, the following conclusion was recorded in Para 38 of the judgment, which is to the following effect: "38. In view of the fore-going discussions, we are of the considered opinion that at the instance of intervener, the order passed by the Adjudicating Authority dated 08.10.2021 cannot be set aside. We although have permitted the applicant to intervene in the Appeal but are unable to grant any relief to intervention as prayed in the Application. We are thus of the view that prayer of the appellant -Indiabulls Housing Finance Ltd. to withdraw the Appeal is to be allowed and the Appeal is to be dismissed as withdrawn." 30. The judgment dated 03.01.2023, thus, in result, dismissed the Company Appeal (AT) (Ins.) No. 880 of 2021 as withdrawn and has rejected the I.A. No. 2623 of 2021. The rejection of the I.A. was after consideration on the merit of the I.A. and entitlement of the Intervenor in the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am, AIR 1949 Pat 362 (C). 5. In our opinion, the contention advanced on behalf of the appellant must be given effect to. We have no doubt that Section 14 of the Limitation Act has no application to the facts of this case and the plaintiff is not entitled to the benefit of that section. Before that section can apply, the prior proceeding must have been founded upon the same cause of action as that on which the later suit is founded and the Court in which the prior proceeding was prosecuted must have been unable to entertain it for the reasons specified, namely, defect of jurisdiction or other cause of a like nature. Now the words 'which, from defect of jurisdiction, or other cause of a like nature, is unable to entertain it' which occur in Section 14(1) of the Limitation Act are very significant. As pointed out by Mukherjee, J. (as he then was), in AIR 1945 Cal 381 (B), the word 'entertain' means to admit for consideration. It does not mean giving relief, and that when a suit or proceeding is not thrown out in limine but the Court receives it for consideration and disposal according to law, it must be regarded as entertaining the suit or proceeding, no matter w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al available under Section 61 of the I&B Code and challenge the said order. It is well settled that in Insolvency and Bankruptcy Code timelines have its own importance and relevance. When Section 61 provides that right to appeal to be exercised within a prescribed period of 30 days with power to condone the delay of only 15 days, the party who chose not to file an appeal, comes after 400 days for filing an appeal cannot be said to be acting with due diligence. The Appellant is a Financial Creditor of the Corporate Debtor who is an entity backed by large number of advisors and consultants. The remedy of appeal and an intervention application in an appeal are entirely different. When Appellant chose not to file appeal challenging order dated 08.10.2021 and chose to file Intervention Application in an appeal filed by the another creditor it cannot be said that it was prosecuting the proceeding with due diligence. 34. By filing an Intervention Application, the Appellant could not have prayed for setting aside order dated 08.10.2021 it has already been held by this Tribunal in its judgment dated 03.01.2023, which also received approval of the Hon'ble Supreme Court. It is relevant that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 14 are attracted when a claimant is prosecuting "another civil proceeding" the use of expression "another civil proceeding" as occuring in Section 14(1) and 14(2) is for definite purpose and object. 19. We have already noticed above the Judgement of the Hon'ble Supreme Court in "Kalpraj Dharamshi" (supra) where it has been held that authority underlying Section 14 should be applied to its fullest extent and time taken diligently pursuing a remedy in a wrong Court should be excluded. Present is not a case where Applicant can claim that he had filed I.A. No. 145/2022 in a wrong Court. The IA was filed before the same Adjudicating Authority in the same proceeding being CP (IB) No. 107/ALD/2019 in which Impugned Order was passed. The applicability of principle of res judicata may be invoked on different stages of the same proceedings but we have not come across any authority/precedent where it has been held that in same proceeding with regard to the Orders passed in different I.As, principles of Section 14 of Limitation Act can be invoked. 20. We thus are of the view that Judgement of "Kalpraj Dharamshi" (supra) quoted above, the benefit of Section 14 was extended on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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