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TMI Blog2024 (1) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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 he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2023 for condonation of delay has been filed. The ground taken in the Application for condonation is that the Order dated 20th March, 2023 passed by the Adjudicating Authority was passed without giving an opportunity to the Appellant. Appellant gained knowledge of the Order dated 20th March, 2023 only on 3rd April, 2023 when the Appellant was apprised of the Order by letter dated 3rd April, 2023 issued by the Respondent demanding amount of Rs. 74,48,820/-. Appellant after gaining knowledge of the same filed an application being I.A. No. 2337 of 2023 on 19th April, 2023 before the Adjudicating Authority under Section 60(5)(c) of the Code read with Rule 11 and Rule 49 of the NCLT Rules, 2016 seeking recalling of the order dated 20th March, 2023. The Application was dismissed by the Adjudicating Authority on 28th March, 2023 for non-prosecution. Appellant filed another Application being I.A. No. 3270 of 2023 on 10th May, 2023 under Section 60(5)(c) of the Code read with Rule 11 and Rule 49 of the NCLT Rules, 2016 seeking recalling of the order dated 20th March, 2023. Learned Counsel for the Appellant withdrew I.A. No. 3270 of 2023 and thus I.A. stood dismissed as withdrawn on 16th Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condonation application deserves to be rejected. 8. The main submission which has been pressed by Learned Counsel for the Appellant is that Appellant is entitled to exclude period during which I.A. No. 2337 of 2023 and I.A. No. 3270 of 2023 was pending before the Adjudicating Authority as noted above. Order dated 20th March, 2023 was passed by the Adjudicating Authority on I.A. No. 3362 of 2020 which was filed by the Resolution Professional seeking a direction to the Respondent (Appellant herein) to pay the entire outstanding dues without any adjustment. In I.A. No. 3362 of 2020, the Adjudicating Authority has recorded that no one has appeared on behalf of Respondent (Appellant herein) despite service of notice in terms of Order dated 03.01.2023. The Respondent was set ex-parte and by the Impugned Order, direction was issued to contribute the amount of Rs. 74,48,828/-. Appellant s case is that he came to know about the Order only when Respondent sent a letter on 3rd April, 2023. Appellant filed an I.A. No. 2337 of 2023 on 19th April, 2023 where Appellant prayed for following relief: (a) recall the exparte order dated 20.03.2023, in view of the above said facts and circumstances, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anted the benefit of Section 14 of the Limitation Act by excluding the period from 11.12.2019 to 28.01.2020 during which the writ petition was filed in the High Court. The grant of benefit of Section 14 in the Appeal was questioned before the Hon ble Supreme Court. The arguments advanced by Learned Sr. Counsel challenging the extension of benefit of Section14 was noticed in paragraph 19 to 20 of the Judgment which are to the following effect: 19. Shri Rohatgi further submitted that as held by this Court in Innoventive Industries Ltd. v. ICICI Bank [Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407 : (2018) 1 SCC (Civ) 356] , the I B Code is a complete code in itself. He submitted that Section 61(2) of the I B Code provides that the decision of the adjudicating authority (i.e. NCLT) may be challenged before NCLAT within 30 days. He submitted that an appeal would be tenable within a further period of 15 days, only when NCLAT comes to a satisfaction that there was a sufficient cause for not filing the appeal within a period of 30 days. He submitted that since the I B Code is a complete Code, neither Section 5 nor Section 14 of the Limitation Act, 1963 (hereinafter referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or consideration. The proceedings before the High Court were hotly contested and by an elaborate judgment, the High Court dismissed [Kotak Investment Advisors Ltd. v. Krishna Chamadia, 2020 SCC OnLine Bom 197] the writ petition relegating the petitioner therein i.e. KIAL to an alternate remedy available in law. It is thus apparently clear, that KIAL was bona fide prosecuting a remedy before the High Court in good faith and with due diligence. In a given case, the High Court could have exercised jurisdiction under Article 226 of the Constitution inasmuch as, the grievance was regarding procedure followed by NCLT to be in breach of principles of natural justice. That would come within the limited area earmarked by this Court for exercise of extraordinary jurisdiction under Article 226 despite availability of an alternate remedy. 98. This Court recently in the judgment of Embassy Property Developments (P) Ltd. v. State of Karnataka [Embassy Property Developments (P) Ltd. v. State of Karnataka, (2020) 13 SCC 308] had an occasion to consider a similar issue. We find it apposite to refer to the question framed by this Court, which reads thus: (SCC p. 315, para 1) 1. (i) Whether the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 18. Ambit and scope of Section 14 of the Limitation Act came for consideration before several judgments of the Hon ble Supreme Court. We need to notice few judgments where contents of section 14 of the limitation act was examined and principles were laid down for applicability of Section 14 of the Limitation Act. 19. In (1975) 4 SCC 628, Roshanlal Kuthalia Ors. Vs R.B. Mohan Singh Oberoi, ingredients of Section 14 were considered and following was laid down in paragraph 25-27: 25. Section 14, which neatly fits in, is simple in its ingredients, to the extent we are called upon to consider. 26. It is a sine qua non of a claim under Section 14 that the earlier proceeding is prosecuted in good faith. It is beyond cavil that before launching on execution of the Pakistani decree Shri Oberoi had taken advice from two leading Indian lawyers and set about the job diligently. Bona fides is thus wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very matter, the obstacle was jurisdictional and the exclusionary operation of Section 14 of the Limitation Act was attracted. 20. The next judgment where Section 14 was elaborately considered is the Judgment of Hon ble Supreme Court in (2004) 3 SCC 458, Union of India Ors. Vs. West Coast Paper Mills Ltd. Anr. In paragraph 14 of the Judgment, following was laid down: 14. In the submission of Mr Malhotra, placing reliance on CST v. Parson Tools and Plants [(1975) 4 SCC 22 : 1975 SCC (Tax) 185] to attract the applicability of Section 14 of the Limitation Act, the following requirements must be specified: (SCC p. 25, para 6) 6. (1) both the prior and subsequent proceedings are civil proceedings prosecuted by the same party; (2) the prior proceedings had been prosecuted with due diligence and in good faith; (3) the failure of the prior proceedings was due to a defect of jurisdiction or other cause of a like nature; (4) both the proceedings are proceedings in a court. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in issue and; (5) Both the proceedings are in a court. 22. The policy of the section is to afford protection to a litigant against the bar of limitation when he institutes a proceeding which by reason of some technical defect cannot be decided on merits and is dismissed. While considering the provisions of Section 14 of the Limitation Act, proper approach will have to be adopted and the provisions will have to be interpreted so as to advance the cause of justice rather than abort the proceedings. It will be well to bear in mind that an element of mistake is inherent in the invocation of Section 14. In fact, the section is intended to provide relief against the bar of limitation in cases of mistaken remedy or selection of a wrong forum. On reading Section 14 of the Act it becomes clear that the legislature has enacted the said section to exempt a certain period covered by a bona fide litigious activity. Upon the words used in the section, it is not possible to sustain the interpretation that the principle underlying the said section, namely, that the bar of limitation should not affect a person honestly doing his best to get his case tried on merits but failing because the court is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use of a like nature, is unable to entertain it . Thus the exclusion of which is sought was not entertained by the Court due to defect of jurisdiction or other cause of a like nature. Present is not a case where it is contended that there was any defect of jurisdiction in the Adjudicating Authority in entertaining the recall application. Recall Application was filed by the Appellant to recall the ex-parte order under Rule 60(5)(c) read with Rule 11 and 49 of NCLT Rules, 2016. The expression other cause of a like nature came for consideration in Roshanlal Khutalia (supra) where Hon ble Supreme Court held following in para 27 : 27 Moreover, the defects that will attract the provision are not merely jurisdictional strictly so called but others more or less neighbours to such deficiencies. Any circumstance legal or factual, which inhibits entertainment or consideration by the Court of the dispute on the merits, comes within the scope of the section and a liberal touch must inform the interpretation of the Limitation Act which deprives the remedy of one who has a right Thus, it is not only the defect of jurisdiction which attracts applicability of Section 14 but other cause is that whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on period for the original proceeding is six months. The plaintiff/applicant files such a proceeding on the ninetieth day i.e. after three months are over. The said proceeding turns out to be abortive after it has gone through a chequered career in the appeal courts. The same plaintiff/applicant now files a fresh proceeding before a court of first instance having the necessary jurisdiction. So long as the said proceeding is filed within the remaining three month period, Section 14 will apply to exclude the entire time taken starting from the ninety-first day till the final appeal is ultimately dismissed. This example also goes to show that the expression the time during which the plaintiff has been prosecuting with due diligence another civil proceeding needs to be construed in a manner which advances the object sought to be achieved, thereby advancing the cause of justice. 50. Section 14 has been interpreted by this Court extremely liberally inasmuch as it is a provision which furthers the cause of justice. Thus, in Union of India v. West Coast Paper Mills Ltd. [(2004) 3 SCC 458] , this Court held: (SCC p. 464, para 14) 14. In the submission of the learned Senior Counsel, filing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l provisions and it should be liberally interpreted to give relief to a litigant who was bona fide prosecuting the legal remedy. The above judgment of the Hon ble Supreme Court has reiterated the principles which were well settled by earlier judgements as referred therein. Learned Counsel for the Appellant has also placed reliance on Judgment of the Hon ble Supreme Court in State of Kerala Ors. Vs. M.G. Presanna, (2011) 15 SCC 203 which was a case where a writ petition was allowed by a Ld. Single Judge on 08th April, 2009, review petition was filed in which there was a delay. Learned Single Judge has condoned the delay but ultimately dismissed the review petition. A Writ Appeal was filed. Division Bench dismissed the writ petition due to delay in filing the Appeal. Hon ble Supreme Court in the above context took the view that delay in filing the review petition was satisfactory explained and Division Bench ought to have condoned the delay of entire period upto the disposal of the review petition. The Appellant having been bona fide pursuing other remedies, in paragraph 4 and 5, following was held: 4. It is true that technically the Division Bench was not bound to accept the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was filed with delay and Hon ble Supreme Court extended the benefit of Section 14 and condoned the delay in filing the Appeal. In paragraph 35 of the Judgment, following has been held; 35. As far as the present case is concerned, the action of the Petitioner/Appellant in moving the Hon ble Supreme Court of India in Civil Appeal No.3169 of 2019 after the Impugned Order dated 25.6.2019 passed by the Adjudicating Authority , instead of preferring an Appeal before this Tribunal and later filing of the Review Proceeding before the Adjudicating Authority , pursuant to the liberty granted by the Hon ble Supreme Court as per order dated 29.7.2019 are bonafide, of course based on act of prudence or reasonable person in prosecuting the concerned proceeding with reasonable due diligence. Suffice it for this Tribunal to point out that the time spent in prosecuting the legal remedy by the Petitioner/Appellant/Bank is required to be excluded while computing the period of limitation as envisaged under section 61(2) of the Insolvency Bankruptcy Code, 2016, in the considered opinion of this Tribunal . In any event, the Petitioner/Appellant/Bank cannot be attributed with Lack of Bonafides in resorti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant were pending. The above judgment does not in any manner help the Appellant in the facts of the present case. Learned Counsel for the Appellant has also relied on Judgment of Hon ble Delhi High Court in Bank of India Vs. M/s. Mehta Brothers and Ors. ILR 1991 Delhi 374. The above was a case where an application under order 9 CPC Rule 13 proviso was filed for setting aside the ex-parte decree. In the above context, Hon ble Delhi high Court held that although counsel did not appear and ex-parte decree was passed but there was sufficient cause for setting aside the ex-parte decree, in paragraph 27, following was held: 27. The limitation which has been provided under Section 61(2) and Section 421 is the limitation for filing an appeal. The Rules, neither the Code nor the Companies Act, 2013 lay down any limitation for representation/refiling of the Appeal. Rule 26 of NCLAT Rules, 2016, which govern the re-presentation/refiling of the appeal does not provide for any limitation. When Sub- Rule (3) of Rule 26 empowers the Registrar to allow the parties concerned a reasonable time or to extend the time for compliance, which power is not hedged by any period of limitation, it can be sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 315/2023 in Company Appeal (AT) Insolvency No. 694 of 2023 in the matter of Vikram Bhawanishankar Sharma, Member of the Suspended Board of Directors of Supreme Vasai Bhiwandi Tollways Pvt. Ltd. Versus SREI Infrastructure Finance Ltd. Anr. The order on the basis of which the Appellant claims exclusion of time u/s 14 dated 13.02.2023 is to the following effect:- Heard the submissions made by Ld. Counsel for the Applicant. Ld. Counsel for the Applicant has prayed for grant of liberty to withdraw the present application i.e. Rest.A/24/20223 and to prefer an appeal against the order dated 22.12.2022. Prayer is granted and application stands disposed of as withdrawal. 4. The present is a case where we cannot hold that the application filed for restoration was in a wrong forum which could not be decided for the defect of jurisdiction or of like nature. Conditions as contemplated u/s 14 are not attracted to extend the benefit u/s 14 to the Appellant. The judgement of Hon ble Supreme Court in Sesh Nath Singh Anr. in Civil Appeal No. 9198 of 2019 Vs. Baidyabati Sheoraphuli Co-operative Bank Ltd. Anr. was a case where the benefit was extended u/s 14 of the Limitation Act with regard to period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Thus the Judgment of the Hon ble Supreme Court does not in any manner help the Appellant in the present case. 84. In the instant case, even if it is assumed that the right to sue accrued on 31-3-2013 when the account of corporate debtor was declared NPA, the financial creditor initiated proceedings under the SARFAESI Act on 18-1-2014, that is the date on which notice under Section 13(2) was issued, proceeded with the same, and even took possession of the assets, until the entire proceedings were stayed by the High Court by its order dated 24-7-2017 [Debitech Fabtech (P) Ltd. v. Baidyabati Seoraphully Coop. Bank Ltd., 2017 SCC OnLine Cal 9738] . The proceedings under Section 7 IBC were initiated on 10-7-2018. 85. In our view, since the proceedings in the High Court were still pending on the date of filing of the application under Section 7 IBC in NCLT, the entire period after the initiation of proceedings under the SARFAESI Act could be excluded. If the period from the date of institution of the proceedings under the SARFAESI Act till the date of filing of the application under Section 7 IBC in NCLT is excluded, the application in NCLT is well within the limitation of three years. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted in it in law. While exercising its power, the court will merely consider whether it has the source to exercise such power or not. The court will not apply the beneficent provisions like Sections 5 and 14 of the Limitation Act in a pedantic manner. When the provisions are meant to apply and in fact found to be applicable to the facts and circumstances of a case, in our opinion, there is no reason as to why the court will refuse to apply the same only because a wrong provision has been mentioned. In a case of this nature, sub-section (2) of Section 14 of the Limitation Act per se may not be applicable, but, as indicated hereinbefore, the principles thereof would be applicable for the purpose of condonation of delay in terms of Section 5 thereof. 26. We thus are of the view that 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 Authorit ..... 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