NCLAT rejects delay condonation for IBC Section 61 appeal filed 74 days late, exceeding 15-day limit

The NCLAT dismissed an application for condonation of delay in filing an appeal under Section 61 of the IBC. The appellant sought to exclude the period during which two applications were pending before the Adjudicating Authority under Section 14 of the Limitation Act. The NCLAT held that while Section 14 of the Limitation Act applies to IBC proceedings as established by the SC in Kalpraj Dharamshi case, the period during which applications were pending before the Adjudicating Authority cannot be excluded. The appeal was filed 74 days beyond the prescribed period, exceeding the 15-day condonable limit under Section 61(2) proviso of the IBC.

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Issues Involved:
1. Condonation of delay in filing the appeal.
2. Applicability of Section 14 of the Limitation Act for excluding the period during which applications were pending before the Adjudicating Authority.

Summary:

1. Condonation of Delay in Filing the Appeal:
The appellant filed an application (I.A. No. 5497 of 2023) for condonation of delay in filing the appeal against the order dated 20th March 2023 passed by the National Company Law Tribunal (NCLT), New Delhi Bench (Court-II). The appeal was e-filed on 2nd July 2023, resulting in a delay of 74 days. The appellant argued that the delay should be condoned as the order was passed without giving an opportunity to the appellant, who only gained knowledge of the order on 3rd April 2023. Subsequently, the appellant filed applications for recalling the order, which were dismissed for non-prosecution and later withdrawn.

2. Applicability of Section 14 of the Limitation Act:
The appellant contended that the period during which I.A. No. 2337 of 2023 and I.A. No. 3270 of 2023 were pending before the Adjudicating Authority should be excluded under Section 14 of the Limitation Act. The appellant argued that these applications were prosecuted in good faith and with due diligence, and hence, the delay in filing the appeal falls within the condonable period of 45 days.

The respondent, representing the Liquidator, opposed the application, arguing that the appellant is not entitled to the benefit of Section 14 of the Limitation Act. The respondent cited a judgment from the Tribunal in Harish Kumar vs. Solitaire Infomedia Private Limited & Anr., asserting that the period during which the applications were pending cannot be excluded, and the appeal was filed beyond the permissible delay period.

Tribunal's Analysis and Conclusion:
The Tribunal examined whether the appellant is entitled to the benefit of Section 14 of the Limitation Act. The Tribunal referred to several judgments, including Kalpraj Dharamshi Vs Kotak Investment Advisors Ltd., where the Supreme Court held that the benefit of Section 14 could be extended in appeals filed under Section 61 of the IBC.

The Tribunal identified five conditions necessary to attract Section 14:
1. Both prior and subsequent proceedings are civil proceedings prosecuted by the same party.
2. The prior proceeding was prosecuted with due diligence and in good faith.
3. The failure of the prior proceeding was due to a defect of jurisdiction or other cause of a like nature.
4. Both proceedings relate to the same matter in issue.
5. Both proceedings are in a court.

The Tribunal found that conditions (i), (ii), (iv), and (v) were fulfilled. However, condition (iii) was not met as the applications were dismissed for non-prosecution and withdrawn, not due to a defect of jurisdiction or other cause of a like nature. Therefore, the benefit of Section 14 could not be extended.

The Tribunal also considered whether the delay could be condoned under Section 5 of the Limitation Act but concluded that the delay exceeded the condonable limit of 15 days as stipulated under Section 61(2) of the IBC.

Final Decision:
The Tribunal dismissed the delay condonation application and consequently rejected the memo of appeal, as the appeal was filed beyond the permissible delay period.

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