2023 (4) TMI 777 - AT - Insolvency and Bankruptcy

Dismissal of Appeal Delay Condonation Application under Insolvency & Bankruptcy Code - Failure to Meet Due Diligence

SREI Equipment Finance Limited Versus Kalpataru Properties Pvt. Ltd., Shree Ram Urban Infrastructure Limited, Official Liquidator, Bombay High Court

The Tribunal dismissed the application for condonation of delay in filing an Appeal under the Insolvency and Bankruptcy Code, 2016. The Appellant's ... Condonation of delay in filing appeal - Appellant has been prosecuting the civil remedy by way of filing I.A. No. 2623 of 2021, which was rejected only on 03.01.2023 and thereafter immediately the Appeal has been filed on 07.01.2023 challenging order dated 08.10.2021 - seeking that the period during which the Appellant was prosecuting his I.A. No. 2623 of 2021 be excluded giving the benefit of Section 14 of the Limitation Act. Whether the Appellant is entitled to claim benefit of exclusion of period from 17.11.2021 till 03.01.2023 during which Intervention Application filed by the Appellant being I.A. No. 2623 of 2021 in Company Appeal (AT) (Ins.) No. 880/2021 was pending? HELD THAT:- The Limitation Act, 1963 in several sections has used the word ‘suit’, ‘application’ and ‘appeal’. Section 12 which provides for ‘exclusion of time in legal proceedings’ uses all three expressions i.e. ‘suit, appeal or application’, whereas Section 13 uses expression ‘suit or appeal’ - A plain reading of provisions of Section 14 indicate that Section 14 does not apply to appeal, however, the Hon’ble Supreme Court had occasion to consider as to whether even if Section 14 of Limitation Act does not expressly apply to appeal, whether the principles underlying Section 14 are applicable to appeal or not. The Hon’ble Supreme Court in MP. STEEL CORPORATION VERSUS COMMISSIONER OF CENTRAL EXCISE [2015 (4) TMI 849 - SUPREME COURT] has laid down that where Section 14 may not apply, the principles on which Section 14 is based, would nevertheless apply. - The law laid down by the Hon’ble Supreme Court is that even if Section 14 of the Limitation Act does not apply in an appeal, however, the principles underlying Section 14 can be 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. 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. Appellant is not entitled to claim benefit of Section 14 of the Limitation Act on the ground that I.A. No. 2623 of 2021 was pending in Company Appeal (AT) (Ins.) No. 880 of 2021. The Appellant being not entitled for benefit of Section 14 and this appeal being filed against order dated 08.10.2021 after 400 days, we see no reason to condone the delay in filing the appeal - Delay condonation application is dismissed. Issues Involved:1. Application for condonation of delay in filing the Appeal.2. Entitlement to benefit of Section 14 of the Limitation Act for exclusion of time.Summary:Application for Condonation of Delay:The Appellant filed an application for condonation of delay in filing an Appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016, challenging the order dated 08.10.2021. The limitation period for filing an appeal under Section 61 is 30 days, with a permissible condonation of delay for an additional 15 days. The Appellant sought condonation of delay relying on Section 14 of the Limitation Act, arguing that the delay should be excluded as the Appellant was prosecuting another civil remedy in good faith.Entitlement to Benefit of Section 14 of the Limitation Act:The Tribunal examined whether the Appellant is entitled to the exclusion of the period from 17.11.2021 to 03.01.2023 during which the Intervention Application (I.A. No. 2623 of 2021) was pending. The Tribunal noted that Section 14 of the Limitation Act does not expressly apply to appeals but the principles underlying Section 14 could be applied. The Tribunal referred to several judgments of the Hon'ble Supreme Court, including 'M. P. Steel Corporation vs. Commissioner of Central Excise' and 'Kalpraj Dharamshi & Anr. vs. Kotak Investment Advisors Ltd. & Anr.', which established that principles underlying Section 14 can be applied to appeals.Consideration of I.A. No. 2623 of 2021:The Tribunal found that I.A. No. 2623 of 2021 was considered on merits and rejected, and it cannot be said that the Court was unable to entertain the application due to defect of jurisdiction or other cause of like nature. The Tribunal concluded that the essential condition for extending the benefit of Section 14 was not satisfied as the earlier proceeding was adjudicated on merits.Prosecution with Due Diligence:The Tribunal also considered whether the Appellant prosecuted the I.A. with due diligence. It was noted that the Appellant, a Financial Creditor with access to legal advisors, chose to file an Intervention Application instead of an appeal. The Tribunal held that the Appellant did not act with due diligence as required under the Insolvency and Bankruptcy Code, which emphasizes strict timelines.Conclusion:The Tribunal concluded that the Appellant is not entitled to claim the benefit of Section 14 of the Limitation Act. The delay condonation application was dismissed, and consequently, the Memo of Appeal was also rejected.