2024 (12) TMI 1525 - AT - IBC

NCLAT rejects delay condonation under Section 61(2) IBC, rules Section 14 Limitation Act inapplicable to insolvency proceedings

Kalyan Muppaneni Suspended Director, Founder Shareholder of M/s. Pi Data Centers Private Limited Versus M/s. K. Computers, Mr. P. Madhusdhan Reddy, IRP

NCLAT dismissed the appeal, rejecting the condonation of delay application. The tribunal held that Section 14 of the Limitation Act cannot be applied to ... Condonation of delay in filing the appeal under Section 61 of the Insolvency and Bankruptcy Code - Whether under the given factual set of circumstances, the provisions of Section 14 of the Limitation Act, could at all be made applicable to grant the benefit of limitation to the Appellant, during the pendency of the proceedings by way of application? - HELD THAT:- There was a conscious intent that the Ld. Senior Counsel for the Appellant has chosen to address upon Company Appeal (AT) (CH) (Ins) No.192/2022, which is against the Impugned order that was decided on 28.04.2022, which was arising from the interlocutory application proceedings of the same company petition and the principle proceedings of admission into the CIRP, under Section 9, which was made as the subject matter of the Company Appeal (AT) (CH) (Ins) No.193/2022. For the reasons best known, the appeal CA (AT) (CH) (Ins) No.193/2022, was chosen to be addressed upon at a later stage for the reason being that, the consequential effect would be that since the appeal itself was preferred with 45 days of delay, may be that the exclusion which has been sought by the Appellant for a period from 15.03.2022 to 28.04.2022 of 44 days will not be a period, which will be falling within the exemption clause to the proviso, which is strict in its applicability and upon failure to succeed in pressing upon the Condone Delay Application, it would have a direct bearing on the Company Appeal (AT) (CH) (Ins) No.192/2022. Hence, the aspect of exclusion, which has been sought to be argued by the Ld. Counsel for the Applicant, since would be a variable factor in each of the cases depending upon the fact involved therein, cannot be universally made applicable as a concept for the purposes of dealing with an aspect of limitation, when the law itself very strictly creates a restriction on the Appellate Tribunal that while determining the aspect of limitation, it cannot be barge upon, and extend the period beyond which is prescribed under the proviso to Section 61 (2). The Hon’ble Apex Court in Kalpraj Dharamshi [2021 (3) TMI 496 - SUPREME COURT] has attracted the implications of Section 14 of the Limitation Act because writ remedy was not statutorily contemplated under law. These are not the circumstances which would apply for this instant case, for the purposes of extending the limbs of the interpretation of limitation as prescribed under Section 61 (2), owing to the reason that I & B Code itself has been given an overriding effect to the other law and once it contains a self-contained provision, governing the field of the limitation it has to be determined, on the basis of the strict mandate of the statute provided under Section 61 (2) and at the most it could be extendable upto the upper limit under the proviso to Section 61 (2) of I & B Code. Hence, the Condone Delay Application which has been sought for, is 45 days, which is outside the ambit of the provisions contained under Section 61(2), cannot be allowed. Application for condonation of delay rejected. Withdrawal of Corporate Insolvency Resolution Process (CIRP) proceedings under Section 12A of the I & B Code - Whether the Appellant can compel the Respondent to withdraw the Corporate Insolvency Resolution Process (CIRP) proceedings under Section 12A of the I & B Code based on a claimed debt settlement? - HELD THAT:- While exercising powers under Rule 11, the Ld. NCLAT has approved the settlement of a dispute in relation to the dues payable to the Respondent No.03 therein the said case. This would have been a case, had the controversy ended at the stage when there was a Debt Settlement Agreement, the fact of which stands vehemently denied by the Respondent. We feel it apt to observe at this stage itself, that authority of a Hon’ble Apex Court laying down the law and that too which is procedural in nature will always depend upon the facts and circumstances of each and every case and the same cannot be made universally applicable irrespective of considering the facts and circumstances which are involved therein. The instant appeal would stand answered against the Appellant and we are of the considered view, that a distorted interpretation to the Judgment relied by the Appellant, cannot be given in a manner to mould a Judgment, in a manner as if a right which are given to an Applicant to withdraw an application under Regulation 30A to be read with Section 60 could be chiselled in a manner to impose upon an Applicant by forcing upon him by soliciting a judicial direction to withdraw his own proceedings over which he has a right to pursue and continue in the light of the mandate of Article 14 to be read with Article 21 of the Constitution of India, as there cannot be a deprivation of right to judicial remedies to the citizen of this country of ours, by a judicial adjudication, where a deprivation is being attempted to be forced upon him by calling upon a party by a judicial order for not to pursue a proceeding in which he otherwise intends to continue, being the master of the proceedings drawn by him. Appeal dismissed. Conclusion - i) Section 14 of the Limitation Act does not apply to intra-court applications within the same proceeding, as it is intended for proceedings in courts lacking jurisdiction. ii) The decision to withdraw CIRP proceedings under Section 12A lies with the Applicant, and judicial directions cannot compel such withdrawal. 1. ISSUES PRESENTED and CONSIDEREDThe Tribunal considered the following core legal issues:- Whether the provisions of Section 14 of the Limitation Act can be applied to condone the delay in filing the appeal under Section 61 of the Insolvency and Bankruptcy Code (I & B Code).- Whether the Appellant can compel the Respondent to withdraw the Corporate Insolvency Resolution Process (CIRP) proceedings under Section 12A of the I & B Code based on a claimed debt settlement.- The applicability of judicial precedents and legal principles regarding the withdrawal of CIRP proceedings and the interpretation of Section 60 of the I & B Code in conjunction with Regulation 30A.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Application of Section 14 of the Limitation ActThe Tribunal examined whether the delay in filing the appeal could be condoned under Section 14 of the Limitation Act, which allows for the exclusion of time spent in proceedings before a court that lacks jurisdiction. The Appellant argued that the delay should be condoned due to the pendency of an interlocutory application (IA No. 30/2022) before the adjudicating authority.- Relevant Legal Framework and Precedents: Section 14 of the Limitation Act provides for the exclusion of time spent in bona fide proceedings before a court without jurisdiction. Section 61(2) of the I & B Code prescribes a strict limitation period for filing appeals.- Court's Interpretation and Reasoning: The Tribunal concluded that Section 14 does not apply to intra-court applications within the same proceeding, as the application was filed before a competent court with jurisdiction. The Tribunal emphasized that Section 14 is intended for situations where a party prosecutes a case in a court lacking jurisdiction and is later directed to the appropriate forum.- Conclusions: The Tribunal rejected the application of Section 14 to condone the delay, as the appeal was filed 45 days late, exceeding the permissible extension under Section 61(2) of the I & B Code.Issue 2: Compelling Withdrawal of CIRP ProceedingsThe Appellant sought a direction for the Respondent to withdraw the CIRP proceedings under Section 12A of the I & B Code, claiming a debt settlement had occurred.- Relevant Legal Framework and Precedents: Section 12A of the I & B Code allows for the withdrawal of CIRP proceedings with the approval of 90% of the Committee of Creditors. Regulation 30A outlines the procedure for withdrawal. The Tribunal referenced the Swiss Ribbons Pvt. Ltd. case, which discusses the discretionary nature of withdrawal applications under Regulation 30A.- Court's Interpretation and Reasoning: The Tribunal held that the Appellant cannot compel the Respondent to withdraw the CIRP proceedings, as the decision to withdraw lies with the Applicant of the Section 9 proceedings. The Tribunal noted that Regulation 30A and Section 60 do not provide for judicial directions to force withdrawal.- Conclusions: The Tribunal dismissed the Appellant's request for a direction to withdraw the CIRP proceedings, affirming that the prerogative to withdraw lies with the Applicant.3. SIGNIFICANT HOLDINGS- The Tribunal emphasized the strict application of limitation periods under Section 61(2) of the I & B Code, rejecting the extension of time limits beyond the prescribed period.- It clarified that Section 14 of the Limitation Act does not apply to intra-court applications within the same proceeding, as it is intended for proceedings in courts lacking jurisdiction.- The Tribunal upheld the principle that the decision to withdraw CIRP proceedings under Section 12A lies with the Applicant, and judicial directions cannot compel such withdrawal.- The Tribunal dismissed both appeals, reiterating the importance of adhering to procedural timelines and respecting the autonomy of parties in insolvency proceedings.