2024 (11) TMI 1235 - HC - IBC

Corporate appellant loses delay condonation for 4486-day delay in money recovery appeal due to insufficient cause and lack of diligence

Delhi HC dismissed delay condonation application for 4486-day delay in filing appeal against money recovery decree. Corporate appellant attributed delay ... Condonation of delay of 4486 days in filing the appeal to assail money recovery decree - benefit under Section 14 of the Limitation Act - professional misconduct of the counsel of appellant. HELD THAT:- The delay in filing the appeal is not for an insignificant period; it is an inordinate delay of 4486 days. The impugned judgment and decree being dated 18.09.2012, the period of limitation prescribed for filing appeal expired on 17.12.2012. The delay till 29.11.2019 (the date of filing of application under Order IX Rule 13 CPC) has been attributed by the appellant company to the professional misconduct of their erstwhile counsel. The appellant is not an individual litigant, much less an illiterate lay person. The appellant is a limited company. Admittedly, the appellant was being represented through an employee of theirs, who left job. That being so, the appellant cannot claim no duty to be diligent in keeping track of the lis. Further, during arguments learned counsel for appellant submitted that no action has been taken against the erstwhile counsel for his alleged misconduct - no satisfactory explanation is set up by the appellant to explain their having not filed the appeal during the period from 17.12.2012 to 29.11.2019. The period from 29.11.2019 to 20.09.2024 has been explained by the appellant, pleading that they filed application under Order IX Rule 13 CPC, which got dismissed, so they filed the present appeal on 08.10.2024. The appellant has claimed benefit under Section 14 of the Limitation Act for the said period of almost five years - The expression “good faith” is defined under Section 2(h) of the Limitation Act, stipulating that nothing shall be deemed to be done in good faith which is not done with due care and attention. What is to be seen is as to whether the institution and prosecution of the other proceeding in wrong forum was done with due care and attention, thereby in good faith. Another requirement of Section 14 of the Act is that the applicant must have been prosecuting the previously instituted proceedings with due diligence. Due diligence is a measure of prudence or activity expected from and ordinarily exercised by reasonable and prudent person under the particular circumstances. In the present case, complete lack of due care and attention is writ large on the face of record. According to the appellant’s own case, for the first time they became aware of the impugned judgment and decree upon receipt of demand notice on 27.09.2019 and filed application under Order IX Rule 13 CPC on 29.11.2019, which application was dismissed by the trial court vide order dated 27.05.2024 - There is not even a whisper in the impugned judgment that it was being passed ex-parte. Even counsel for the appellant was conscious that the impugned judgment and decree was not ex-parte and that is the reason, the appeal FAO 300/2024 was withdrawn on 20.09.2024. Evidently, the appellant first filed the application under Order IX Rule 13 CPC without there being ex-parte judgment and decree, and thereafter, continued to prolong the application from 29.11.2019 to 20.09.2024 i.e., almost five years. By any liberal standards, it cannot be treated as proceedings pursued by the appellant in good faith. Therefore, for the period from 29.11.2019 to 20.09.2024, benefit of Section 14 of the Act cannot be granted to the appellant. In any case, since for the first part of delay period of almost seven years no sufficient cause has been shown, thereby disentitling the appellant benefit under Section 5 of the Act, for the subsequent part of delay period of more than five years, no benefit under Section 14 of the Act can be granted. This is not a fit case to condone the colossal delay of 4486 days in filing the present appeal. Therefore, the delay condonation application is dismissed. Issues Involved:1. Condonation of delay under Section 5 of the Limitation Act.2. Applicability of Section 14 of the Limitation Act.3. Alleged professional misconduct of the appellant's counsel.Issue-wise Detailed Analysis:1. Condonation of Delay under Section 5 of the Limitation Act:The appellant sought condonation for a delay of 4486 days in filing an appeal against a money recovery decree. The court examined whether the appellant was precluded from filing the appeal due to circumstances beyond their control, which is a requirement under Section 5 of the Limitation Act. The court reiterated that the discretion to condone delay must be exercised judiciously and liberally in favor of the applicant unless the explanation for the delay is wholly unacceptable. However, the appellant, a corporate entity, failed to demonstrate sufficient cause for the delay. The court found the appellant's reliance on alleged professional misconduct of their counsel insufficient, especially since no action was taken against the counsel. The appellant's lack of diligence and the absence of any steps to track the case progress were significant factors leading to the rejection of their application for condonation of delay.2. Applicability of Section 14 of the Limitation Act:The appellant claimed the benefit of Section 14 of the Limitation Act for the period during which they pursued an application under Order IX Rule 13 CPC, arguing that this period should be excluded from the limitation period. Section 14 allows exclusion of time spent in bona fide proceedings in a court without jurisdiction. However, the court emphasized that the proceedings must be pursued with due diligence and in good faith. The appellant failed to meet these criteria, as their application under Order IX Rule 13 CPC was filed without due care, given that the impugned judgment was not ex-parte. The court found a lack of good faith and due diligence in the appellant's actions, thereby denying them the benefit of Section 14.3. Alleged Professional Misconduct of the Appellant's Counsel:The appellant attributed the delay to the professional misconduct of their previous counsel, who allegedly stopped appearing in court without informing the appellant. The court noted that while litigants should not suffer due to their counsel's fault, this principle does not apply universally, especially to educated litigants or corporate entities. The appellant's failure to take any action against the counsel weakened their claim. The court highlighted that accepting the appellant's allegations without evidence would unjustly condemn the counsel without a hearing. Consequently, the court did not find the appellant's explanation credible and rejected the argument of professional misconduct as a sufficient cause for the delay.Conclusion:The court concluded that the appellant did not establish sufficient cause for the extensive delay in filing the appeal. The lack of action against the counsel, combined with the appellant's failure to demonstrate due diligence and good faith, led to the dismissal of the delay condonation application. Consequently, the appeal and accompanying applications were dismissed as barred by limitation.