TaxTMI 
TaxTMI 
2023 (4) TMI 777
X X X X Extracts X X X X
X X X X Extracts X X X X
....eal under Section 61 of the Insolvency and Bankruptcy Code, 2016 has been filed in this Tribunal on 07.01.2023 (e-filed) challenging the order dated 08.10.2021 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Court No.-I in I.A. No. 1921 of 2021 in C.P. (IB) No. 494/MB/2019. The limitation for filing an Appeal under Section 61 is 30 days and under proviso to Section 61(1) the jurisdiction of this Tribunal to condone the delay is of only 15 days. In the application for condonation of delay, condonation of delay has been sought relying on Section 14 of the limitation Act. 2. Before we consider the respective submissions of learned counsel for the parties, brief facts giving rise to this Appeal and application for condonation of Appeal needs to be noted: i. A Memorandum of Understanding dated 28.06.2004 was executed between the Shree Ram Urban Infrastructure Ltd. (Corporate Debtor), Kalpataru Properties Pvt. (Respondent No.1 to this Appeal) and Vijay Infrastructure Technology Pvt. Ltd. (a sister concern of the Corporate Debtor) for sale of a plot of land measuring 20,955.40 sq. m. situated at Plot No. 5A of Lower Parel Division of Distric....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing Company Appeal (AT) (Ins.) No. 880 of 2021. xi. In Company Appeal (AT) (Ins.) No. 880 of 2021, an interim order was passed by this Tribunal on 28.10.2021. Challenging the interim order dated 28.10.2021, the Respondent No.1 filed Civil Appeal No. 7050 of 2022 before the Hon'ble Supreme Court, where the Hon'ble Supreme Court disposed of the Appeal on 14.11.2022. Following order was passed by the Hon'ble Supreme Court: "C.A. No. 7050/2022 Learned senior counsel for the appellant, on instructions states that the appellant is willing to bring in the money in terms of the arbitral award, approximately Rs.75.30 crores in the corporate debtors' account and the Resolution Professional will execute the sale deed on the said amount being so deposited. He submits on instructions that the amount will be deposited within 10 days. On the aforesaid statement taken on record, learned counsel for respondent no. 1 who is the appellant before the NCLAT submit that if the amount is brought in, the sale deed can be executed by the Resolution Professional and the appeal filed by the Respondent No. 1 before the NCLAT would stand withdrawn. In view of the af....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s controversy should be resolved by the NCLAT itself i.e. whether on the appellants seeking to withdraw the appeal, there can be any impediment in withdrawal of the appeal and is the NCLAT really required to comment on the merits of the order of the NCLT at the behest of an intervener. We further make it clear that we are not expanding the array of parties before the NCLAT as a number of entities seems to have jumped into the picture as the matter has gone on before this Court. We make it clear that only the parties/existing interventionist before the NCLAT will have the right of hearing. In view of the orders passed in Civil Appeal No.9062/2022, this appeal will also to be listed before the Bench presided over by the Chairman. In view thereof, the final picture which would emerge would be before the NCLAT and to that extent the order passed by us on 14.11.2022 would be kept in abeyance till the NCLAT resolves the issue. List on 07.02.2023." xiii. In pursuance of the order passed by the Hon'ble Supreme Court dated 09.12.2022, the Company Appeal (AT) (Ins.) No. 880 of 2021 alongwith I.A. No. 2623 of 2021 was heard by this Tribunal and decided by judgment dated 03.0....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 14 of the Limitation Act. It is submitted that the earlier proceeding which was initiation by the Appellant by I.A. No. 2623 of 2021 was a civil proceeding which was being prosecuted in due diligence and good faith, in which no relief could be granted by this Tribunal, hence, the order passed by this Tribunal on 03.01.2023 in I.A. No.2623 of 2021 is covered within the expression 'other cause of like nature' occurring in Section 14 of the Limitation Act. 8. Shri Arun Kathpalia, learned senior counsel for the Respondent No.1 refuted the submissions of learned counsel for the Appellant and submits that Appellant cannot claim benefit of Section 14 of the Limitation Act in facts of the present case. Order dated 08.10.2021 was passed by the Adjudicating Authority allowing the application filed by the Respondent No.1 directing for execution of the sale deed by the Resolution Professional, which was well within knowledge of the Appellant. Appellant chose not to file an appeal against the said order in this Tribunal and only filed an Intervention Application, which Intervention Application came to be rejected by this Tribunal on 03.01.2023. It is submitted that the Appellant is not ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l be excluded, where the proceeding relates to the same matter in issue and 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. (2) In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another 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. (3) Notwithstanding anything contained in rule 2 of Order XXIII of the Code of Civil Procedure, 1908 (5 of 1908), the provisions of sub-section (1) shall apply in relation to a fresh suit instituted on permission granted by the court under rule 1 of that Order where such permission is granted on the ground that the first suit must fail by reason of a defect in the jurisdiction of the court or other cause of a like nature. Explanation.- For the purposes of this section,- (a) in excluding the time during ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....terms by Hegde, J. as follows: "Before considering the meaning of the word "held" in Section 9, it is necessary to mention that it is proper to assume that the lawmakers who are the representatives of the people enact laws which the society considers as honest, fair and equitable. The object of every legislation is to advance public welfare. In other words as observed by Crawford in his book on Statutory Constructions the entire legislative process is influenced by considerations of justice and reason. Justice and reason constitute the great general legislative intent in every piece of legislation. Consequently where the suggested construction operates harshly, ridiculously or in any other manner contrary to prevailing conceptions of justice and reason, in most instances, it would seem that the apparent or suggested meaning of the statute, was not the one intended by the law- makers. In the absence of some other indication that the harsh or ridiculous effect was actually intended by the legislature, there is little reason to believe that it represents the legislative intent."" 15. In the judgment of Hon'ble Supreme Court which arose out of Insolvency and Bankruptcy Code....
X X X X Extracts X X X X
X X X X Extracts X X X X
....would be entitled to exclusion of the period during which it was bona fide prosecuting the remedy before the High Court with due diligence." 16. 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. 17. For taking benefit of Section 14 of the Limitation Act several conditions need to be fulfilled cumulatively. In Kalpraj Dharamshi (supra), the Hon'ble Supreme Court relying on its earlier judgment in "(2008) 7 SCC 169, Consolidated Engineering Enterprises vs. Principal Secretary, Irrigation Department and others", in Para 59 has noted conditions which may be satisfied before Section 14 can be pressed into service, which is to the following effect: "59. The conditions that are required to be fulfilled for invoking the provisions of Section 14 of the Limitation Act have been succinctly spelt out in various ju....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on either in its inception or at all events as to prevent it from deciding it on the merits. Para 5 of judgment of the Hon'ble Supreme Court is as follows: "5. Section 14 in so far as it is material for our purpose runs as follows:- "S. 14(1) - In computing the period of limitation prescribed for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a Court of first instance or in a Court of Appeal, against the defendant shall be excluded, where the proceeding is founded upon the same cause of action and 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. (2) ......................................... Explanation I........................ Explanation II ...................... Explanation III. - For the purpose of this section misjoinder of parties or of causes of action shall be deemed to be a cause of a like nature with defect of jurisdiction." The High Court having found that the present claim of the plaintiffs was also included in the previous suit the condition that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(i) if a suit had failed because it was brought without proper leave; (ii) if it had failed because no notice under Section 80, Civil Procedure Code, had been given; (iii) where it would fail for non-production of the Collector's certificate required by Section 7 of the Pensions Act. In each one of these cases the court did not lack jurisdiction in its inception but the suit could not be proceeded with and disposed of until the statutory conditions laid down had been satisfied or fulfilled." 20. The Hon'ble Supreme Court in the same judgment further held that the words "or other cause of a like nature" must be construed liberally. In Para 7 following has been held: "7. It is well settled that although all questions of limitation must be decided by the provisions of the Act and the courts cannot travel beyond them the words "or other cause, of a like nature" must be construed liberally. Some clue is furnished with regard to the intention of the legislature by the Explanation III in Section 14(2). Before the enactment of the Act in 1908 there was a conflict amongst the High Courts on the question whether misjoinder and non-joinder were defects which were covered by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lity of Section 14 of the Limitation Act the following requirements must be specified. "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 case of a like nature; (4) both the proceedings are proceeding 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 was not an appropriate remedy for seeking money relief cannot be said to be "detect of jurisdiction or other cause of a like nature' within the meaning of Section 14 of the Limitation Act. It is true that the writ petition was not dismissed by the High Court on the ground of defect of jurisdiction. However, Section 14 of the Limitation Act is wide in its application, inasmuch it is not confined in its applicability only to cases of defect of jurisdiction but it is applicable also to cases....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g to do with "civil proceedings" referred to in Section 14 which may be filed before other courts or authorities which ultimately do not answer the case before them on merits but throw the case out on some technical ground. Obviously the word "court" in Section 14 takes its colour from the preceding words "civil proceedings". Civil proceedings are of many kinds and need not be confined to suits, appeals or applications which are made only in courts stricto sensu. This is made even more clear by the explicit language of Section 14 by which a civil proceeding can even be a revision which may be to a quasi-judicial tribunal under a particular statute." 24. Last judgment relied by learned counsel for the Appellant is Kalpraj Dharamshi (supra), in which case after order of the NCLT dated 28.11.2019, KIAL filed a Writ Petition before the Bombay High Court, which Writ Petition was dismissed by the High Court on 28.01.2020 on the ground that KIAL had an alternate and efficacious remedy of filing an appeal before NCLAT. Thereafter, KIAL filed appeals before NCLAT on 18.02.2020. The Appeals were allowed by NCLAT vide its judgment dated 05.08.2020, which judgment was challenged before the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iction was exercised by NCLT. It could thus be seen, that KIAL was bona fide prosecuting the proceedings before the High Court in good faith. Perusal of the dates referred to herein above would also reveal, that KIAL was prosecuting the proceedings before the High Court with due diligence. Even before the availability of the certified copy, it had knocked the doors of the High Court. The matter before the High Court was hotly contested and ultimately, the petition was dismissed by an elaborate judgment relegating KIAL to the alternate remedy available to it in law. As such, the conditions which enable a party to invoke the provisions of Section 14 of the Limitation Act are very much available to KIAL. If the period during which KIAL was bona fide prosecuting the writ petition before the High Court and that too with due diligence, is excluded applying the principles underlying Section 14 of the Limitation Act, the appeals filed before NCLAT would be very much within the limitation. We find, that KIAL would be entitled to exclusion of the period during which it was bona fide prosecuting the remedy before the High Court with due diligence." 25. From the law laid down by Hon'ble Sup....
X X X X Extracts X X X X
X X X X Extracts X X X X
....me of their litigation. An appeal, if considered necessary and expedient by an aggrieved party, is expected to be filed forthwith without awaiting a free copy which may be received at an indefinite stage. Hence, the omission of the words "from the date on which the order is made available" for the purposes of computation of limitation in Section 61(2) IBC, is a consistent signal of the intention of the legislature to nudge the parties to be proactive and facilitate timely resolution."" 29. The Intervention Application No. 2623 of 2021 was considered on merits in the judgment of this Tribunal, relevant case laws cited by the counsel for the Intervenor was noted and considered. After detailed consideration of judgment of Hon'ble Supreme Court relied by learned counsel for the Intervenor, ultimately, the following conclusion was recorded in Para 38 of the judgment, which is to the following effect: "38. In view of the fore-going discussions, we are of the considered opinion that at the instance of intervener, the order passed by the Adjudicating Authority dated 08.10.2021 cannot be set aside. We although have permitted the applicant to intervene in the Appeal but are unabl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that Section 14 of the Limitation Act could not be invoked in this case as the plaintiff's prior suit was dismissed; not on account of defect of jurisdiction or other cause of a like nature, but that it was entertained and then dismissed because the relief of the rendition of accounts was not available against the son of a deceased agent. Learned counsel relied on V.C. Thani Chettiar v. Dakshinamurthy Mudaliar, (S) AIR 1955 Mad 288 (A); Nakul Chandra Ghose v. Shyamapada Ghose, AIR 1945 Cal 381 (B); and Ramanand Prasad v. Gaya Prasad Ram, AIR 1949 Pat 362 (C). 5. In our opinion, the contention advanced on behalf of the appellant must be given effect to. We have no doubt that Section 14 of the Limitation Act has no application to the facts of this case and the plaintiff is not entitled to the benefit of that section. Before that section can apply, the prior proceeding must have been founded upon the same cause of action as that on which the later suit is founded and the Court in which the prior proceeding was prosecuted must have been unable to entertain it for the reasons specified, namely, defect of jurisdiction or other cause of a like nature. Now the words 'which....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... nature. This essential condition being not satisfied, the benefit of Section 14 cannot be extended. 33. Shri Arun Kathpalia, learned senior counsel for the Respondent vehemently contended that present is also a case where it cannot be said that Appellant was prosecuting the I.A. with due diligence. Shri Kathpalia submitted that when the order was passed on 08.10.2021 by the Adjudicating Authority directing for execution of deed for the transfer of property by the Resolution Professional, any person who felt aggrieved of the order was free to avail right to appeal available under Section 61 of the I&B Code and challenge the said order. It is well settled that in Insolvency and Bankruptcy Code timelines have its own importance and relevance. 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 inter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....his Bench, both these applications are rendered infructuous and she wants to withdraw both these applications. Keeping in view the statement made by the Ld. Counsel for the applicant IA No. 318/2021 & IA No. 145/2022 are dismissed as withdrawn." 18. Present is not a case where it is even contended that IA No. 145 of 2022 was not entertained due to any defect of the jurisdiction or other cause of like nature. The Adjudicating Authority before whom the Application was filed, was fully competent to entertain the Application. We however are of the view that the principle under Section 14 are attracted when a claimant is prosecuting "another civil proceeding" the use of expression "another civil proceeding" as occuring in Section 14(1) and 14(2) is for definite purpose and object. 19. We have already noticed above the Judgement of the Hon'ble Supreme Court in "Kalpraj Dharamshi" (supra) where it has been held that authority underlying Section 14 should be applied to its fullest extent and time taken diligently pursuing a remedy in a wrong Court should be excluded. Present is not a case where Applicant can claim that he had filed I.A. No. 145/2022 in a wrong Co....