TaxTMI 
TaxTMI 
2023 (10) TMI 1171
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....- (1) dated 23.02.2013 (2) dated 23.10.2013 and (3) dated 28.08.2017. In response to Purchase Orders 1 and 2, Operational Creditor issued 65 invoices on different dates from 31.10.2013 to 29.03.2014 total amounting to Rs.3,61,40,025/- out of which payment was made of Rs.2,88,84,623/-. However, till 03.06.2014, there was unpaid amount of Rs.72,55,402/-. In response to 3rd Purchase Order, Operational Creditor issued three invoices amounting to Rs. 21,91,122/-. The Operational Creditor filed a Suit No.67 of 2017 dated 03.10.2017 for recovery of monies under 1st two Purchase Orders i.e. Stage 1 which suit was withdrawn by the Operational Creditor by order dated 18.07.2022. Operational Creditor issued demand notice dated 27.07.2022 claiming amount of Rs.1,78,78,390/- total amount of which included principal amount under Stage 1 and Stage 2 and interest. The date of default as per Part-IV of Section 9 Application is 30.04.2015 for Stage 1 and on 23.10.2018 for Stage 2. Section 9 Application was filed by Operational Creditor on 05.12.2022. Adjudicating Authority by impugned order has dismissed the Section 9 Application on the ground that it is barred by limitation as well as there being n....
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.... shall 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 whic....
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....nly due to plaintiff. Today, plaintiff and its advocate are only present, the learned advocate for the plaintiff pressed for allowing the withdrawal application contending that withdrawal is necessary to be allowed urgently, when I proposed him, keep the matter for Lok Adalat. The other sides, learned advocate and the other side defendant found absent, nobody was present on their side. However, since the plaintiff is going to withdraw the suit, it may be allowed but as the defendant has strongly objected for the withdrawal requesting for imposing heavy costs on the plaintiff since the plaintiff compelled them to face unnecessary litigation and bear costs of the suit including advocate fees etc. Finally, I came to the conclusion that withdrawal can be allowed, but the plaintiff has to pay the costs to the defendant to compensate their expenditure to face the proceeding. Though the defendant has asked for heavy costs, but considering the facts and circumstances the amount of Rs. 5,000/- would suffice the purpose. Hence, I proceed to pass the following order: ORDER 1. The Application (Exh.26) is allowed subject to costs of Rs. 5,000/- (Rupees Five Thousand only) to b....
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....ting 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." 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 a....
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....to entertain it." 11. One of the conditions which is required to be fulfilled for extending the benefit of Section 14 as per the law laid down by the Hon'ble Supreme Court is "failure of the prior proceedings due to defect of jurisdiction or other cause of like nature". The withdrawal of the suit filed by the Appellant on its own application cannot be said to be failure of prior proceeding due to defect of jurisdiction or other cause of a like nature. When we look into the order passed by the Civil Court as extracted above, it is clear that the Appellant himself has withdrawn the suit for filing the application, which was withdrawn with subject to payment of cost of Rs.5,000/- to the Defendant. Order XXIII Rule 1 under the application was filed for withdrawal of the suit provides as follows:- "ORDER XXIII WITHDRAWAL AND ADJUSTMENT OF SUITS [1. Withdrawal of suit or abandonment of part of claim. - (1) At any time after the institution of a suit, the plaintiff may as against all or any of the defendants abandon his suit or abandon a part of his claim: Provided that where the plaintiff is a minor or other person to whom the provisions contained i....
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....ust fail by reason of some formal defect, or where there are sufficient grounds for allowing the plaintiff to institute a fresh suit for the subject matter of suit or part of a claim, Court shall grant liberty to institute a fresh suit. No such liberty has been granted to the Operational Creditor to institute a fresh suit. We, thus, are satisfied that the Appellant is not entitled for benefit of Section 14 of the Limitation Act as has been contended by Counsel for the Appellant. 14. Counsel for the Appellant relied on judgment in "Sabarmati Gas Limited" (supra). In the above case, an application was filed under Section 9 by the operational creditor for computing the limitation for filing Section 9 where one of the issues was as to whether Appellant is entitled to exclude the period during which right to proceed against or sue the Corporate Debtor that remain suspended by virtue of Section 22(1) of the Sick Industrial Companies (Special Provisions Act, 1985). In paragraph 2 of the judgment, Hon'ble Supreme Court has noticed the issue which arose in the case, which is as follows:- "2. In the captioned appeal mainly, twin questions of law call for consideration id est :- ....
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....4 filed thereon, were then, posted for hearing. In short, Case No. 13 of 2010 was pending before the BIFR when SICA was repealed w.e.f. 01.12.2016 and Sections 8 and 9, IBC took its effect from 01.12.12016. Thus, obviously, proceedings under SICA were then pending before the BIFR when the default from the part of the respondent allegedly occurred and by virtue of Section 22 (1), SICA and the decisions referred above, the appellant could not have, then, resorted to any legal proceedings for enforcing any right which may result in recovery from the properties of the respondent company. For the same reasons, the contention of the respondent that pending the proceedings before the BIFR the appellant could have resorted to arbitration proceedings also has to fail." 16. The Hon'ble Supreme Court in the above case has also held that sufficient cause as contemplated in Section 5 of the Limitation Act also need to be considered. In paragraphs 24 and 25 following was laid down:- "24. When the limitation period for initiating CIRP under Section 9, IBC is to be reckoned from the date of default, as opposed to the date of commencement of IBC and the period prescribed therefor, is th....
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....ny liberty from the Court to institute a fresh proceeding and termination of suit cannot be held on ground of defect of jurisdiction on cause of like nature. Thus, an essential condition for extending the benefit of Section 14 is absent. We, thus, are satisfied that delay in filing Section 9 application with delay cannot be said to be a sufficient cause within the meaning of Section 5. It is relevant to notice that according to Part-IV of the application itself the default occurred on 30.04.2015 for Stage 1 and 23.10.2018 for Stage 2. Column 2 of Part-IV of Section 7 Application is as follows:- 2. AMOUNT CLAIMED TO BE IN DEFAULT AND THE DATE ON WHICH THE DEFAULT OCCURRED (ATTACH THE WORKINGS FOR COMPUTATION OF AMOUNT AND DATES OF DEFAULT IN TABULAR FORM) Principal: Rs. 72,55,402 (Stage 1) + Rs.21,91,122 (Stage 2) = Rs.94,46,524 (Rupees NinetyFour Lakhs Fourty Six Thousand Five Hundred and twenty four only) Interest @12% p.a. = Rs.84,31,866 (Rupees Eighty Four Lakhs Thirty one thousand Eight hundred and Sixty Six only) TOTAL: Rs.1,78,78,390/- (Rupees One crore seventy eight lakhs seventy eight thousand three hundred and ninety only) as on 27.07.2022. Date of Default: 30.04.....
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....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 like nature, is unable to entertain it. The conditions for exclusion are that the earlier proceedings should have been for the same relief, the proceedings should have been prosecuted diligently and in good faith and the proceedings should have been prosecuted in a forum which, from defect of jurisdiction or other cause of a like nature, was unable to entertain it. 70. In Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department and Ors. 16, a three-Judge Bench of this Court unanimously held that in the absence of any provision in the Arbitration and Conciliation Act, 1996 which excluded the applicability of Section 14 of the Limitation Act, there was no reason why Section 14 of the Limitation Act should not apply to an application for setting aside an arbitral award. This Court held: "19. A bare reading of sub-section (3) of Section 34 read with the proviso mak....
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....er Section 34 of the Act of 1996. 21. Section 14 of the Limitation Act deals with exclusion of time of proceeding bona fide in a court without jurisdiction. On analysis of the said section, it becomes evident that the following conditions must be satisfied before Section 14 can be pressed into service: (1) Both the prior and subsequent proceedings are civil proceedings prosecuted by the same party; (2) The prior proceeding had been prosecuted with due diligence and in good faith; (3) The failure of the prior proceeding was due to defect of jurisdiction or other cause of like nature; (4) The earlier proceeding and the latter proceeding must relate to the same matter in issue and; (5) Both the proceedings are in a court. 22. The policy of the section is to afford protection to a litigant against the bar of limitation when he institutes a proceeding which by reason of some technical defect cannot be decided on merits and is dismissed. While considering the provisions of Section 14 of the Limitation Act, proper approach will have to be adopted and the provisions will have to be interpreted so as to advance the cause of just....
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....imitation Act which also relates to extension of the period of limitation prescribed for any application or appeal. It vests a discretion in a court to extend the prescribed period of limitation if the applicant satisfies the court that he had sufficient cause for not making the application within the prescribed period. Section 5 of the Limitation Act does not place any outer limit in regard to the period of extension, whereas the proviso to sub-section (3) of Section 34 of the AC Act places a limit on the period of extension of the period of limitation. Thus the proviso to Section 34(3) of the AC Act is also a provision relating to extension of period of limitation, but differs from Section 5 of the Limitation Act, in regard to period of extension, and has the effect of excluding Section 5 alone of the Limitation Act." 21. The Hon'ble Supreme Court noticed that the Hon'ble High Court in the Writ Petition has stayed the proceedings under SARFAESI Act on the ground that proceedings are without jurisdiction. In paragraph 85 of the judgment, following has been noticed:- "85. In our view, since the proceedings in the High Court were still pending on the date of filing of th....