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TMI Blog2023 (10) TMI 1171X X X X Extracts X X X X X X X X Extracts X X X X ..... nature. Thus, an essential condition for extending the benefit of Section 14 is absent. Thus, the delay in filing Section 9 application with delay cannot be said to be a sufficient cause within the meaning of Section 5. The benefit for exclusion of the time during which proceedings under SARFAESI Act was pending was based on the observation that the said proceedings are without jurisdiction, on which prima facie finding High Court has granted stay. Hon ble Supreme Court in Sesh Nath Singh [ 2021 (3) TMI 1183 - SUPREME COURT ] also observed that Section 5 of the Limitation Act is also applicable in proceedings under Section 9 and on sufficient cause, the said delay can be condoned - The Judgment of Sesh Nath Singh was in facts and grounds as noted above and does not help the Appellant in the present case. It is further observed that that the proceedings under IBC are not proceedings for recovery of contractual dues, as is apparent from the facts of the present case the Operational Creditor has initiated proceeding for recovery of its contractual dues arising out of contract between the parties. Suit for recovery of dues was already filed by the Appellant which was withd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st. 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 no agreement placed on record for interest it does not fulfil the threshold of Rs.1 Crore. Aggrieved by the impugned order, this Appeal has been filed. 3. We have heard Shri D. Rishabh Gupta, Learned Counsel for the Appellant. 4. Learned Counsel for the Appellant challenging the order impugned submits that the Adjudicating Authority committed error in dismissing the application as barred by time. It is submitted that the Civil Suit filed by the Appellant being Civil Suit No.67 of 2017 was filed on 03.10.2017 and could be withdrawn on 18.07.2022 which period need to be excluded giving benefit of Section 14 of the Limitation Act. It is submitted that there is arbitration clause in the agreement and the suit could not have been decided on merits, hence, the benefit of Section 14 needs to be extended to the Appellant. It is submitted that the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ituted 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 which a former civil proceeding was pending, the day on which that proceeding was instituted and the day on which it ended shall both be counted; (b) a plaintiff or an applicant resisting an appeal shall be deemed to be prosecuting a proceeding; (c) misjoinder of parties or of causes of action shall be deemed to be a cause of a like nature with defect of jurisdiction. 9. According to own case of the Appellant, Appellant has filed Civil Suit No. 67 of 2017 dated 03.10.2017 for recovery of monies for Stage 1 i.e. money due against Purchase Orders 1 and 2. In the suit, an application was filed by the Appellant under Order XXIII Rule 1 of the Code of Civil Procedure for withdrawal of the suit which was opposed by the Defendant. The Application for withdrawal was allowed subject to cost of Rs.5,000/-. On the basis of allowing the application for withdra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 be paid to the other side. 2. Concerned clerk is hereby directed to dispose of the matter in view of application (Exh.26) after payment of costs above mentioned. 3. Parties to take note. 10. For taking benefit of Section 14 of the Limitation Act, several preconditions are to be fulfilled as per the provisions of the statute. This Tribunal had occasion to consider the essentials which are required to be fulfilled for extending the benefit under Section 14 of the Limitation Act in IA No.130 of 2023 in Company Appeal (AT) (Insolvency) No.37 of 2023- SREI Equipment Finance Ltd. vs. Kalpataru Properties Pvt. Ltd. . This Tribunal in the aforesaid judgment has noticed the law laid down by the Hon ble Supreme Court on Section 14. It is useful to extract paragraphs 15, 16, 17 and 18 of the Judgement: - 15. In the judgment of Hon ble Supreme Court which arose out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation. 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 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 bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in rules 1 to 14 of Order XXXII extend, neither the suit nor any part of the claim shall be abandoned without the leave of the Court. (2) An application for leave under the proviso to subrule (1) shall be accompanied by an affidavit of the next friend and also, if the minor or such other person is represented by a pleader, by a certificate of the pleader to the effect that the abandonment proposed is, in his opinion, for the benefit of the minor or such other person. (3) Where the Court is satisfied.- (a) that a suit must fail by reason of some formal defect, or (b) that there are sufficient grounds for allowing the plaintiff to institute a fresh suit for the subject matter of a suit or part of a claim, it may, on such terms as it thinks fit, grant the plaintiff permission to withdraw from such suit or such part of the claim with liberty to institute a fresh suit in respect of the subject-matter of such sui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 :- (i) Whether in computation of the period of limitation in regard to an application filed under Section 9, IBC the period during which the operational creditor's 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) (SICA) can be excluded, as provided under Section 22 (5) of SICA? (ii) Whether the respondent has raised a dispute which is describable as 'pre-existing dispute between itself and the appellant warranting dismissal of application under Section 9 of the IBC at the threshold? While considering the stated twin questions certain other allied questions of relevance may also crop up for consideration, which we will state and consider at the appropriate time. The respondent -corporate debtor was the petitioner in Case No. 13 of 2010 before the Board for Industrial and Financial Reconstruction (BIFR) and the appellant herein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 three years as provided by Section 137 of the Limitation Act, 1963 and the same would commence from the date of default and is extendable only by application of Section 5 of the Limitation Act, 1963 it is incumbent on the Adjudicating Authority to consider the claim for condonation of the delay when once the proceeding concerned is found filed beyond the period of limitation. 25. As relates Section 5 of the Limitation Act showing 'sufficient cause' is the only criterion for condoning delay. 'Sufficient Cause' is the cause for which a party could not be blamed. We have already taken note of the legal bar for initiation of proceedings against an industrial company by virtue of Section 22 (1), SICA and obviously, when a party was thus legally disabled from resorting to legal proceeding for recovering the outstanding dues without the permission of BIFR and even on application permission therefor was not given the period of suspension of legal proceedings is exclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... = 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: 30.04.2015 for Stage 1 and on 23-10-2018 for Stage 2. Computation Table- ANNEXURE-J 19. Learned Counsel for the Appellant has also raised submission that there is arbitration clause in contract between the parties and as per the argument of the Appellant, suit was withdrawn by the Appellant because of the reason that there was arbitration clause. It is not the case of the Appellant that Appellant has instituted any proceeding for arbitration. We are conscious of the legal position that a mere availability of the arbitration or any other proceeding by the operational creditor cannot preclude the operational creditor to initiate proceeding under Section 9 but the question which has arisen in the present case is as to whether application was filed within limitation by the Appellant. As observed above, when the operational creditor is not entitled to get benefit of the period during which Civil Suit filed by the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 makes it abundantly clear that the application for setting aside 14 (2006) 6 SCC 239 15 (2001) 8 SCC 470 16 (2008) 7 SCC 169 the award on the grounds mentioned in sub-section (2) of Section 34 will have to be made within three months. The period can further be extended, on sufficient cause being shown, by another period of 30 days but not thereafter. It means that as far as application for setting aside the award is concerned, the period of limitation prescribed is three months which can be extended by another period of 30 days, on sufficient cause being shown to the satisfaction of the court. 20. Section 29(2) of the Limitation Act inter alia provides that where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period of limitation prescribed by the Schedule, the provisions of Section 3 shall apply as if such period was the period prescribed by the Schedule and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not 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 justice rather than abort the proceedings. It will be well to bear in mind that an element of mistake is inherent in the invocation of Section 14. In fact, the section is intended to provide relief against the bar of limitation in cases of mistaken remedy or selection of a wrong forum. On reading Section 14 of the Act it becomes clear that the legislature has enacted the said section to exempt a certain period covered by a bona fide litigious activity. Upon the words used in the section, it is not possible to sustain the interpretation that the principle underlying the said section, namely, that the bar of limitation should not affect a person honestly doing his best to get his case tried on merits but failing because the court is unable to give him such a trial, would not be applicable to an application filed under Section 34 of the Act of 1996. The principle is clearly applicable not only to a case in which a litigant brings his application in the court, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound 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 the application under Section 7 of the IBC in the NCLT, the entire period after the initiation of proceedings under the SARFAESI Act could be excluded. If the period from the date of institution of the proceedings under the SARFAESI Act till the date of filing of the application under Section 7 of the IBC in the NCLT is excluded, the application in the NCLT is well within the limitation of three years. Even if the period between the date of the notice under Section 13(2) and date of the interim order of the High Court staying the proceedings under the SARFAESI Act, on the prima facie ground of want of jurisdiction is excluded, the proceedings under Section 7 of IBC are still within limitation of three years. 22. The benefit for exclusion of the time during which proceedings under SARFAESI Act was pending was based on the observation that the said proceedings are without jurisdiction, on which prima facie finding High Court has granted stay. Hon ble Supreme Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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