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Judgment
Ashok Bhushan, J.
This Appeal has been filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 (“Code” for short) against the judgment and order dated 11.11.2019 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, approving the Resolution Plan. Brief facts of the case are:-
‘New Phaltan Sugar Works Limited’ (Corporate Debtor) was put under Corporate Insolvency Resolution Process (CIRP) by order dated 22.02.2019 passed by the Adjudicating Authority. The Appellant i.e. ‘Central Board of Trustees, Employees’ Provident Fund Organization’ filed a claim for a sum of Rs.4,40,77,899/- which was duly admitted by the Interim Resolution Professional (IRP). In the Resolution Plan, the Provident Fund dues of Rs. 4,40,77,899/- were accepted to be paid 100% within three months. The Appellant was not party to the proceeding before the Adjudicating Authority. Writ Petition No. 12386 of 2019- “Shri Dutt India Private Limited and Anr. vs. The Government of India & Ors.” was filed in the Bombay High Court where the Appellant before us was Respondent No.3. The Writ Petitioner before the Bombay High Court claimed to be purchaser of the Corporate Debtor. Before the Bombay High Court, it was submitted on behalf of the Respondent No.3 (Appellant before us) that their Provident Fund dues are to the tune of Rs. 23 Crores approx. and Respondent No.3 (Appellant before us) proposes to either file Review Petition before the NCLT or challenge the order dated 11.11.2019 before this Tribunal. The Bombay High Court noticing the above submission passed an order on 03.12.2019.
The Appellant applied for certified copy of the impugned judgment. Appellant was issued certified true copy (free of cost) on 05.02.2021 by the Registry of the NCLT, Mumbai Bench. After obtaining the copy of certified order on 05.02.2021, the present Appeal was filed on 17.06.2021 before this Tribunal. An Application under Section 5 of the Limitation Act, 1963 for condonation of delay has been filed by the Appellant. Notice was issued by this Tribunal on Respondent by order dated 30.07.2021. The Respondent appeared and filed their reply.
Learned Counsel appearing for the Respondent at the very outset submitted that this Appeal is barred by time and hence is liable to be rejected as barred by time without entering into the merits of the case.
Learned Counsel for the Appellant refuted the submission of the Learned Counsel for the Respondent and said that sufficient cause has been made in the Application under Section 5 for the condonation of delay. The parties were heard on the question of limitation on 08.12.2021.
The submission of the Learned Counsel for the Appellant is that the Appellant was provided free of cost copy of the order only on 05.02.2021 hence period of limitation shall start running only from 05.02.2021 and by virtue of the order passed by the Hon’ble Supreme Court in Suo Motu Writ Petition No. 3 of 2020, the Appellant is entitled for benefit of the order. Hence, the Appeal filed on 17.06.2021 is well within time.
Learned Counsel for the Appellant, however, does not dispute that by 03.12.2019 Appellant was well aware of the order dated 11.11.2019 but he submitted that in view of the fact that the Writ Petition where the Appellant was Respondent No.3 has raised a claim of Rs. 23 Crores and was prosecuting the proceeding which entitled for benefit of Section 14(2) of the Limitation Act, 1963. The Writ Petition being still pending, this Appeal is well within time.
Learned Counsel for the Respondent refuting the submissions of Learned Counsel for the Appellant contends that the Appellant being well aware of the order dated 11.11.2019 on 03.12.2019 he could have filed an Appeal within 30 days thereafter. It is submitted that the Appellant is not entitled for the benefit of judgment of the Hon’ble Supreme Court in Suo Motu Writ Petition No. 03 of 2020 since the limitation of filing Appeal has long expired before order was passed by the Hon’ble Supreme Court in Suo Motu Writ Petition giving benefit of limitation w.e.f. 25.03.2020. It is submitted that the Appellant is not entitled for the benefit of Section 14(2) since the proceeding before the Bombay High Court cannot be said to be proceeding having defect of jurisdiction or any other similar cause.
Learned Counsel for the parties in support of their respective submissions has cited judgments of the Hon’ble Supreme Court and this Tribunal.
There is no dispute between the parties with regard to (a) the Appellant was not party to CP No. 2956/2018 although they had filed their claim which was accepted by the Insolvency Resolution Professional; (b) Appellant was well aware of the order dated 11.11.2019 by 03.12.2019 which fact is recorded in the order of the Bombay High Court dated 03.12.2019 passed in W.P No. 12386 of 2019.
From the submissions of the Learned Counsel for the parties and material on record, following issues arise for consideration in the present Appeal:-
Whether limitation for filing the Appeal for the Appellant against the order dated 11.11.2019 passed by the Adjudicating Authority shall commence only w.e.f. 05.02.2021 when he has been provided with certified copy of the judgment (free of cost)?
Whether the Appellant is entitled for the benefit of judgment of the Hon’ble Supreme Court in Suo Moto Writ Petition No. 3 of 2020?
Whether on account of Appellant prosecuting its claim in Writ Petition No. 12386 of 2019 as Respondent No.3, which Writ Petition is still pending, the Appellant is entitled for the benefit of Section 14(2) of the Limitation Act, 1963 for presenting the present Appeal?
ISSUE NO. (1):-
The submission of the Learned Counsel for the Appellant is that he is entitled to reckon the period of limitation for filing the present Appeal w.e.f. 05.02.2021 when he was provided certified copy (free of cost). Appellant in support of his submission has placed reliance on two judgments of this Tribunal i.e. “Mahendra Trading Company and Ors. vs. Hindustan Controls and Equipment Pvt. Ltd.- Company Appeal (AT) (Insol.) No. 97 of 2018 (decided on 25.11.2019)” and “Shaji Purushothaman vs. S. Rajendran & Ors.- Company Appeal (AT) (Insol.) No. 551 of 2020 (decided on 27.08.2020)” and Judgment of the Hon’ble Supreme Court in “Sagufa Ahmed and Ors. vs. Upper Assam Polywood Products Pvt. Ltd. & Ors.-(2021) 2 SCC 317”.
In the case of “Mahendra Trading Company and Ors.” (supra), this Tribunal held that when computed from the date when free certified copy was received by the Appellant till the date when Appeal was filed on 05.03.2018, 30 days was to complete on 27.02.2018 and there was only six days’ delay in filing the Appeal which delay was condoned.
In “Shaji Purushothaman” (supra) again the Appeal was filed within 45 days of receiving certified copy free of cost. The delay of 14 days was condoned.
“Sagufa Ahmed” is a case where the Hon’ble Supreme Court had occasion to consider the provisions of Sections 421 and 420 of the Companies Act, 2013. In the above case, the Appellant had applied certified copy of the order of the NCLT dated 25.10.2019 on 21.11.2019 which copy was received on 19.12.2019. The Appeal was filed on 20.07.2020 along with an Application for condonation of delay. In paragraphs 12 and 13 following was laid down:-
“12.Therefore, it is true, as contended by the appellants, that the period of limitation of 45 days prescribed in Section 421(3) would start running only from the date on which a copy of the order of the Tribunal is made available to the person aggrieved. It is also true that under Section 420(3) of the Act read with Rule 50, the appellants were entitled to be furnished with a certified copy of the order free of cost.
13.Therefore if the appellants had chosen not to file a copy application, but to await the receipt of a free copy of the order in terms of Section 420(3) read with Rule 50, they would be perfectly justified in falling back on Section 421(3), for fixing the date from which limitation would start running. But the appellants in this case, chose to apply for a certified copy after 27 days of the pronouncement of the order in their presence and they now fall back upon Section 421(3).”
The above was a case where certified copy of the order of the NCLT was applied within period of limitation i.e. within period of one month. The Hon’ble Supreme Court held that when they had applied for certified copy of the judgment after 27 days of the pronouncement of the order they cannot fall back on Section 421(3) of the Companies Act, 2013 which requires providing free copy to the parties. Judgment of the “Sagufa Ahmed” came for consideration before the Hon’ble Supreme Court in “V. Nagarajan v. SKS Ispat and Power Ltd. & Ors.- Civil Appeal No. 3327 of 2020”. Three judges Bench in ‘V. Nagarajan’s case has categorically held that limitation for filing an Appeal under Section 61 of the ‘I&B Code’ shall begin from the date of pronouncement of the judgment. A party cannot wait. It was also noticed that the scheme under Section 60 of the ‘I&B Code’ is little different from the scheme of limitation as provided under Sections 420 and 421 of the Companies Act, 2013. In paragraphs 20 and 21, following was laid down:-
“20.The appellant had argued that the order of the NCLAT notes that the NCLT registry had objected to the appeal in regard to limitation, to which the appellant had filed a reply stating that the limitation period would begin from the date of the uploading of the order, which was 12 March 2020. The appellant submitted that the suo motu order of this Court dated 23 March 2020, taking retrospective effect from 15 March 2020, made under Article 142 of the Constitution, extended the limitation until further orders, which renders the appeal filed on 8 June 2020 within limitation. However, it is important to note that this Court had only extended the period of limitation applicable in the proceedings, only in cases where such period had not ended before 15 March 2020. In this case, owing to the specific language of Section 61(1) and 61(2), it is evident that limitation commenced once the order was pronounced and the time taken by the Court to provide the appellant with a certified copy would have been excluded, as clarified in Section 12(2) of the Limitation Act, if the appellant had applied for a certified copy within the prescribed period of limitation under Section 61(2) of the IBC. The construction of the law does not import the absurdity the appellant alleges of an impossible act of filing an appeal against an order which was uploaded on 12 March 2020. However, the mandate of the law is to impose an obligation on the appellant to apply for a certified copy once the order was pronounced by the NCLT on 31 December 2019, by virtue of Section 61(2) of the IBC read with Rule 22(2) of the NCLAT Rules. In the event the appellant was correct in his assertion that a correct copy of the order was not available until 20 March 2020, the appellant would not have received a certified copy in spite of the application till such date and accordingly received the benefit of the suo motu order of this Court which came into effect on 15 March 2020. However, in the absence of an application for a certified copy, the appeal was barred by limitation much prior to the suo motu direction of this court, even after factoring in a permissible fifteen days of condonation under Section 61(2). The Court is not empowered to condone delays beyond statutory prescriptions in special statutes containing a provision for limitation.
D Conclusion
21.The answer to the two issues set out in Section C of the judgement- (i) when will the clock for calculating the limitation period run for proceedings under the IBC; and (ii) is the annexation of a certified copy mandatory for an appeal to the NCLAT against an order passed under the IBC – must be based on a harmonious interpretation of the applicable legal regime, given that the IBC is a Code in itself and has overriding effect. Sections 61(1) and (2) of the IBC consciously omit the requirement of limitation being computed from when the “order is made available to the aggrieved party”, in contradistinction to Section 421(3) of the Companies Act. Owing to the special nature of the IBC, the aggrieved party is expected to exercise due diligence and apply for a certified copy upon pronouncement of the order it seeks to assail, in consonance with the requirements of Rule 22(2) of the NCLAT Rules. Section 12(2) of the Limitation Act allows for an exclusion of the time requisite for obtaining a copy of the decree or order appealed against. It is not open to a person aggrieved by an order under the IBC to await the receipt of a free certified copy under Section 420(3) of the Companies Act 2013 read with Rule 50 of the NCLT and prevent limitation from running. Accepting such a construction will upset the timely framework of the IBC. The litigant has to file its appeal within thirty days, which can be extended up to a period of fifteen days, and no more, upon showing sufficient cause. A sleight of interpretation of procedural rules cannot be used to defeat the substantive objective of a legislation that has an impact on the economic health of a nation.”
In a recent judgment of this Tribunal in “M/s. Hasmukh N. Shah & Associates vs. M/s. Victoria Entertainment Pvt. Ltd.- Company Appeal (AT) (Insol.) No. 918 of 2021 (decided on 01.12.2021)”, it was held that a party cannot claim limitation and file an Appeal after long expiry of limitation claiming that he was not provided free of cost copy of the judgment. The period of limitation shall not stop running merely because free of cost copy was not provided.
In the present case, the judgment of the Adjudicating Authority was delivered on 11.11.2019 and the Appellant was well aware of the judgment and in fact made statement before the Bombay High Court on 03.12.2019 that they propose to file an Appeal against the order dated 11.11.2019. Paragraph 8 of the judgment of the Bombay High Court where following statement was recorded of Respondent No.3 who is Appellant before us:-
“8.Shri Sureshkumar learned Counsel for respondent No.3 submitted that petitioner No.2 owes provident fund dues to the tune of Rs. 23 crores approximately. He submits that respondent No.3 proposes to either file Review Petition before NCLT or challenge the order dated 11.11.2019 before the Appellate Tribunal. Respondent No.3 is at liberty to take appropriate action.”
When the Appellant himself stated before the Bombay High Court that they intend to challenge the order dated 11.11.2019 there was no occasion for him to wait till 05.02.2021 for obtaining a certified free of cost copy and file an Appeal. He has disclosed their intention to file an Appeal on 03.12.2019. He cannot be allowed to contend that since he received certified copy (free of cost) on 05.02.2021, his Appeal is within time.
ISSUE NO. (2):-
Now coming to Issue No. (ii) i.e. claim of the Appellant to receive the benefit of judgment of the Apex Court in Suo Motu Writ Petition No. 03 of 2020. The present is a case where order was passed on 11.11.2019 and 30 days’ period expired on 10.12.2019. The order of Suo Motu Writ Petition was relied. The Hon’ble Supreme Court in the aforesaid order directed for extension of limitation from 15.03.2020 due to the COVID-19 Pandemic. The limitation for filing the Appeal of the Appellant long expired much before 15.03.2020, hence, the benefit of order of the Hon’ble Supreme Court dated 23.03.2020 in Suo Motu Writ Petition cannot be availed by the Appellant.
ISSUE NO. (3):-
Now coming to Issue No. (iii) which is a claim of benefit of Section 14(2) by the Appellant, it is useful to refer to Section 14(2) which provides as follows:-
“14.Exclusion of time of proceeding bona fide in Court without jurisdiction.- ……….(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 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.”
The Appellant’s submission is that since the Writ Petition No. 12386 of 2019 filed by the Respondent in the Bombay High Court was being prosecuted by the Appellant as Respondent No.3, the Period during which the Writ Petition was pending (which Writ Petition is still pending) has to be given benefit under Section 14(2). Learned Counsel for the Appellant submits that it does not make any difference whether the Appellant was prosecuting the Writ Petition as Petitioner or was prosecuting his claim as Respondent. He has placed reliance on Explanation (b). We are of the view that in so far Explanation (b) is concerned, the Petitioner is right in his submission. The benefit under Section 14(2) can be claimed both by a Writ Petitioner or the Respondent who was prosecuting its claim as Writ Petitioner. However, there is another pre-condition of applicability of Section 14(2) which is not fulfilled by the Appellant. Section 14(2) contains a pre-condition i.e. “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”.
Thus, the benefit of Section 14(2) can be claimed of the period during which bonafide proceeding is prosecuted in a Court which due to defect of jurisdiction or other cause of a like nature, is unable to entertain it. The present is not a case where Bombay High Court was unable to entertain the Writ Petition which was filed and pending in the Bombay High Court. Writ Petition was filed under Article 226 of the Constitution of Indian and it cannot be accepted that High Court has no jurisdiction to entertain the Writ Petition. Thus, the benefit of Section 14(2) as claimed by the Appellant cannot be extended in the present case.
Learned Counsel for the Appellant has placed reliance on the judgment of the Hon’ble Supreme Court in “Sesh Nath Singh and Ors. vs. Baidyabati Sheoraphuli Co-operative Bank Ltd. & Ors.- Civil Appeal No. 9198 of 2019 (decided on 22.03.2021)”. In the above case, an Application was filed under Section 7 of the ‘I&B Code’ which was admitted by the Adjudicating Authority. In the above case, it was found that right to sue accrued on 31.03.2013 when the account of the Corporate Debtor was declared NPA. The Financial Creditor has initiated proceeding under Section 13(2) of the SARFAESI Act, 2002 by issuing a notice on 18.01.2014. The proceedings under Section 13(2) were stayed by the High Court by its order dated 24.07.2017 when it passed interim order. High Court was prima facie of the view that Financial Creditor being a Co-operative Bank, it could not invoke the provisions of the SARFAESI Act, 2002. In the above context, Section 14 of the Limitation Act, 1963 came for consideration before the Hon’ble Supreme Court. The Hon’ble Supreme Court held that benefit of proceedings under the SARFAESI Act, 2002 is to be given to the Financial Creditor under Section 14 since prima facie the proceedings before the SARFAESI Act, 2002 were suffering from defect of jurisdiction. In Paragraphs 70, 84, 85 & 86, following was laid down:-
“70.Section 14 (2) of the Limitation Act provides that in computing the period of limitation for any application, the time during which the petitioner had 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 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. xxx xxx xxx
84.To sum up, Section 14 excludes the time spent in proceeding in a wrong forum, which is unable to entertain the proceedings for want of jurisdiction, or other such cause. Where such proceedings have ended, the outer limit to claim exclusion under Section 14 would be the date on which the proceedings ended.
85.In the instant case, the proceedings under the SARFAESI Act may not have formally been terminated. The proceedings have however been stayed by the High Court by an interim order, on the prima facie satisfaction that the proceedings initiated by the financial creditor, which is a cooperative bank, was without jurisdiction. The writ petition filed by the Corporate Debtor was not disposed of even after almost four years. The carriage of proceedings was with the Corporate Debtor. The interim order was still in force, when proceedings under Section 7 of the IBC were initiated, as a result of which the Financial Creditor was unable to proceed further under the SARFAESI Act.
86.In the instant case, even if it is assumed that the right to sue accrued on 31.3.2013 when the account of Corporate Debtor was declared NPA, the financial creditor initiated proceedings under SARFAESI Act on 18th January 2014, that is the date on which notice under Section 13(2) was issued, proceeded with the same, and even took possession of the assets, until the entire proceedings were stayed by the High Court by its order dated 24th July 2017. The proceedings under Section 7 of the IBC were initiated on 10th July 2018.
87.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.”
The above judgment does not come to any aid of the Appellant since the benefit under Section 14(2) of the Limitation Act was given in the above case on the prima facie ground that SARFAESI proceedings is without jurisdiction and which proceedings were already stayed by the High Court by the interim order on the aforesaid ground. As noted above, proceedings of Writ Petition before the Bombay High Court does not suffer from any defect of jurisdiction, hence, judgment of the Hon’ble Supreme Court in “Sesh Nath Singh and Ors.” (supra) does not come to any aid of the Appellant.
In view of the foregoing discussion, we are of the view that this Appeal against the judgment dated 11.11.2019 of the Adjudicating Authority filed in this Tribunal on 17.06.2021 is clearly barred by time and no case has been made out to claim benefit of Sections 5 and 14(2) of the Limitation Act to the Appellant.
The Appeal is dismissed as barred by time.