M/s. V. Pathy Enterprises vs M/s. Ohm Srinivasa Paper Boards Pvt. Ltd.

The brief facts of this case are that proceedings under Section 9 of the Insolvency and Bankruptcy Code, 2016 to be read with Rule 6 of the Insolvency and Bankruptcy [Application to Adjudicating Authority] Rules, 2016, was instituted before the NCLT, Chennai, which was numbered as CP/IB/130(CHE)/2021, the said proceedings stood dismissed by an order dated 04^th November 2022.

The instant Company Appeal in Comp. App. (AT)(CH)(Ins) 258 of 2023 has been preferred against the said Impugned Order. This Company Appeal is accompanied with IA/817/2023 praying for condonation of 90 days of delay which has chanced in preferring the appeal.

The Learned Counsel for the Appellant has argued that for the reasons given in Para 3 of his Application the delay deserves to be condoned because after the Judgment was rendered by NCLT on 04^th November 2022, the appellant realised that there were certain arithmetical errors in calculating the amount of dues which was the crux of the matter of the Company Petition. Accordingly, he had filed an application for correcting those arithmetical calculations, some time was taken by NCLT to decide on this issue which has caused the delay and therefore the delay of 119 days deserves to be condoned. On a simple computation, it is not in controversy that in respect of the judgment of 4^th November 2022 the period of limitation for preferring an application would expire on 4^th December 2022 but the records reveal as per the report/record of the registry that it was filed on 12^th of June 2023.

The Impugned order was received by the Appellant on 28^th November 2022 and later he chose to invoke the provisions under Rule 11 of NCLT Rules, 2016 seeking corrections and filed the relevant Application on 2^nd December 2022 which was dismissed on 12^th of May 2023. So far as the provisions contained in the Insolvency and Bankruptcy Code are concerned the period of limitation has explicitly been provided under Proviso to sub section 2 of Section 7, that is, beyond the period of 30 days the appellate tribunal has got powers to condone the delay with the upper limit of 15 days period only and not beyond that. Once a special statute like IBC 2016 puts a restriction on this Tribunal in respect of how much delay can be condoned, the same cannot be extended in the exercise of this appellate jurisdiction.

The Learned Counsel for the Appellant had made reference to a Judgment as reported in (2021) Vo. 10 SCC 401, Kalpraj Dharamshi & Anr. v Kotak Investment Advisors Ltd. where the Hon’ble Apex Court has observed that in the proceedings under Section 61, the principles underlying section 14 of the Limitation Act, would be attracted in computing the period of limitation. However, in the said case, the party had filed a proceeding under Article 226 of the Constitution of India for adjudication of a right against the Impugned Order by invoking Article 226 and prosecuted the same with due diligence and good faith except that the choice of forum suffered from jurisdiction. The said principle will not apply herein because appellant had consciously filed an application for correction of alleged errors before NCLT and not before a wrong forum for redressal of its grievances in good faith as against the impugned order. Hence, the said principles of section 14 on account of choosing a wrong forum would not be attracted here, contrary to the arguments of the Counsel for the Appellant.

Counsel for the Appellant also makes reference to yet another Judgment of the Hon’ble Supreme Court being 2021(7) SCC Page 313 in Sesh Nath Singh vs Kotak Investment Advisors Limited and another. In this case, it has been noted that Section 14 of Limitation Act will apply to an application under Section 7 of IBC, 2016 and that time taken in proceeding bona fide in a wrong forum will IA No.817/2023 in Comp App (AT) (CH) (Ins) No.258/2023 Page 3 of 4 stand excluded from even when the proceedings therein are still pending, while computing the limitation period and that IBC will not exclude operations of section 14 of Limitation Act. In the instant application, that too cannot be a subject matter for the reason being that, according to the appellant himself, he was in receipt of the Impugned Order on 28^th November 2022, and instead of approaching this Appellate jurisdiction he chose to agitate the matter before NCLT itself. There was no bona fide mistake in choosing the Appellate Forum. Therefore, the principles of sub-Section 2 of Section 14 will not be attracted. Since a statutory period of limitation prescribed by a special statute cannot be expanded by the Tribunal exercising its appellate jurisdiction under section 61 owing to a bar created by proviso sub section 2 of section 61 coupled with the reasons which has been given in the delay condonation application being not satisfactory the delay which has chanced in filing the appeal would hereby stand not condoned. Accordingly, the IA/817/2023 is hereby dismissed. Consequently, the appeal in Comp.App.(AT)(CH)(Ins) No.258/2023 too would stand dismissed. All pending applications if any, would stand disposed of.