V. Nagarajan vs ICICI Bank Ltd.

(Hybrid Mode)

Per : Justice Sharad Kumar Sharma, Member (Judicial):

Brief facts of the instant Company Appeal (AT) (CH) (INS) No. 14 / 2022 are;

The Appellant who initially happened to be the Resolution Professional of M/s. Cethar Limited, the Company under Liquidation, later was appointed as a Liquidator of the Corporate Debtor.

Initially, CA / 17 / 2018, u/s. 43 & 45 of IBC, was filed by Resolution Professional to set aside the avoidance transactions. During the course of the proceedings, an Application was preferred, being MA No. 68 / 2018 which was filed in CA / 17 / 2018 by the Resolution Professional (the Appellant herein), seeking leave to amend the pleadings in CA / 17 / 2018 filed in CP / 511 / IB / 2017 by making certain insertions therein.

The Ld. Tribunal after considering the rival contentions and particularly considering the grounds taken in the Application for seeking an amendment had proceeded to pass an order on 17.08.2018 whereby, the Ld. Tribunal had allowed MA No. 68 / 2018, with a direction to the Resolution Professional to file the amended Company Application CA / 17 / 2018 and to circulate the copy of the amended Application to the other side within a week’s time. The Respondents were also called upon to file reply to said amended Application in the subsequent week. But, the said amendment was not carried by the Appellant herein.

On the other hand, the Appellant after a lapse of about 495 days, filed yet another Application being MA / 46 / 2020 praying for, to condone the delay of 495 days in filing of the amended copy of Application CA / 17 / 2018, as it has been directed by the earlier order passed on 17.08.2018, in MA / 68 / 2018 in CA / 17 / 2018. The said application MA / 46 / 2020 was filed under Section 45 & 60 of I & B Code, 2016, read with Rule 11 & 14 of NCLT Rules and Section 5 of Limitation Act.

The relief, sought by the Appellant in the Application CA / 17 / 2018, was admittedly to set aside and avoid the sale of the property of the Corporate Debtor to the Respondent therein in proceedings under Section 43 & 45 of I & B Code, 2016. An amendment therein was sought by the Appellant in CA / 17 / 2018 by way of filing a MA / 68 / 2018 to incorporate the additional grounds to establish the sale of the Corporate Debtor’s property as void on grounds of non-compliance with the mandatory provisions as contained under Section 180 of the Companies Act, 2013.

It is an admitted case that the said application MA / 68 / 2018 in CA / 17 / 2018 by the Appellant, was allowed on 17.08.2018, but, the amendment thus directed was not carried out by the Appellant. Instead preferred the Application being MA / 46 / 2020 prefer u/s. 45 & 60 of IB Code r/w Rule 11 and Rule 14 of the NCLT Rules to be read with Section 5 of the Limitation Act and Section 148 of the Code of Civil Procedure.

The provisions as contained under Rule 11 of the NCLT Rules, 2016, grants a power to the Tribunal, to exempt the parties from compliance with any of the rules for sufficient cause and to issue directions relating to practice and procedure in the interest of justice. In addition, the Appellant in his application, MA / 46 / 2020 contended that, his application for condonation of delay will be within the provisions contained under Section 148 of C.P.C. Section 148 of C.P.C. permits for an enlargement of time for any period, which has been fixed or granted by the Court for doing of any act prescribed or allowed by the Court in a proceedings governed by Code of Civil Procedure. But, by virtue of an insertion made by Act No. 46 of 1999, the said power of the Court to extend the prescribed time period has been restricted, to a maximum period of 30 days.

In the instant case, the application MA / 46 / 2020 preferred by the Appellant on 25.12.2019 sought condonation of 495 days of delay in complying with the order of 17.08.2018, passed in MA / 68 / 2018 along with the necessary permission to carry out the necessary amendment. It is this application which has been rejected by the impugned order of 27.04.2021.

It is settled law that, the general rule or procedure will not prevail over a special statute. The proceedings before the Ld. NCLT are governed by the provisions contained under Section 424 of the Companies Act 2013, which depends upon the principles of natural justice which is again guided by the provisions as contained under the Code of Civil Procedure, 1908.

If that be the mandate of law, where principally the principles of Code of Civil Procedure has been allowed to guide the proceedings under I & B Code, 2016, grant of permission to carry out the amendments by the order of 17.08.2018, would be falling to be within an ambit of the principles of Order VI Rule 17 of the Code of Civil Procedure, permitting the Appellant to carry out the said amendments as were prayed for by him in MA / 68 / 2018. In that eventuality, if the provisions contained under Order VI Rule 17 is attracted to be made applicable for the purposes of carrying out the amendment in the pleadings, as it was sought for by the Appellant, the embargo as contained under Order VI Rule 18 as substituted by Act No. 22 of 2002 will come into play, and would be applicable, in the instant case.

Order VI Rule 18 reads as under:

``18. Failure to amend after Order.— If a party who has obtained an order for leave to amend does not amend accordingly within the time limited for that purpose by the order, or if no time is thereby limited then within fourteen days from the date of the order, he shall not be permitted to amend after the expiration of such limited time as aforesaid or of such fourteen days, as the case may be, unless the time is extended by the Court.’’

On a simpliciter reading of the aforesaid provision, it follows that, where any party to a proceedings has obtained an order, permitting him to carry out the amendment, and he has to carry out the said amendments within the time limit as prescribed by the Court and in case no time limit has been set in the order, the said amendments have to be carried within 14 days from the date of the order, in which such an amendment has been allowed. The intention behind this provision is to prevent the abuse of the procedural law, by a party to the proceedings to buy time and to prolong the proceedings to the detriment of the other party.

In that eventuality, the prayer contained in the MA / 46 / 2020, to carry out amendments in CA / 17 / 2018, 495 days after the date of Order permitting such amendments is well beyond the ambit provided under Order VI Rule 18, and therefore, under the normal set of circumstances, it could not have been granted by the Ld. Tribunal.

Besides that, looking into the finding, that has been recorded by the Ld. Tribunal in the impugned order dated 27.04.2021, we find that the Appellant has attempted to explain the delay in carrying out the amendments in terms of negligence of his Counsel. The Appellant has stated that he instructed his Counsel to carry out the amendment, who inturn is said to have instructed his Clerk to carry the same before the Registry of the Ld. Tribunal who did not carry out the assigned task. He has alleged that both the Counsel and his Clerk have not acted in accordance with the advice and instructions of the Appellant and therefore, he could not carry out the amendments in time. This is not a credible explanation, even if we accept that the Appellant did instruct his Counsel to carry out the Amendment, he should not have waited for an indefinite period as he was expected the follow up on the same to ensure that amendment was carried out within reasonable time as settled by precedents. Having failed to do so, the Appellant has to face the consequences of his dereliction or lack of diligence. Law assists those vigilant, not those who sleep over their rights.

Further, no such evidence or document has been placed on record by the Appellant to show that there was any written instructions given by him to the Counsel or by the Counsel to the Clerk to carry out the amendment and there was a failure on their part. When a prayer is made to condone a delay of a period as large as 495 days, it becomes all the more necessary for the Appellant to have established by evidence that, he had been diligent enough, that after passing of the order dated 17.08.2018 allowing the amendment of 17.08.2018, has promptly imparted the instructions to his Counsel to carry out the amendment which is absent in this case. It is reasonably expected that the Appellant himself ought to have acted diligently to ensure that the amendment is actually incorporated in the Company Application as prayed in MA No. 68 / 2018, but, the same was not done, nor established to have been done.

The Ld. Tribunal after hearing both the parties on the issue has observed that, the Resolution Professional and consequentially, the Liquidator has derelicted in performing his duties in accordance with the provisions contained under Section 35 of the I & B Code, 2016.

Having failed to prosecute or to defend the legal proceedings, as per the mandate of the law, the Appellant cannot be permitted to carry the proceedings as per his whims and fancies or the convenience by filing of an application, seeking permission to incorporate the amendment permitted on 17.08.2018 after a lapse of 495 days. The said application is in absolute contradiction to the provisions and mandate of law as contained under Order VI Rule 18 of C.P.C. for the reason being that, the general law of condonation of delay under Section 148 of the Code of Civil Procedure, 1908, to be read with Section 5 of the Limitation Act, 1963, will not be attracted to be made applicable under the facts and circumstances of the instant case, where the aspect of limitation for carrying out the amendment is specifically governed and self contained by the provision mandated under Order VI Rule 18 of the C.P.C., which will regulate the procedure for amendment and its incorporation.

In that eventuality, the shifting of the blame on the Counsel as well as the Clerk of the Counsel, for the failure to carry out the amendment in time, cannot be a reasonable ground to be accepted because, the prolonged delay of 495 days has not been reasonably explained in the application itself. Besides such plea of blaming the Counsel for the delay cannot be accepted, unless evidence has been placed on record to show action taken by the Appellant thereafter against the said Counsel or his Staff.

Apart from that, the general spirit of taking a lenient view of allowing the amendment application, so as to enable the party to substantiate his case before the Ld. Tribunal or a Court, will not apply in this case because, it is not established to be backed by diligence.

Since, the very reason for seeking an extension of time to comply with the order of 17.08.2018, permitting the Appellant to incorporate the amendment sought for, has not been reasonably explained, and since the delay is inordinate, the rejection of the said application by the Ld. Tribunal by the impugned order of 27.04.2021, does not call for any interference in the exercise of our Appellate jurisdiction. The Court(s) or the Tribunal(s), which are deciding upon the right of the parties to the proceedings, is only meant to be made available for those who are diligent to participate in the proceedings and not for those litigants who sleep over their rights as it is in the instant case.

Law does not allow any scope for any indulgence to be shown to or any of a party to the proceedings who, in gross negligence, adopts a careless attitude by not carrying the amendment to the Company Application and not complying the orders passed by the Ld. Tribunal, with reference to such an amendment.

In the absence of there being any bona fide on part of the Appellant and owing to the bar created by Order VI Rule 18 of the Code of Civil Procedure, 1908, and since the issue of grant or extension of time would not be falling within the ambit of Section 148 of the C.P.C., the rejection of the application seeking permission to condone the delay of 495 days in order to enable to comply the order of 17.08.2018 does not suffer from any apparent error calling for any interference. Thus, the instant Company Appeal (AT) (CH) (INS) No. 14 of 2022 lacks merit and the same is accordingly dismissed. The connected pending Interlocutory Applications, if any, would stand closed.