NCLAT Chennai Condones Delay Of 147 Days In Filing Appeal,The Time Spent On Bonafide Litigation

The National Company Law Appellate Tribunal ("NCLAT"), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Shri Naresh Salecha (Technical Member), while adjudicating an appeal filed in M.K. Resely & Ors. v Union Bank of India, has condoned a delay of 147 days in filing of appeal before NCLAT upon equity. The delay had occurred as the Appellant had challenged the Impugned Order before the High Court instead of NCLAT but on a bona fide basis. The time taken by the High Court in deciding the matter has been excluded by the NCLAT in computation of limitation. Background Facts The Liquidator of M/s. Raihan Healthcare Private Limited ("Corporate Debtor") had filed an application before the Adjudicating Authority (NCLT, Kochi Bench), seeking to add the personal properties of Mr. M.K. Resely and others ("Appellants"), into the Liquidation Estate of the Corporate Debtor. The Adjudicating Authority vide an order dated 21.01.2022 ("Impugned Order") allowed the prayer of the Liquidator. The Impugned Order was uploaded on the website on 25.01.2022. Thereafter, the Appellants challenged the Impugned Order before High Court of Kerala on 26.01.2022, which was dismissed vide an order dated 22.04.2022. On 25.04.2022, the Appellants filed a writ appeal before the High Court of Kerala against the Order of dismissal dated 22.04.2022. The Writ Appeal was dismissed on 22.06.2022. Thereafter, the Appellants filed an appeal against the Impugned Order before the NCLAT on 06.07.2022. The time taken to file the appeal before NCLAT was 14 days i.e. from 22.06.2022 to 06.07.2022. Alongwith the appeal, the Appellants filed an Interim Application before the NCLAT seeking exclusion of the period from 25.01.2022 till 22.06.2022 (147 Days) in computing the period of Limitation of the Appeal. Contentions Of The Apellants It was submitted that the High Court of Kerala in Writ Appeal had ordered that the period spent before the High Court in prosecuting the case, would be taken note of by the Appellate Tribunal while considering the Petition/Condonation of Delay. The High Court had directed the Appellants to file an appeal before NCLAT within 2 weeks of dismissal of the writ appeal. The Appellants also placed reliance that on the Supreme Court Judgment in Kalparaj Dharamshi and another v Kotak Investment Advisors Limited & Anr., (2021) 10 SCC 401, wherein it was held that the provisions of Section 14 of the Limitation Act, 1963, will apply to the proceedings before the Tribunal. Further, if the period of 147 Days, from 25.01.2022 till 22.06.2022, are excluded as per Section 14 of the Limitation Act 1963, then the appeal is within the time. Contentions Of Respondent The Union Bank of India ("Respondent") argued that the Appeal should have been filed by the Appellants within 30 Days from the date of the Impugned Order dated 21.01.2022. The Appellants failed to file the appeal within 30 days and have occasioned a delay of 147 Days. Decision Of NCLAT The Bench observed that the Legislature enacted Section 14 of the Limitation Act, 1963, to exempt a certain period covered by a bona fide Litigious Activity. While extending the benefit of Section 14 of the Limitation Act, 1963, to a Party, the Tribunal is to see whether the conduct will satisfy the test of prosecuting a given Proceeding in a Good faith and Due diligence. If Good Faith is established, Section 14 of the Limitation Act, 1963, can be pressed into service. The period of Limitation for filing a Suit/Appeal is fixed by Law and ordinarily it cannot be deemed to be excluded or extended automatically or as a matter of routine. The High Court of Kerala had extended the interim order for a period of two weeks from 22.06.2022, enabling the Appellants to prefer an Appeal before the Appellate Tribunal. "In view of the fact, that the Petitioners / Appellants have indulged in Bonafide Litigious Activity, in preferring the W.P. No.2832/2022 and W.A. No.537/2022, before the Hon'ble High Court of Kerala, this Tribunal, by construing the ingredients of Section 14 of the Limitation Act 1963, in a liberal manner and by applying Equity, permits the exclusion of period from `25.01.2022 till 22.06.2022 (147 days), in computing the Period of Limitation, and consequently `disposes of the IA/990/2022, without Costs." The Bench excluded the period from 25.01.2022 till 22.06.2022 in computation of limitation period in view of equity. The Bench further observed that the High Court of Kerala had granted the Appellants Two Weeks' time to file an appeal before NCLAT. The period of two weeks' ended on 05.07.2022. However, the appeal was filed on 06.07.2022. There was delay of one day in filing of the appeal which is beyond the prescribed time limited granted by the High Court. The Bench dismissed the appeal. Case Title: M.K. Resely & Ors. v Union Bank of India Case No.: Company ...

NCLAT Chennai Condones Delay Of 147 Days In Filing Appeal,The Time Spent On Bonafide Litigation

Pallavi Mishra

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