Financial Crisis Can Be One Of The Grounds For Condonation Of Delay: Gujarat High Court

Background

In the instant case, the Trial Court had granted an injunction against the Applicant. The suit property was the ancestral land of the Deponent and subsequently, Respondent No 2 executed a registered sale deed in favour of the Applicant as he was sole owner of the property. The Deponent had contended that he had undivided share by virtue of birth in the family of the suit property as a co-parcener. Further, there was no infirmity with the order of the Trial Court since any third party interest would create multiplicity of litigation.

The Applicant's primary contention was that he was suffering from financial crisis and had no funds to challenge the impugned order or develop the subject property. Later, he gained some financial strength through his friends, whereby he decided to develop the land himself or through some developer. Further relying on N. Balakrishnan v. M. Krishnamurthy, AIR 1998 SC 3222, the Applicant averred that refusal to condone the delay will result in a meritorious matter being thrown out and the cause of justice would be defeated. AIR 1998 SC 3222

Per contra, Respondent No 1 averred that the delay was more than 1 year and the reason of financial crisis was not acceptable. No evidence was also produced in support of the causes cited for seeking condonation of delay. However, in the affidavit-in-rejoinder, the Applicant submitted the statement of the bank account to show that there was a financial crisis, indeed. Additionally, the Respondent alleged that the Applicant wanted to create third party interest in the suit property.

Judgement

The Bench primarily examined the holdings of various judgements cited by the parties. For instance, in N Balakrishnan, the Apex Court had opined:

"Sometimes delay of the shortest range may be uncondonable due to want of acceptable explanation whereas in certain other cases delay of very long range can be condoned as the explanation thereof is satisfactory."

Justice Thaker while clarifying that the merits of the case had no relevance at the instant stage, opined:

"It is axiomatic that condonation of delay is a matter of discretion of the Court. Section 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limited."

Further affirming that rules of limitation are not intended to destroy rights of the parties, the Court opined that the Applicant's explanation did not "smack of mala fides". However, Justice Thaker cautioned that when delays occur on part of one party, the other party suffers litigation expenses as well. Therefore, the Court must compensate opposite party for the loss. The Court averred that the sale deed was in favour of the Applicant as admitted by the opposite parties and owing to the prevalent economic condition in the country, it could not be said that the Applicant was employing dilatory tactics and the opposite party would also suffer no prejudice. Therefore, per Justice Thaker, genuine financial crises could be a reason for condoning delay and laches for the suffering party. Accordingly, the Application was allowed.

Case Title: NANDLAL NAMDEV OTWANI Versus VIJAY JAYPRAKASH AHUJA 

Citation: 2022 LiveLaw (Guj) 45

Case No.: C/CA/941/2020

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