Section 17 Of Limitation Act Inapplicable Where Limitation Is Prescribed For Appeal: NCLAT Delhi

Background Facts

National Rayon Corporation Ltd. (“Corporate Debtor”) was admitted into Corporate Insolvency Resolution Process (“CIRP”). On 13.03.2020 the Adjudicating Authority approved the Resolution Plan submitted by Adani Properties Pvt. Ltd. (“Successful Resolution Applicant”) for the Corporate Debtor.

Maharashtra State Electricity Distribution Company Ltd. (“MSEDCL”) had submitted its claim towards electricity dues after the prescribed time. Hence, its claim was neither admitted by the Resolution Professional nor included in the approved resolution plan. Thus, MSEDCL challenged the order dated 13.03.2020 before NCLAT on 22.11.2022. The Appeal was filed after delay of 244 days.

MSEDCL argued that it became aware that the order needs to be challenged when the Successful Resolution Applicant filed a writ petition against it on 29.06.2022, seeking direction against MSEDCL. Further, the limitation stood extended in view of Section 17(1)(c) of the Limitation Act, 1963, which reads as follows:

“Section 17. Effect of fraud or mistake.—

(1) Where, in the case of any suit or application for which a period of limitation is prescribed by this Act,—

(a) the suit or application is based upon the fraud of the defendant or respondent or his agent; or

(b) the knowledge of the right or title on which a suit or application is founded is concealed by the fraud of any such person as aforesaid; or

(c) the suit or application is for relief from the consequences of a mistake; or
(d)…..xxx”

NCLAT Verdict

The Bench observed that the limitation for filing an Appeal is 30 days under Section 61 of IBC and only 15 days of delay could be condoned under Section 61(2) proviso of IBC.

“The submission of Learned Counsel for the Appellant that he came to know to file an Appeal only on 29.06.2022 when Writ Petition was filed by the Successful Resolution Applicant seeking direction against the Appellant is the reason which cannot clothe jurisdiction to this tribunal to condone the delay beyond 15 days.”

Section 17(1) of Limitation Act, 1963 deals with the period of limitation in the case of any suit or application. On the face of it, Section 17(1)(c) of Limitation Act does not come into play in an Appeal, when limitation is prescribed for an Appeal. Therefore, Section 17(1)(c) has no application in the facts of the present case. 11.

The Bench held that Section 17(1)(c) of Limitation Act was inapplicable to the case and thus the delay of 244 days cannot be condoned. Accordingly, the Bench dismissed the Delay Condonation Application as well as the Appeal.

Case Title: Maharashtra State Electricity Distribution Company Ltd. v NRC Ltd. & Anr.

Case No.: Company Appeal (AT) (Insolvency) No. 13 of 2023.

Counsel For Appellants: Advocate Soumik Ghosal, Advocate Akash Kotari, Advocate Gaurav Singh, Advocate Neerav Shah.

Counsel For Respondent: Advocate Himanshu Satija, Advocate Geetika Sharma.

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