Since SC Extended Limitation, No Need To File Application For Condonation Of Delay; NCLAT Delhi

Factual Background-

NCLT, New Delhi Bench rejected the application of the Appellant, filed under Section 9 of the Insolvency and Bankruptcy Code, 2016. Section 9 of the Code allows the Operational Creditor to file an application for initiating the corporate insolvency resolution process after the expiry of 10 days from the date of delivery of notice or invoice demanding payment, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under Section 8(2). Against this, the Appellant filed an appeal in the NCLAT Principal Bench.

Learned Counsel for the Respondent contended that the Appeal is barred by time and should be rejected as no application for condonation of delay has been filed by the Appellant.

In this regard, the Respondent placed reliance on BharatKalra v. Raj Krishan Chabra CM(M) 429/2021 and Sagufa Ahmed and Ors. v. Upper Assam Plywood Products Pvt. Ltd. (2021).

The Bench Considered Two Issues:

(i) Whether judgment and order of the Hon'ble Supreme Court passed in Suo Motu Writ Petition No. 3 of 2020 shall operate as automatic extension of the limitation?

(ii) Whether for taking benefit of judgment of the Hon'ble Supreme Court passed in Suo Motu Writ Petition No. 3 of 2020, an Applicant has to file an Application for condonation under Section 5 of the Limitation Act, 1963 and satisfy the Court/ Tribunal that sufficient cause has been made out for condonation of delay?

The Tribunal, after analysing the judgment and order passed by the Supreme Court in Suo Motu Writ Petition No. 3 of 2020 held that-

"When the Hon'ble Supreme Court has granted extension of period of limitation, it cannot be said that appeal, suit or application which is filed during the relevant period is barred by time so as requiring an Application under Section 5 of the Limitation Act, 1963 for condonation of delay. When the appeal, suit, application etc. is filed within period of limitation as extended by the Hon'ble Supreme Court, there does not arise any occasion to pray for condonation of delay for filing suit, application or appeal."

Refusing to accept the reliance placed on Sagufa Ahmed and Ors. and Bharat Kalra by the Respondent, the Tribunal allowed the appeal of the Appellant, holding that there is an automatic extension in view of the judgment and order of the Supreme Court extending limitation. An application under Section 5 for condonation of delay and satisfying the Court/Tribunal that sufficient cause has been made out to condone the delay, is not required.

The Bench relied on the judgment of K. Sulaiman vs. K.P. Nafeesa and Ors., in which the Kerala High Court held that in case an appeal or application is filed within the period of limitation as extended by the Hon'ble Supreme Court, there is no occasion to file an application for condonation of delay under Section 5 of the Limitation Act, 1963.

Case Title: M/s. Essjay Ericsson Private Limited v. M/s. Frontline (NCR) Business Solutions Pvt. Ltd.

Citation: Company Appeal (AT) (Insolvency) No. 936 of 2021

Counsel for the Appellant: Mr. Partho Bhattacharya and Mr. Anand Kumar Singh, Advocates

Counsel for the Respondent: Mr. Rajeev Narayan, Advocate