CRUX: Sesh Nath Singh & anr. V. Baidyabati Sheoraphuli Co-operative Bank ltd & anr. (23rd March 2021) – Supreme Court stated that Court/Tribunal can condone delay under section 5 limitation act even in the absence of a formal application.
DATE OF JUDGMENT: 22nd March 2021
JUDGES: Justice Indira Banerjee and Justice Hemant Gupta
PARTIES
- Sesh Nath Singh & anr. (Appellant)
- Baidyabati Sheoraphuli Co-operative Bank ltd & anr. (Respondent)
SUMMARY: The following judgement given by the Supreme Court states that the court/tribunal can condone delay under section 5 limitation act even in the absence of a formal application.
AN OVERVIEW
- The Financial Creditor had not drew any application ahead of the National Company Law Tribunal under Section 5 of the Limitation Act.
- Corporate Debtor’s allegation was that the delay in filing the application under Section 7 of the IBC, could not have been condoned or excused.
ISSUES
The following issue was analyzed by the court-
- Whether postponement beyond three years in filing an application under Section 7 of Insolvency and Bankruptcy Code can be condoned, when an application is not present for condonation of delay which is made by the applicant stated under Section 5 of the Limitation Act?
IMPORTANT PROVISIONS
- Section 5 of Limitations Act - Extension of specified period in certain cases.
- Section 7 of Insolvency and Bankruptcy code - Inception of corporate insolvency resolution process by financial creditor.
ANALYSIS OF THE JUDGEMENT
To analyze the issue -
• The court duly noted that the Section 5 does not talk about any application and it authorizes the Court to acknowledge an application or to appeal if the applicant or the petitioner, as the situation may be, appeases the Court that he had sufficient cause for not accomplishing the application and/or favoring the appeal, within the time period prescribed - the Court said.
"Even though, it is the common practice to make a formal application under Section 5 of the Limitation Act, 1963, in order to authorize the Court / Tribunal to contemplate the sufficiency of the clause for the inefficiency of the appellant or applicant to reach out the Court or Tribunal within the time period prescribed by limitation, there is no barrier to exercise by the Court or Tribunal of its discretion to excuse delay, in the absence of a formal application... A simple reading of Section 5 of the Limitation Act makes it abundantly clear that, it is not necessary to file an application in writing before aid can be granted under the following section. Had such an application been essential, Sec. 5 of the Limitation Act would have unambiguously provided so. Section 5 would then have read that the Court might excuse the delay beyond the time period prescribed by limitation for filing an application or appeal, if on deliberation of the application of the appellant or the applicant, as the situation may be, for condonation of delay, the Court is satisfied that the appellant/applicant had sufficient cause for not favoring the appeal or making the application within such time period. Alternatively, a provision or an explanation would have been additional to Section 5, which require the appellant / applicant, as the situation may be, to make an application for condonation or excuse of delay.
• The bench however further clarified that a Court can continually order and expect that an application or an affidavit showing cause for the delay be filed and no applicant / appellant can claim the condonation of delay under Section 5 of the Limitation Act as of right, without submitting an application.
CONCLUSION
The Hon’ble Supreme Court held that there is no bar or barrier to exercise by the Court or Tribunal of its judgment to condone delay under Section 5 of the Limitation Act, where formal application is not present. Nevertheless, the Court can always order and expect that an application or an affidavit showing cause for the delay be filed, the bench comprising Justices Indira Banerjee and Hemant Gupta observed.
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