The The State Court of Appeal for Company Law (“NCLAT”), the Chennai Bench comprising Justice M. Venugopal (judicial member) and Shri Naresh Salecha (technical member), during the decision on the appeal filed in MK Resely & Ors. v. Union Bank of India, condoned the 147-day delay in filing the appeal before the NCLAT on equity. The delay occurred because the appellant challenged the impugned order before the High Court instead of the NCLAT, but on bona fide base. The time taken by the High Court to decide the case was excluded by the NCLAT while calculating the limitation period.
The liquidator of M/s. Raihan Healthcare Private Limited (the “Corporate Debtor”) filed an application with the Competent Authority (NCLT, Kochi Bench) seeking to attach the personal property of Mr. MK Resely and others (“complainants”) in the liquidation estate Debtor of the company. Competent authority video the order dated 21/01/2022 (“the impugned order”) allowed the liquidator’s prayer. The contested order was uploaded to the website on 01/25/2022. Thereafter, the appellants challenged the impugned order before the Kerala High Court on 26/01/2022, which was rejected video order dated 22.04.2022.
On 25/04/2022, the appellants filed a written appeal with the Kerala High Court against the order of dismissal dated 22/04/2022. The 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 an appeal before NCLAT was 14 days ie. from 22/06/2022 to 06/07/2022.
Together with the appeal, the appellants filed a provisional application with the NCLAT, in which they requested the exclusion of the period from 25/01/2022 to 22/06/2022 (147 days) when calculating the period of limitation of the appeal.
Claims of the appellants
It was stated that the Kerala High Court in the Writ Appeal has directed that the appellate court will consider the period spent before the High Court in prosecuting the case while considering the petition/excuse the delay. The high court directed the appellants to file an appeal with the NCLAT within two weeks of the rejection of the writ petition.
The appellants also referred to the judgment of the Supreme Court v Kalparaj Dharamshi and others vs. Kotak Investment Advisors Limited & Anr., (2021) 10 SCC 401 where it was held that the provisions of Section 14 of the Limitation Act, 1963 will apply to proceedings before the Court.
Further, if the period of 147 days, from 25/01/2022 to 22/06/2022, is excluded under section 14 of the Limitation Act 1963, then the appeal is time-barred.
Claims of the defendant
Union Bank of India (“Respondent”) contended that the appellants should have filed the appeal within 30 days from the date of the impugned order dated 21st January, 2022. The appellants failed to file the appeal within 30 days and caused a delay of 147 days.
Decision of NCLAT
The Court held that the Legislature enacted Section 14 of the Limitation Act, 1963 to exempt a certain period covered by bona fide Litigation activity. In extending the benefit of section 14 of the Limitation Act 1963 to a party, the court must determine whether the conduct will meet the test of prosecuting a given proceeding in good faith and with due diligence. If good faith is established, section 14 of the Limitation Act, 1963 may apply. The limitation period for filing a suit/appeal is set by law and cannot normally be deemed to be excluded or extended automatically or as a matter of routine.
The Kerala High Court extended the interim order for a period of two weeks from June 22, 2022, allowing the appellants to appeal before the appellate court.
“In view of the fact that the petitioners/appellants have indulged in bona fide litigation by preferring WP No. 2832/2022 and WA No. 537/2022, before the Hon’ble High Court of Kerala, this Court by interpreting the ingredients of Section 14 of the Limitation Act of 1963 in a liberal manner and using equity allows the exclusion of the period from `25.01.2022 to 22.06.2022 (147 days) in calculating the limitation period and consequently ` disposes of IA/990/2022 without costs.”
When calculating the limitation period based on the capital, the court excluded the period from 25.01.2022 to 22.06.2022.
The court further noted that the Kerala High Court had granted two weeks’ time to the appellants to file an appeal before the NCLAT. The two-week period ended on 07/05/2022. However, the appeal was filed on 07/06/2022. There was a one-day delay in filing the appeal, which exceeds the prescribed deadline approved by the High Court. The court rejected the appeal.
Case title: MK Resely & Ors. v. Union Bank of India
No. matters: Company complaint (AT)(CH)(Ins) no. 337/2022
Counsel for the applicant: GS Easwaran, Advocate
Counsel for the defendant: Mr. Varun Srinivasan, Advocate (for Caveator), Mr. Shinu J. Pillai, Advocate, Mr. AG Sathyanarayana, Advocate (for the receiver)
Click here to read/download the order