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SC’s order extending limitation doesn’t enlarge period upto which delay can be condoned

September 30, 2020

 

In a recent case Sagufa Ahmed & ors. V. Upper Assam Plywood Products Pvt. Ltd. & ors.[1], the Three Judge Bench of the Hon’ble Supreme Court headed by Chief Justice S.A. Bobde has clarified the implication of the Court’s March 23, 2020 order on an application filed for condonation of delay and stated that claims cannot be made to benefit from the order passed by the Court on March 23, 2020 (extending period of limitation), for also enlarging the period upto which delay can be condoned.

Factual Background of the case

The Appellants approached the Hon’ble Supreme Court challenging an order passed by the National Company Law Appellate Tribunal (NCLAT), whereby the Appellate Tribunal had dismissed the Appellants application for condonation of delay and the appeal as time barred.

In the present case, the Appellants claimed to hold 24.89% of the shares of the Respondent company and had lodged an application for winding up of Respondent company before the Guwahati Bench of the National Company Law Tribunal (NCLT). However, the Appellant’s petition was dismissed by the NCLT on October 25, 2019. Pursuant to dismissal of appeal, the Appellant applied for a certified copy of NCLT’s order on November 21, 2019 and Appellant’s counsel received the copy of impugned order on December 19, 2019.

Thereafter, even though the Appellants admittedly received the certified copy of order on December 19, 2019, they filed the appeal before NCLAT challenging NCLT’s order on July 20, 2020 alongwith an application for condonation of delay.

To sum up, the NCLT order in the case was passed on October 25, 2019, certified copy of the order was received by the Appellants on December 19, 2019 and the Appellants approached the NLCAT challenging NCLT’s order on July 20, 2020.

NCLAT’s order

The NCLAT dismissed the Appellants’ application for condonation of delay on the ground that the Appellate Tribunal does not have the power to condone the delay beyond a period of 45 days. Hence, the appeal was also dismissed by NCLAT.

Submissions made by the Appellant

The Appellant based its appeal on two contentions as under:

  1. That an error was committed by the NCLAT while computing the period of limitation from the date of NCLT’s order and the same was contrary to Section 421(3) of Companies Act, 2013.
  2. That NCLAT failed to take note of lockdown and subsequent order passed by the Supreme Court on March 23, 2020 extending the period of limitation for filing any proceeding with effect from March 15, 2020.

Supreme Court’s Order and Observations

The Hon’ble Three Judge Bench of the Supreme Court while taking into consideration the facts and circumstances of the case and prevailing law, dismissed the appeal and made the following observations in the case with respect to the aforesaid two contentions raised by the Appellant:

  • While deciding on the first contention, the Apex Court made reference to Section 420(3) of the Companied Act, 2013 and Rule 50 of National Company Law Tribunal Rules, 2016. Section 420(3) mandates the NCLT to send a copy of every order passed under Section 420(1) to all the parties concerned and Rule 50 mandates the NCLT’s Registry to send a certified copy of order to concerned parties free of cost. However, Rule 50 also enables NCLT’s Registry to make available certified copy of order with cost as per schedule of fees.
  • Considering the aforesaid provisions, the Hon’ble Court was of the view that if the Appellants had waited for receipt of free copy of order from the NCLT instead of applying for certified copy of order, then the they could have claimed benefit under Section 421(3) with respect to fixing the date from which limitation would start running. It was opined by the Court that as the Appellants chose to apply for a certified copy of order 27 days after the pronouncement of the order they could not claim that an error was committed by NCLAT in computing the limitation period for filing appeal in the case at hand.
  • The Court also took note of the fact that period of limitation to file appeal against NCLT’s order in the case would start running from atleast December 19, 2019 i.e. the date on which certified copy of order was admittedly received by Appellant’s Counsel and hence the limitation period to file appeal in the case expired on February 02, 2020 i.e. 45 days from the date of receipt of certified copy of order. The Court further noted that the statutory period of 45 days under Section 421(3) started running from February 02, 2020 and it expired on March 18, 2020. However, the Appellants filed the appeal July 20, 2020. While noting this, the Court also remarked that the lock down was imposed on march 24, 2020 and there was no impediment in filing appeal on or before the expiration of limitation period i.e. March 18, 2020.
  • With respect to second contention relating to Supreme Court’s order extending period of limitation, the Court clarified that vide its March 23 order, the Court only extended “the period of limitation” and not the period upto which delay can be condoned in exercise of discretion conferred by the Statute.
  • The Apex Court also observed that the order extending period of limitation was passed to benefit vigilant litigants who were who could not file appeal or initiate proceedings owing to the pandemic and lockdown within the period of limitation prescribed by general or special law. While emphasising on the principles governing the Law of Limitation, the Apex Court also noted that the law is based on the legal maxim-  Vigilantibus Non Dormientibus Jura Subveniunt i.e. law will assist only those who are vigilant about their rights and not those who sleep over their rights.
  • Computation of time when Court is closed- While deciding the second contention in the case at hand, the Hon’ble Court also made reference to Section 10 of the General Clauses Act, 1897 which provides for computation of time and states that if the Court is closed on a certain day or within a prescribed period in which an act or proceeding is to be initiated then the act or proceeding shall be considered as done in due time if it is done on the next day afterwards on which the Court is open.
  • The Apex Court also made reference to Section 4 of the Limitation Act, 1963 providing for Expiry of prescribed period when court is closed. The provision under Section 4 provides that where the prescribed period for any suit, appeal expires on a day when the Court is closed then the suit or appeal can be instituted on the day when the Court opens.
  • Meaning of prescribed period under Section 4 of Limitation Act- It may be noted that the term “prescribed period” holds substantial importance when discussing the expiry of limitation period for initiation of any act or proceeding. Moreover, the term “prescribed period” though not statutorily defined under the Limitation Act, 1963 appears several times in the Statute including under Section 4.
  • The Apex Court in the case, while taking note of this fact, deliberated on the term and while referring to the provisions where the term “prescribed period” appears, concluded that the expression “prescribed period” appearing in Section 4 refers to the period of limitation i.e. any period beyond the prescribed period, during which the Court or Tribunal has the discretion to allow a person to institute the proceedings, cannot be taken to be “prescribed period”.
  • Herein the Court also made reference to its judgment in the case of Assam Urban Water Supply and Sewerage Board V. Subash Projects and Marketing Limited[2], wherein the issue pertained to meaning of ‘prescribed period’ for the purposes of making the application for setting aside the arbitral award. In this case, the Hon’ble Supreme Court opined that the period of 30 days beyond three months which the court may extend on sufficient cause being shown under the proviso appended to Section 34(3) of Arbitration Act, 1996 is not the ‘period of limitation’ or, in other words, ‘prescribed period’ under Section 4 of the Limitation Act, 1963.

In view of the aforesaid observations and prevailing law with respect to the computation of period of limitation, the Hon’ble Supreme Court Bench while dismissing the appeal in the case held that the Appellants could not claim the benefit of order extending limitation period passed by the Court on March 23, 2020 for even enlarging the period up to which delay could be condoned in the case.

[1]https://main.sci.gov.in/supremecourt/2020/17038/17038_2020_31_1501_23998_Judgement_18-Sep-2020.pdf

[2] (2012) 2 SCC 624

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