Insolvency and Bankruptcy Code, 2016: Object and Reasons of the enactment of the Code – Held : Is to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner, for maximization of the value of the assets of such persons, to promote entrepreneurship, availability of credit and to balance the interest of all the stakeholders. Insolvency and Bankruptcy Code, 2016: s.7 – Application under – When any corporate debtor commits a default, a financial creditor, an operational creditor or the corporate debtor itself may initiate corporate insolvency resolution process in respect of such corporate debtor, in such manner as provided in Chapter II of the IBC – A financial creditor may either by itself or jointly with other financial creditors, as may be notified by the Government, file an application for initiation of the corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority, when a default has occurred – The trigger point for an application under s.7 of the IBC is the occurrence of a default. Insolvency and Bankruptcy Code, 2016: Applicability of Limitation Act to application made under the Code before the NCLT – Held: There is no specific period of limitation prescribed in the Limitation Act, 1963 for an application under the IBC before the NCLT – An application for which no period of limitation is provided anywhere else in the Schedule, is governed by Art.137 of the Schedule to the Limitation Act – Under Art.137 of the Schedule to the Limitation Act, the period of limitation prescribed for such an application is three years from the date of accrual of the right to apply – Limitation Act, 1963 – Art.137 Limitation Act, 1963: s.5 – Delay in filing appeal/any application – s.5 of the Limitation Act provides that any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period of limitation, if the appellant or the applicant satisfies the Court, that he had sufficient cause for not preferring the appeal or making the application within such period – Explanation in s.5 of the Limitation Act clarifies that, the fact that the appellant or the applicant may have been misled by any order, practice or judgment of the High Court in ascertaining or computing the prescribed period, may be sufficient cause within the meaning of this Section. Limitation Act, 1963: s.5 – Condonation of delay in filing an application or appeal – The condition precedent for condonation of the delay in filing an application or appeal, is the existence of sufficient cause – Whether the explanation furnished for the delay would constitute ‘sufficient cause’ or not would depend upon facts of each case – There cannot be any straight jacket formula for accepting or rejecting the explanation furnished by the applicant/ appellant for the delay in taking steps – Acceptance of explanation furnished should be the rule and refusal an exception, when no negligence or inaction or want of bona fides can be imputed to the defaulting party. Limitation Act, 1963: s.5 – Requirement to file application, not mandatory – s.5 of the Limitation Act does not speak of any application – Although, it is the general practice to make a formal application under s.5, in order to enable the Court or Tribunal to weigh the sufficiency of the cause for the inability of the appellant/ applicant to approach the Court/Tribunal within the time prescribed by limitation, there is no bar to exercise by the Court/Tribunal of its discretion to condone delay, in the absence of a formal application – A plain reading of s.5 makes it amply clear that it is not mandatory to file an application in writing before relief can be granted under the said section – Had such an application been mandatory, s.5 of the Limitation Act would have expressly provided so. Limitation Act, 1963: s.14(2) – Exclusion of period for commutation of limitation period – Held: In computing the period of limitation for any application, the time during which the petitioner had been prosecuting, with due diligence, another civil proceeding, whether in a court of first instance, or of appeal or revision, against the same party, for the same relief, shall be excluded, where such proceeding is prosecuted in good faith in a Court which, from defect of jurisdiction or other cause of like nature, is unable to entertain it – The conditions for exclusion are that the earlier proceedings should have been for the same relief, the proceedings should have been prosecuted diligently and in good faith and the proceedings should have been prosecuted in a forum which, from defect of jurisdiction or other cause of a like nature, was unable to entertain it – Where such proceedings have ended, the outer limit to claim exclusion under s.14 would be the date on which the proceedings ended. Limitation Act, 1963: s.14 – Applicability to an application under s.7 of the IBC – Held: Legislature has in its wisdom chosen not to make the provisions of the Limitation Act verbatim applicable to proceedings in NCLT/NCLAT, but consciously used the words ‘as far as may be’ – The words ‘as far as may be’ are not meant to be otiose – Those words are to be understood in the sense in which they best harmonise with the subject matter of the legislation and the object which the Legislature has in view – The Courts would not give an interpretation to those words which would frustrate the purposes of making the Limitation Act applicable to proceedings in the NCLT/NCLAT ‘as far as may be’ – In other words, the provisions of the Limitation Act would apply mutatis mutandis to proceedings under the IBC in the NCLT/NCLAT – Insolvency and Bankruptcy Code, 2016 –s.238A – Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Insolvency and Bankruptcy Code, 2016: s.238A – Words ‘as far as may be’ – meaning of – Held: The use of words ‘as far as may be’, occurring in s.238A of the IBC tones down the rigour of the words ‘shall’ in the said Section which is normally considered as mandatory – The expression ‘as far as may be’ is indicative of the fact that all or any of the provisions of the Limitation Act may not apply to proceedings before the Adjudicating Authority (NCLT) or the Appellate authority (NCLAT) if they are patently inconsistent with some provisions of the IBC – At the same time, the words ‘as far as may be’ cannot be construed as a total exclusion of the requirements of the basic principles of s.14 of the Limitation Act, but permits a wider, more liberal, contextual and purposive interpretation by necessary modification, which is in harmony with the principles of the said Section. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002: s.13(4) – The Chief Metropolitan Magistrate or the Judicial Magistrate, as the case may be, exercising powers under s.14 of the SARFAESI Act, functions as a Civil Court/Executing Court – Proceedings under the SARFAESI Act would, therefore, be deemed to be civil proceedings in a Court – Moreover, proceedings under the SARFAESI Act under s.13(4) are appealable to the DRT under s.18 of the SARFAESI Act – Argument that proceedings under the SARFAESI Act would not qualify for exclusion under s.14 of the Limitation Act, because those proceedings were not conducted in a Civil Court, cannot be sustained. B Limitation Act, 1963: s.14 – Keeping in mind the scope and ambit of proceedings under the IBC before the NCLT/NCLAT, the expression ‘Court’ in s.14(2) would be deemed to be any forum for a civil proceeding including any Tribunal or any forum under the SARFAESI Act – Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Limitation Act, 1963: s.5 and s.14 – s.5 and s.14 of the Limitation Act are not mutually exclusive – Even in a case where s.14 does not strictly apply, the principles of s.14 can be invoked to grant relief to an applicant under s.5 of the Limitation Act by purposively construing ‘sufficient cause’ – It is well settled that omission to refer to the correct section of a statute does not vitiate an order – Delay can be condoned irrespective of whether there is any formal application, if there are sufficient materials on record disclosing sufficient cause for the delay – NCLAT rightly refused to stay the proceedings before the NCLT – The judgment and order of the NCLT does not warrant interference.