Does the principle in Kalpraj Dharamshi, permitting exclusion of time under Sections 5 and 14 of the Limitation Act, 1963 for a delayed appeal bona fide pursued before a wrong forum, extend to permit exclusion of time spent in an independent winding up proceeding for the purpose of a separate suit for recovery of money?

Paragraph 11The respondent/plaintiff relies on Kalpraj Dharamshi and Anr. v. Kotak Investments Advisor Limited and Anr.[^1], wherein on an application by the corporate debtor, Corporate Insolvency Resolution Process was initiated and the Resolution Professional appointed, invited resolution plans. The appellant before this Court, submitted its Resolution Plan after the last date as specified by the RP, who invited all the applicants to file a Revised Resolution Plan which led to the appellant’s plan being accepted. The respondent before this Court who had applied on time and had also furnished a Revised Resolution Plan, challenged the acceptance of the appellant’s Resolution Plan before the High Court. The High Court disposed of the writ petition finding an alternate and efficacious remedy of filing an appeal before the NCLAT. Going by the date on which the appellant received the order of the NCLT, the appeal was delayed by 16 days. The argument that the writ court was not a wrong forum, was not accepted. This Court held so in Paragraph 64 of the said decision as under: - “64. Thus, this Court relying on the earlier judgments in Bhudan Singh v. Nabi Bux [Bhudan Singh v. Nabi Bux, (1969) 2 SCC 481], J. Kumaradasan Nair v. Iric Sohan [J. Kumaradasan Nair v. Iric Sohan, (2009) 12 SCC 175: (2009) 4 SCC (Civ) 656] and Consolidated Engg. Enterprises [Consolidated Engg. Enterprises v. Irrigation Deptt., (2008) 7 SCC 169] observed, that the object of enacting the legislation is to advance public welfare. The entire legislative process is influenced by considerations of justice and reason. Justice and reason constitute the great general legislative intent in every piece of legislation. It has been held by this Court, that in the absence of some other indication that the harsh or ridiculous effect was actually intended by the legislature, there is little reason to believe, that it represents the legislative intent. It is further observed, that the provisions contained in Sections 5 and 14 of the Limitation Act are meant for grant of relief, where a person has committed some mistake. In J. Kumaradasan Nair [J. Kumaradasan Nair v. Iric Sohan, (2009) 12 SCC 175 : (2009) 4 SCC (Civ) 656] , it has been observed, that when sub-section (2) of Section 14 of the Limitation Act per se is not applicable, the same would not mean, that the principles akin thereto would not be applicable.”

Paragraph 13Apposite would also be reference to Yeswant Deorao Deshmukh v. Walchand Ramchand Kothari[^2], which is almost on similar lines. Therein the question was as to whether the period spent in pursuing an insolvency proceedings can be reckoned as the period eligible for condonation under Section 14 of the Limitation Act, when a delayed execution petition is filed. It was categorically held that “There could be no exclusion of the time occupied by the insolvency proceedings which clearly was not for the purpose of obtaining the same relief (sic). The eventual recovery in such a proceeding was held to be a ‘mere consequence or result’. The relief was found to be different and so was the procedure widely divergent. In Jignesh Shah and Anr. v. Union of India and Anr.[^3] a converse situation was considered. The filing of a civil suit was projected as a ground for the delayed winding up petition filed before the High Court, which was sought to be transferred to the NCLT. It was categorically held that the filing of a suit for recovery based upon a cause of action, that is within limitation cannot in any manner impact the separate and independent remedy of a winding up proceeding. The converse position applies squarely to this case that the initiation of a winding up proceeding, which may or may not enable recovery, will not impact the limitation for the separate remedy of suit for recovery of money.

Paragraph 14We are of the opinion that on the facts of this case Yeswant Deorao Deshmukh[^2] & Jignesh Shah[^3] apply squarely. In this context, we also have to notice that the Company Petition filed was not entertained since it was found that, though slightly delayed, the appellant issued a reply alleging that the substantial part of the claim made by the respondent, was apparently ‘at the behest and with the connivance of the erstwhile associates of our company’ (sic). Hence, there was a clear dispute raised and it was in the context of the appellant having undertaken to provide security for two bills i.e. TC/152 and TC/153, which were found in their accounts too, that the respondent was relegated to the civil remedy, further directing that deposit of Rs.12,38,000/- covered by the bills bearing Nos.TC/152 and TC/153 be secured before the Civil Court within 3 weeks; to facilitate which, the company proceeding was kept in abeyance till the security is furnished, failing which the Company Petition was entitled to be revived for the sum of Rs.12,38,000/- with interest @ 8% per annum. The acceptance of the bills was not an admission, giving up the plea of limitation. There was also no extension of limitation by the Company Court, which in any event, the Court was not competent so to do. Hence, the clear finding was that there is no scope of winding up of the appellant, the demand having been disputed by the appellant. The decisions of this Court with respect to finding a clear distinction between a winding up proceeding and a suit for recovery of money simpliciter, applies squarely.