Interpretations of IBC, Arbitration and Limitation Act

Vishal Kale

Trained Mediator, Sole Arbitrator and Environmentalist

Trained Mediator, Sole Arbitrator and Environmentalist

Trained Mediator, Sole Arbitrator and Environmentalist

11-Nov-2024

11-Nov-2024

1 . Whether the period spent in pursuing proceedings under the IBC is liable to be excluded while computing the limitation period for filing the application under Section 11(6) of the Arbitration and Conciliation Act, 1996? 

2. Whether the principles contained in Order 23 Rule 1 of the CPC will apply to an application under Section 11(6)? | 

3. Whether the benefit of Section 5 and 14 of the Limitation Act is available in respect of an application for the appointment of an arbitrator under Section 11(6) of the Arbitration Act? –


       One landmark judgment is delivered on November 7, 2024, by Supreme Court which would enable lawyers like me to better understand and interpret the provisions of the Arbitration Act and Civil Procedure Code and Insolvency, Bankruptcy Code 2016. I would like to share this judgment to all my colleagues, juniors and clients. I loved the interpretation and in-depth study of Honourable Judges which made me think that I need to learn a lot from them and “so little done, so much to do ahead in advocacy”. 

Summary of case 


IN THE SUPREME COURT OF INDIA

HPCL Bio-Fuels Ltd.
v/s

Shahaji Bhanudas Bhad

Civil Appeal No. 12233 of 2024 (Arising out of SLP (C) No. 5589 of 2024) Decided on 07-Nov-24

Dr. Dhananjaya Y. Chandrachud (CJI) and Mr. Justice J. B. Pardiwala 


Key law points involved.

  • Whether a fresh application under Section 11(6) of the Arbitration and Conciliation Act, 1996 filed by the Respondent could be said to be maintainable more particularly when no liberty to file a fresh application was granted by the High Court at the time of withdrawal of the first application under Section 11(6) of the Act, 1996?

  • Whether the fresh application under Section 11(6) of the act, 1996 filed by the Respondent on 09.12.2022 could be said to be time-barred? If yes, whether the Respondent is entitled to the benefit of section 14 of the Limitation Act? In other words, whether the period spent by the Respondent in pursuing proceedings under the IBC is liable to be excluded while computing the limitation period for filing the application under Section 11(6)?

  • Whether the delay caused by the Respondent in filing the fresh arbitration application under Section 11(6) of the Act, 1996 can be condoned under Section 5 of the Limitation Act?


Decision of the Hon. Supreme Court

A. Whether a fresh application under Section 11(6) of the Arbitration Act can be maintainable when no liberty to file a fresh application was granted by the High Court at the time of withdrawal of the first application under Section 11(6)?

A.1 Scope and applicability of Order 23 Rule 1 of the CPC to proceedings other than suits

  • The key difference between Order 23 Rule 1 as it stood prior to the amendment and as it stands now is that while in sub-rule (1) of the former Order 23 Rule 1, the expression “withdraw his suit” had been used, whereas in sub-rule (1) of the amended Order 23 Rule 1, the expression “abandon his suit” has been used. The new sub-rule (1) is applicable to a case where the court declines to accord permission to withdraw from a suit or such part of the claim with liberty to institute a fresh suit in respect of the subject matter of such suit or such part of the claim.(p38)

  • Order 23 Rule 1, as it now stands post the amendment, makes a distinction between “abandonment” of a suit and “withdrawal” from a suit with permission to file a fresh suit and provides for – first, abandonment of a suit or a part of claim; and secondly, withdrawal from suit or part of claim with the leave of the court. Abandonment of a suit or a part of a claim against all or any of the defendants is an absolute and unqualified right of a plaintiff and the court has no power to preclude the plaintiff from abandoning the suit or direct him to proceed with it. Sub-rule (1) of Order 23 Rule 1 embodies this principle. However, if the plaintiff abandons the suit or part of claim, then he is precluded from instituting a fresh suit in respect of such subject matter or such part of the claim. Upon abandoning the suit or part of the claim, the plaintiff also becomes liable to pay such costs as may be imposed by the Court. This is specified under sub-rule (4) of Order 23 Rule 1.(p39)

  • However, if the plaintiff desires to withdraw from a suit or part of a claim with the liberty to file a fresh suit on the same subject matter or part of the claim, then he must obtain the permission of the court under sub-rule (3) of Order 23 Rule 1. The failure to obtain such permission would preclude the plaintiff from instituting any fresh suit in respect of such subject matter or such part of the claim, and also to any costs that may be imposed by the court.(p40)

  • The court granting liberty under sub-rule (3) of Order 23 Rule 1 may do so only upon being satisfied of one of the following two conditions– first, that the suit suffers from some formal defect and would fail by reason of such defect; and second, that there are sufficient grounds for allowing the plaintiff to institute a fresh suit for the same subject-matter or part of the claim. The court may grant liberty on such terms as it deems fit. It is also apparent from the text of the provision that the liberty under sub-rule (3) can only be granted by the court trying the earlier suit and not by the court before which the subsequent suit is instituted.(p41)

  • The main purpose of permitting the withdrawal of a suit and its re-filing is to ensure that justice is not thwarted due to technicalities. Where permission under Order 23 Rule 1 is granted, the principle of estoppel does not operate and the principle of res judicate would also not apply. However, Order 23 Rule 1 is not intended to enable the plaintiff to get a chance to commence litigation afresh in order to avoid the results of his previous suit, or to engage in multiple proceedings with the motive of bench-hunting.(p44)

  • Order 23 Rule 2 stipulates that any fresh suit instituted on permission granted under Order 23 Rule 1 shall be governed by the law of limitation in the same manner as if the first suit had not been instituted. The object underlying this Rule is to prevent a party from misusing the liberty of filing a fresh suit for evading the limitation period governing the said suit.(p645)

  • The principles of Order 23 Rule 1 are extended to proceedings other than suits with a view to bring in certainty, expediency and efficiency in legal proceedings. However, at the same time, it must also be kept in mind while extending the principles to legal proceedings other than suits that the principles are not applied in a rigid or hyper-technical manner. While the nature of the proceedings, that is, whether such proceeding is a suit or otherwise, should not be a consideration in deciding whether the principles of Order 23 Rule 1 should be extended to such proceedings or not, the bonafide conduct of a party in the unique facts of a case must be considered before precluding such a party from moving ahead with the proceedings.(p653)

A.2 Whether the principles contained in Order 23 Rule 1 of the CPC will apply to an application under Section 11(6) of the Act, 1996

  • A reading of the provision of Section 11 of the Act, 1996 indicates that there is nothing therein that prevents a party from filing more than one application seeking the appointment of arbitrator for adjudicating disputes arising from the same contract.(p34)

  • Undoubtedly, an application under Section 11(6) of the Act, 1996 is not a suit and hence will not be governed stricto-sensu by Order 23 Rule 1 of the CPC. However, in a number of decisions, this Court has extended the principle underlying Order 23 Rule 1 to proceedings other than suits on the ground of public policy underlying the said rule. The Appellant has submitted that in view of the aforesaid decisions, there is no reason why the principles of Order 23 Rule 1 should not be extended to an application for the appointment of an arbitrator under Section 11(6) of the Act, 1996.(p46)

  • Keeping in view the approach of this Court and the nature of applications under Section 11(6) of the Act, 1996, the Hon'ble Supreme Court finds no reason to not extend the principles of Order 23 Rule 1 to such proceedings, when the very same principles have been extended to writ proceedings before High Courts under Articles 226 & 227 and SLPs before this Court under Article 136.(p51)

  • The principles underlying Order 23 Rule 1 can be extended to applications for appointment of arbitrator, the only recourse to the Respondent to defend the second application as maintainable despite it having been withdrawn earlier without liberty was to show bona fides on its part.(p60)

A.3 Important aspect while applying the principles of Order 23 Rule 1 to applications under Section 11(6) of the Act, 1996

  • One important aspect that needs to be kept in mind while applying the principles of Order 23 Rule 1 to applications under Section 11(6) of the Act, 1996 is that it will act as a bar to only those applications which are filed subsequent to the withdrawal of a previous Section 11(6) application filed on the basis of the same cause of action.

  • The extension of the aforesaid principle cannot be construed to mean that it bars invocation of the same arbitration clause on more than one occasion.

  • It is possible that certain claims or disputes may arise between the parties after a tribunal has already been appointed in furtherance of an application under Section 11(6). In such a scenario, a party cannot be precluded from invoking the arbitration clause only on the ground that it had previously invoked the same arbitration clause.

  • If the cause of action for invoking subsequent arbitration has arisen after the invocation of the first arbitration, then the application for appointment of arbitrator cannot be rejected on the ground of multiplicity alone.(p52)

A.4 Withdrawing Section 11 application to file application under Section 9 of IBC, it would no longer be open to it to file a fresh application for appointment of arbitrator without having obtained the liberty of the court to file a fresh application at the time of the withdrawal

  • The Respondent did not withdraw the first arbitration application because of some defect which would have led to its dismissal. It is also clear from the order dated 01.10.2018 of the High Court permitting the Respondent to withdraw the application that neither any liberty was sought by the Respondent nor the court had granted any liberty to file a fresh arbitration application. It appears to us that the only reason the Respondent withdrew the arbitration application was to get his application under Section 9 of the IBC any how admitted by the NCLT.(p58)

  • Thus, it can be said without any doubt that the Respondent took a calculated risk of abandoning the arbitration proceedings to maximise the chances of succeeding in the IBC proceedings.(p58)

  • The Respondent was within its right to abandon the arbitration proceedings in favour of IBC proceedings. However, having done so, it would no longer be open to it to file a fresh application for appointment of arbitrator without having obtained the liberty of the court to file a fresh application at the time of the withdrawal. Because the withdrawal of the first arbitration application was not with a view to cure some formal defect or any other sufficient ground. The application was withdrawn with the hope that the application filed by the Respondent under Section 9 of the IBC may succeed, as the pendency of the arbitration application would have proven to be an indicator of existence of a pre-existing dispute between the parties, and thus fatal to the IBC proceedings.(p59)

  • In light of the aforesaid discussion, the Hon'ble Supreme Court is of the view that in the absence of any liberty sought by the Respondents from the High Court at the time of withdrawal of the first arbitration application, the fresh Section 11 petition arising out of the same cause of action cannot be said to be maintainable.(p61)

A.5 Other Aspect

  • Another way of looking at the abandonment of Section 11(6) application is by understanding the importance of such an application in view of Sections 21 and 43(2) of the Act, 1996 respectively.(p62)

  • As is clear from the word “deemed” used in Section 43(2), the commencement of arbitration proceedings, as contemplated in Section 21, is in the nature of a legal or deeming fiction. It is a notional commencement and not a factual or actual commencement of arbitration. However, the factual or actual arbitration proceeding commences only once an arbitrator is appointed either by the High Court under Section 11 or by consent of parties.(p64)

  • Hence, a petition under Section 11(6) of the Act, 1996 is not a proceeding merely seeking the appointment of an arbitrator. It is in reality a proceeding for appointing an arbitrator and for commencing the actual or real arbitration proceedings.(p65)

  • If that is so, the unconditional withdrawal of a Section 11(6) petition amounts to abandoning not only the formal prayer for appointing an arbitrator but also the substantive prayer for commencing the actual arbitration proceedings. It amounts to abandoning the arbitration itself. It results in abandonment of the notional ‘arbitration proceeding’ that had commenced by virtue of Section 21 and thus amounts to an abandonment of a significant nature. Therefore, it is all the more important to import and apply the principles underlying Order 23 Rule 1 of the CPC to abandonment of applications under Section 11(6).(p66)

B. Whether the period spent in pursuing proceedings under the IBC is liable to be excluded while computing the limitation period for filing the application under Section 11(6)?

B.1 Ingredients need to be fulfilled for the applicability of Section 14(1) of the Limitation Act

  • Under Section 14(1) of the Limitation Act, 1963, in computing the period of limitation for any suit, the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.

  • The following ingredients need to be fulfilled for the applicability of Section 14(1):

    • i. The subsequent proceeding must be a suit;

    • ii. Both the earlier and the subsequent proceeding must be civil proceedings;

    • iii. Both the earlier and subsequent proceedings must be between the same parties;

    • iv. The earlier and subsequent proceeding must have the same matter in issue;

    • v. The earlier proceeding must have failed owing to a defect of jurisdiction of the earlier court or any other cause of a like nature;

    • vi. The earlier proceedings must have been prosecuted in good faith and with due-diligence; and

    • vii. Both the earlier and the subsequent proceedings must be before a court.(p78)

B.2 Conditions required to be fulfilled for seeking the benefit of exclusion under Section 14(2) of the Limitation Act

Some of the conditions required to be fulfilled for seeking the benefit of exclusion under Section 14(2) are materially different from those required under Section 14(1) and are as follows:

  • i. Both the earlier and the subsequent proceeding must be civil proceedings;

  • ii. Both the earlier and subsequent proceedings must be between the same parties;

  • iii. The earlier and subsequent proceeding must be for the same relief;

  • iv. The earlier proceeding must have failed owing to a defect of jurisdiction of the earlier court or any other cause of a like nature;

  • v. The earlier proceedings must have been prosecuted in good faith and with due-diligence; and

  • vi. Both the earlier and the subsequent proceedings are before a court.(p83)

B.3 Key difference between sub-sections (1) and (2) of Section 14 of the Limitation Act

  • With every other ingredient remaining the same, the key difference between sub-sections (1) and (2) of Section 14 respectively is two-fold:

    • i. First, the benefit of Section 14(1) can be availed of where the subsequent proceeding is a suit, whereas the benefit of Section 14(2) can be availed of where the subsequent proceeding is an application.

    • ii. Secondly, Section 14(1) applies if both the earlier and the subsequent proceedings have the same matter in issue, whereas Section 14(2) applies when both the earlier and the subsequent proceedings are filed for seeking the same relief.(p84)

  • Clearly, the scope of the expression “same matter in issue” appearing in Section 14(1) is much wider than that of the expression “for the same relief” appearing in Section 14(2) of the Limitation Act. This is evident on account of the difference between the nature of a suit vis-à-vis an application. In a suit, a party generally seeks relief in the nature of the cause of action which is established on the basis of oral and documentary evidence and arguments. Whereas, an application is made under a particular provision of a statute and if it appears to the court that such provision of the statute is not applicable, then the application as a whole cannot be sustained. Thus, an application is made for a specific purpose as provided by the statutory provision under which it is made unlike a suit which is instituted based on a cause of action and is for seeking remedies falling in a wider conspectus.(p85)

B.4 Interpretation of the expression “other cause of a like nature” used in Section 14 of the Limitation Act 

  • This Court over a period of time has taken a consistent view that the expression “other cause of a like nature” appearing in Section 14 should be given a wide interpretation.

  • However, while considering the applicability of Section 14 of the Limitation Act, one must not lose sight of the fact that the applicability of the provision is contingent upon not just the reason for the failure of the earlier proceedings, but is also dependent on several other factors as explained in the preceding paragraphs. It is only when all the ingredients required for the applicability of Section 14 are fulfilled that the benefit would become available.(p89)

B.5 A Section 11 petition is in the nature of an ‘application’ and cannot be considered to be a ‘suit’ for the purposes of the Limitation Act

  • Section 2(l) of the Limitation Act clearly provides for a distinction between a ‘suit’ and an ‘application’ under the Limitation Act. Thus, the clear intention of the legislature was that they are not to be considered as the same for the purpose of Limitation Act.(p81)

  • In Section 11(6) of the Act, 1996, the words ‘the appointment shall be made, on an application of the party’ are used, thereby signifying that a Section 11 petition is in the nature of an ‘application’ and cannot be considered to be a ‘suit’ for the purposes of the Limitation Act. Even otherwise, ‘application’ under the Limitation Act includes a ‘petition’, thereby leaving no room for any doubt that a Section 11(6) petition is to be treated as an application.(p82)

  • As a petition under Section 11(6) of the Act, 1996 is not a suit, hence it would not be governed by sub-section (1) of Section 14 of the Limitation Act. Instead, it would be governed by sub-section (2) of Section 14 of the Limitation Act.(p83)

B.6 Application under Section 11(6) of the Arbitration Act is not for the same relief as an application under Section 9 of the IBC

B.6.1 Objects behind enactment of IBC

  • One of the cardinal objectives of the IBC is to protect and preserve the life of the corporate debtor “as a going concern” by providing for the resolution of its insolvency through restructuring and keeping liquidation only as a measure of last resort.(p92)

B.6.2 Insolvency proceedings are fundamentally different from arbitration proceedings etc.

  • The object of initiation of insolvency proceedings under the IBC is to seek rehabilitation of the corporate debtor by appointment of a new management, whereas the objective behind the appointment of an arbitrator is to resolve the disputes arising between the parties out of a private contract. As soon as the CIRP of a corporate debtor is initiated, it becomes a proceeding in rem. On the contrary, arbitration being concerned with private disputes is not an in-rem proceeding.(p98)

  • What can be discerned from decisions in Swiss Ribbons Pvt. Ltd. & Anr. v. Union of India & Ors. (2019) ibclaw.in 03 SCPioneer Urban Land & Infrastructure Ltd. & Anr. v. Union of India & Ors. (2019) ibclaw.in 13 SC, Hindustan Construction Company Ltd. & Anr. v. Union of India (2019) ibclaw.in 21 SC and Jaypee Kensington Boulevard Apartments Welfare Assn. v. NBCC (India) Ltd. (2023) ibclaw.in 320 SC is that insolvency proceedings are fundamentally different from proceedings for recovery of debt such as a suit for recovery of money, execution of decree or claims for amount due under arbitration, etc.:

    • The first distinguishing feature that sets apart ordinary recovery proceedings from insolvency proceedings is that under the former the primary relief is the recovery of dues whereas under the latter the primary concern is the revival and rehabilitation of the corporate debtor. No doubt both proceedings contemplate an aspect of recovery of debt, however in insolvency proceedings, the recovery is only a consequence of the rehabilitation/resolution of the corporate debtor and not the main relief.(p103)

    • The second distinguishing feature is that although both proceedings entail recovery of debt to a certain extent, however they are different inasmuch as when it comes to recovery proceedings it is the individual creditor’s debt which is sought to be recovered, whereas in insolvency proceedings it is the entire debt of the company which is sought to be resolved. The former is only for the benefit of the individual creditor who initiates the recovery proceedings whereas the latter is for the benefit of all creditors irrespective of who initiates insolvency.(p104)

    • The last distinguishing feature is that, a recovery proceeding be it a suit or arbitration is initiated by a creditor where an amount is due and is unpaid by a debtor, in other words the intention behind initiating a recovery proceeding is simpliciter for the full recovery of amount which is unpaid to it. However, in an insolvency proceeding there is no guarantee of recovery of the entire debt. A creditor opts for insolvency where an amount of such threshold is unpaid, that the creditor has an apprehension that the debtor in its current state and under the existing management in all likelihood will be unable to repay that debt in the future i.e., there is no likely prospect of any recovery, and thus it would be beneficial to take the risk of initiating insolvency which even though does not guarantee full recovery, in order for a new management to take over the corporate debtor and to recover at least some amount of debt before it is too late. Thus, the underlying intention behind initiating insolvency is not with the intention of recovering the amount owed to it, but rather with the intention that the corporate debtor is resolved / rehabilitated through a new management as soon as possible before it becomes unviable with no prospect of any meaningful recovery of its dues in the near future.(p105)

  • Thus, by no stretch of imagination can insolvency proceedings be construed as being for the same relief as any ordinary recovery proceedings, and therefore no case is made out for exclusion of time under Section 14(2) of the Limitation Act, 1963.(p106)

  • As the relief sought in an application under Section 11(6) of the Act, 1996 is not the same as the relief sought in an application under Section 9 of the IBC, the benefit of Section 14(2) cannot be given to the Respondent in the present case.(p107)

  • Insolvency proceedings are not one for recovery of debt and cannot be equated with execution proceedings as both proceedings are different in nature and for different reliefs and as such no benefit can be given under Section 14(2) of the Limitation Act which stipulates the requirement of “same relief".(p108)

B.7 Present case

  • The Hon'ble Supreme Court is of the view that the High Court fell in error in holding that an application under Section 9 of the IBC and an application under Section 11(6) of the Act, 1996 are filed for seeking the same relief. While the relief sought in the former is the initiation of the CIRP of the corporate debtor, the relief sought in the latter is the appointment of an arbitrator for the adjudication of disputes arising out of a contract.(p97)

  • Having taken a conscious decision to opt for specific remedy under the IBC which is not for the same relief as an application under Section 11(6) of the Act, 1996, the Respondent cannot be now allowed to take the plea of ignorance or mistake and must bear the consequences of its decisions.(p110)

C. Whether the delay caused by the Respondent in filing the fresh arbitration application under Section 11(6) of the Act, 1996 can be condoned under section 5 of the Limitation Act?

  • The primary intent behind Section 5 of the Limitation Act is not to permit litigants to exploit procedural loopholes and continue with the legal proceedings in multiple forums. Rather, it aims to provide a safeguard for genuinely deserving applicants who might have missed a deadline due to unavoidable circumstances. This provision reflects the intent of the legislature to balance the principles of justice and fairness, ensuring that procedural delays do not hinder the pursuit of substantive justice.

  • Section 5 of the Limitation Act embodies the principle that genuine delay should not be a bar access to justice, thus allowing flexibility in the interest of equity, while simultaneously deterring abuse of this leniency to prolong litigation unnecessarily.(p123)

C.1 Whether the benefit of condonation of delay under Section 5 of the Limitation Act is available in respect of an application for appointment of arbitrator under Section 11(6) of the Act, 1996?

  • The use of the expression “may be admitted” in the provision of Section 5 of the Limitation Act indicates that the nature of relief that can be granted under Section 5 is discretionary and not mandatory in nature. The applicant or the Appellant, even upon showing sufficient cause, cannot assert as a matter of right that the delay be condoned. Thus, unlike Section 14 of the Limitation Act, where the applicant can seek the exclusion of time period as a matter of right upon fulfilment of the mandatory conditions, Section 5 of the Limitation Act leaves the ultimate decision of extending the benefit of condonation of delay to the court before which the application for such condonation is made.(p114)

  • The period of limitation to file an application under Section 11(6) of the Act, 1996 is governed as provided in Article 137 of the Schedule to the Limitation Act, that is, three years. The Hon'ble Court have observed that the benefit available under Section 14 of the Limitation Act will also be available in respect of applications made under Section 11(6) of the Act, 1996. Thus, in the absence of any specific statutory exclusion, there is no good reason to hold that the benefit under Section 5 of the Limitation Act cannot be availed for the purpose of condonation of delay caused in filing a Section 11(6) application.(p117)

  • The legislative intent of expeditious dispute resolution under the Act, 1996 must also be kept in mind by the courts while considering an application for condonation of delay in the filing of an application for appointment of arbitrator under Section 11(6). Thus, the court should exercise its discretion under Section 5 of the Limitation Act only in exceptional cases where a very strong case is made by the applicant for the condonation of delay in filing a Section 11(6) application.(p124)

C.2 Whether it is permissible for the courts to condone delay under Section 5 of the Limitation Act in the absence of any application seeking such condonation?

  • The necessary pre-condition for availing the remedy under Section 5 of the Limitation Act is that the applicant must satisfy the court that there was a sufficient cause which prevented him from instituting the application within the prescribed time period. Although it is a general practice that a formal application under Section 5 of the Limitation Act has to be filed by the applicant, yet no such requirement can be gathered from a bare reading of the statute. Thus, even in the absence of a formal application, a court or tribunal may consider exercising its discretion under Section 5 of the Limitation Act subject to the applicant assigning sufficient cause for condoning the delay. A similar view was taken by this Court in Sesh Nath Singh v. Baidyabati Sheoraphuli Coop. Bank Ltd. reported in (2021) ibclaw.in 49 SC.(p120)

  • The position of law that emerges from the aforesaid discussion is that the benefit under Section 5 of the Limitation Act is available in respect of the applications filed for appointment of arbitrator under Section 11(6) of the Act, 1996. Further, the requirement of filing an application under Section 5 of the Limitation Act is not a mandatory prerequisite for a court to exercise its discretion under the said provision and condone the delay in institution of an application or appeal.(p121)

C.3 Whether the facts of the present case warrant the exercise of discretion in favour of the Respondent to condone the delay in filing the second arbitration application?

  • The Respondent took a conscious decision to abandon its first Section 11(6) application with a view to pursue proceedings under Section 9 of the IBC. The Respondent made such choice despite a specific objection raised by the Appellant in its reply to the statutory demand notice that there were pre-existing disputes between the parties. In view of this, maximisation of the chances of getting the application under Section 9 of the IBC admitted by the NCLT seems to have been the only reason for the abandonment of the first Section 11(6) application by the Respondent.

  • In light of such conduct on the part of the Respondent, the Hon'ble Supreme Court is of the view that the present case does not warrant the exercise of our discretion under Section 5 of the Limitation Act.(p122)

D. Conclusion

  • In the absence of any liberty being granted at the time of withdrawal of the first application under Section 11(6) of the Act, 1996, the fresh application filed by the Respondent under the same provision was not maintainable;

  • (The fresh application filed by the Respondent under Section 11(6) of the Act, 1996 was time-barred;

  • The Respondent is not entitled to the benefit of Section 14(2) of the Limitation Act; and

  • The Respondent is also not entitled to the benefit of condonation of delay under Section 5 of the Limitation Act.(p131)

As a result, the appeal filed by the Appellant is allowed and the impugned order passed by the High Court of Bombay is hereby set aside. Pending application(s), if any, shall stand disposed of. The parties shall bear their own costs.(p132-134)

Hence this landmark case will shape, the future of IBC, Arbitration Act, CPC. And Limitation Act and also clarified how these provisions are interconnected and interlinked to each other and will be a lesson for all lawyers to take care of the pleadings, strategies and care while filing pleadings of the clients.  

Vishal Kale

Trained Mediator, Sole Arbitrator and Environmentalist

Trained Mediator, Sole Arbitrator and Environmentalist

11-Nov-2024

contact@kaleandshinde.com

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