Can Courts/Tribunals condone delay under Limitation Act absent a formal application? Supreme Court explains

Can Courts/Tribunals condone delay under Limitation Act absent a formal application? Supreme Court explains

The Supreme Court (SC) on 22 March 2021, in the case titled Sesh Nath Singh & Anr. (Appellants) v. Baidyabati Sheoraphuli Co-operative Bank Ltd. & Anr. (Respondents) held that there is no bar to exercise by the Court/Tribunal of its discretion to condone delay under Section 5 of the Limitation Act, in the absence of a formal application.

The SC bench comprising of Justices Indira Banerjee and Hemant Gupta observed that the Court can always insist that an application or an affidavit showing cause for the delay be filed.

In the instant matter, the Top Court was considering an appeal filed against a judgment of the National Company Law Appellate Tribunal (NCLAT). The Appellate Tribunal in its judgment dealt with the issue- whether delay beyond three years in filing an application under Section 7 of Insolvency & Bankruptcy Code (IBC) can be condoned, in the absence of an application for condonation of delay made by the applicant under Section 5 of the Limitation Act?

The litigation background of the case is that the financial creditor had not filed an application before the National Company Law Tribunal (NCLT) under Section 5 of the Limitation Act.

The corporate debtor contended that the delay in filing the application under Section 7 of the IBC, could not have been condoned. Section 7 of the IBC, deals with the 'initiation of corporate insolvency resolution process by financial creditor'.

It was observed by the Apex Court that Section 5 of the Limitation Act does not mandate the filing of an application and it enables the Court to admit an application or appeal if the applicant or the appellant, if it is satisfied that there is a sufficient cause for not making the application and/or preferring the appeal, within the time prescribed.

The bench stated that it is the general practice to make a formal application under Section 5 of the Limitation Act 1963. This enables 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 timeline provided by the Limitation Act.

The Court discussed in detail the scope of Section 5 of the Limitation Act and stated that by reading the said provision it is clear that the provision does not mandate the filing of an application in writing before relief can be granted by the Court.

The Apex Court emphasized that according to the said provision the Court might condone delay beyond the time prescribed by limitation for filing an application or appeal if it is satisfied that the appellant/applicant had sufficient cause for not preferring the appeal or making the application within such period.

It further stated that "Alternatively, a proviso or an explanation would have been added to Section 5, requiring the appellant or the applicant, as the case may be, to make an application for condonation of delay. However, the Court can always insist that an application or an affidavit showing cause for the delay be filed. No applicant or appellant can claim condonation of delay under Section 5 of the Limitation Act as of right, without making an application."

The Apex Court clarified that an applicant or appellant cannot claim the condonation of delay under Section 5 of the Limitation Act as a matter of right, without making an application if asked by the Court.