SUPREME COURT HOLDS THAT DELAY CAUSED DURING COVID-19 CAN BE CONDONED UNDER SECTION 5 OF THE LIMITATION ACT.

A two-Judge Bench of the Supreme Court comprising of Justice J.K. Maheshwari and Justice K.V. Viswanathan passed a Judgment dated 03-10-2023 in the matter of Aditya Khaitan & Ors. vs. IL and FS Financial Services Limited Civil Appeal Nos. 6411-6418 / 2023 and observed that in the Suo Motu proceedings titled “In Re: Cognizance for Extension of Limitation,” several Orders were passed, which extended the limitation period.

FACTS

i) That the aforesaid Appeal filed before the Apex Court by one, Aditya Khaitan & Nine Ors. (Appellants) against one IL and FS Financial Services Limited (Respondent), challenged the decision of the Hon’ble High Court of West Bengal, at Calcutta (High Court), that dismissed the said Applications and consequently denied their request to file Written Statements .

ii) That the Respondent filed a lawsuit in S. No. 177 of 2019 in the High Court at Calcutta on 30.08.2019 that was for the recovery of money and other consequential reliefs. There were nine Defendants in the case, all of whom are the Appellants in the present matter.

iii) Summons in the lawsuit were served on the Defendants on 07.02.2020. Since it was a Commercial Suit, the Defendants had a 30-day period to file their Written Statements, which expired on 08.03.2020. Additionally, there was a further condonable period of 90 days, which expired on 06.06.2020. However, the Defendants failed to file their Written Statements within the specified timelines.

iv) Thereafter, the Defendants filed eight Applications on 20.01.2021 (one for each Defendant, as there were nine) seeking an extension of time to file their Written Statements. They cited various reasons for the delay, including the declaration of COVID-19 as a Pandemic by the World Health Organization, Government Advisories related to the Pandemic, and Orders issued by the Indian Government and the State Governments under the Disaster Management Act, of 2005. They also relied on Orders of the Supreme Court dated 23.03.2020 and 10.07.2020, which extended the period of limitation due to the Pandemic.

v) Further, the Plaintiff opposed these Applications, arguing that the Orders of the Court dated 23.03.2020 and 10.07.2020 should not apply in this case because the limitation period had already expired before 15.03.2020.

vi) The Plaintiff relied on a judgment of the Court dated 18.09.2020 in the case of Sagufa Ahmed and Others Vs. Upper Assam Plywood Products Private Limited and Others (2021) 2 SCC 317, to support their argument. As a result, the High Court accepted the Plaintiff’s argument and did not allow the Written Statements to be filed. The Defendants (Applicants) were aggrieved by the High Court’s decision and appealed to the Supreme Court.

HIGH COURT FINDINGS:

The High Court dismissed the said Applications and denied the Prayer vide Order dated 26.02.2021 in General Application Nos. 3,4,5,6,7,8,9 and 10 of 2021 in Civil Suit No. 177 of 2019  filed by Aditya Khaitan and Nine Other Defendants and made the following observations

A) That the Hon’ble High Court denied their Applications on the grounds that the 30-day period for filing Written Statements had already expired by 08.03.2020. Further, the High Court specifically considered the order dated 23.03.2020, issued by the Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020 [In Re: Cognizance for Extension of Limitation], which aimed to extend the limitation period due to the COVID-19 Pandemic, starting from 15.03.2020. The High Court concluded that this Order could not benefit the Applicants because their limitation period had lapsed before 08.03.2020.

B) Subsequently, the High Court referenced the decision in the case of Sagufa Ahmed and Others Vs. Upper Assam Plywood Products Private Limited and Others (2021) 2 SCC 317, which clarified that the Orders issued by the Supreme Court under Article 142 of the Constitution extended only “the period of limitation” and not the period within which delay could be condoned. Based on this interpretation and the circumstances of the case, the High Court determined that the Applications to take on record the Written Statements could not be entertained.

SUPREME COURT:

Aggrieved by the Order dated 26.02.2021 passed by the Hon’ble High Court, the Appellants filed a Civil Appeal Nos. 6411-6418 / 2023 before the Hon’ble Supreme Court on 08.03.2021. The Apex Court, in its observations, addressed the vital issues which are as follows:

ISSUES:

I) The primary issue before the Supreme Court of India revolves around the timely filing of Written Statements by the Applicants/Defendants in Civil Suit No. 177 of 2019. Central to this issue is the interpretation and applicability of the Orders issued by the Supreme Court in response to the COVID-19 Pandemic. Specifically, the Court must determine whether the Orders dated 23.03.2020 and 08.03.2021, among others, extend the limitation period for filing Written Statements in this particular case.

II) Additionally, the Court needs to consider the impact of subsequent Orders issued by the Supreme Court after the judgment in Sagufa Ahmed’s case (supra) on 18.09.2020, as well as the provisions of the Commercial Courts Act, 2015, which introduced specific time limits for filing Written Statements in commercial disputes. Cognizance to file Written Statements was preserved during the extraordinary circumstances of the Pandemic.

OBSERVATIONS:

1) The Supreme Court emphasized the legal maxim, “Vigilantibus non dormientibus jura subveniunt,” which means “the law assists those who are vigilant, not those who sleep over their rights.” This maxim is fundamental to statutes of limitations. Further, the Apex Court recognized that during the COVID-19 Pandemic, parties were not sleeping over their rights, considering the extraordinary circumstances.

2) Subsequently, the Bench highlighted that it had taken Suo Motu Cognizance under Article 142 of the Constitution of India to pass Orders extending deadlines due to the Pandemic. These Orders aimed to protect the rights of parties by ensuring that their remedies and defenses were not barred. Further, the Court mentioned a series of Orders issued in Suo Motu proceedings titled “In Re: Cognizance for Extension of Limitation.” These Orders were dated 23.03.2020, 06.05.2020, 10.07.2020, 08.03.2021, 27.04.2021, and 23.09.2021. These Orders extended the period of limitation and had a significant impact on the case.

3) Later, the Apex Court highlighted a change in the Orders issued after Sagufa Ahmed’s case, which was decided on 18.09.2020. The newer Orders, starting with the one dated 08.03.2021, not only extended the period of limitation but also excluded the period for computing outer limits within which Courts or Tribunals could condone delay. Hence, the Bench noted that the change in Orders post-Sagufa Ahmed expanded the protection, allowing for a more generous exclusion of time for computing limitations.

4) Subsequently, the Supreme Court referred to a specific order dated 08.03.2021, which excluded the period from 15.03.2020 to 14.03.2021 for computing limitations and provided specific rules for calculating time for different types of cases. Further, the Bench explained that these subsequent Orders, particularly those issued after Sagufa Ahmed’s case, changed the basis of Sagufa Ahmed’s judgment, which had emphasized that only the period of limitation was extended, not the period for condoning delays.

CONCLUSION:

Thus, based on aforesaid observations, the Supreme Court’s judgment in this case recognized the unprecedented circumstances of the COVID-19 Pandemic and upheld the principle that the law assists those who are vigilant, even in times of crisis. Further, the Court highlighted its Suo Motu Cognizance under Article 142 of the Constitution to extend deadlines, protecting parties’ rights during the Pandemic. The Hon’ble Court noted a series of Orders issued in this regard, which expanded the protection by not only extending the period of limitation but also excluding time for computing outer limits for condoning delays. These subsequent Orders altered the basis of the earlier Sagufa Ahmed Judgment, allowing for a more generous extension of time for filing Written Statements.

Based on the changed Orders and their interpretation, consequently, the Supreme Court allowed the Appeals and directed the Written Statements filed on 20.01.2021 to be taken on record, and the suit to proceed.

 

Sushila Ram Varma

Chief Consultant

The Indian Lawyer