Allowed

Edelweiss Asset Reconstruction Company v. Indo Wagon Engineering Limited

DRAT3 Apr 2025MISC APPEAL/29/2023

Case brief

AI extract

What is this about?

In this miscellaneous appeal, the DRAT set aside a DRAT order that wrongly allowed a late recall application. The court held the applicant lacked locus standi as it was not a party to the original proceedings and the judgment was based on merits, rendering the delay condonation irrelevant.

What did the court decide?

The impugned DRAT order allowing the recall application was set aside. The application for recall and the application for condonation of delay under Section 5 of the Limitation Act were dismissed.

Edelweiss Asset Reconstruction Company versus Indo Wagon Engineering… — Arbitration | DRAT (2025)

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Reportable/Non-Reportable

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Misc. Appeal No. 29 of 2023-DRAT-Kolkata

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IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT KOLKATA

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Misc. Appeal No. 29 of 2023 (Arising out of NDN 913 of 2019 (MA) in O.A. 33 of 2014 at DRT-I, Kolkata)

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THE HON’BLE MR. JUSTICE ANIL KUMAR SRIVASTAVA

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CHAIRPERSON

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Edelweiss Asset Reconstruction Company Limited (Acting as a trustee of EARC Trust SC 35), Edelweiss House, Off. C.S.T. Road, Kalina, Mumbai, Maharashtra 400 098.

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… Appellant

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-Versus-

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Indo Wagon Engineering Limited, being the Intervener, represented by Mr. Sujit Dutta Roy, Authorised Representative within the meaning of Companies Act, 1956, having its registered office at 9, Ezra Street, Top Floor, Kolkata – 700 001;

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Jessop & Company Limited, a Public Limited Company within the meaning of Companies Act, 1956, having its Registered office at 21 & 22, Jessore Road, Dum Dum, within P.S. Dum Dum, Kolkata – 700 028, District: 24 Parganas North, West Bengal;

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United Bank of India, a body corporate constituted under the Banking Companies (Acquisition & Transfer of Undertaking) Act, 1970, having its branch office at Old Court House Street Branch, 11, Hemanta Basu Sarani, Kolkata – 700 001;

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Bank of India, a body corporate constituted under the Banking Companies (Acquisition & Transfer of Undertaking) Act, 1970, having its branch office at Malad (West) Branch, SV Road, Opposite – Natraj Market, Malad (W), Mumbai – 400 064;

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Official Liquidator, 9, Old Post Office Street, 1^st Floor, BBD Bagh, Kolkata – 700 001.

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	… Respondents
Counsel for Appellants …	Mr. Joy Saha, Senior Advocate Ms. Akshita Bohra
Counsel for Respondent No.1 …	Mr. Bodhisatwa Biswas Mr. Jayati Chowdhury Ms. Sreya Sen
Counsel for Respondent No. 5 …	Mr. Subhadip Biswas Ms. Dona Saha
JUDGMENT :	3^rdApril, 2025
THE APPELLATE TRIBUNAL :

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata 1. Instant appeal has been preferred by the Secured Creditor, Edelweiss Asset Reconstruction Company Limited, against an order dated 1.8.2023 passed by Learned DRT-I, Kolkata in case No. NDN 913 of 2019 (MA)/O.A. 33 of 2014 (Edelweiss Asset Reconstruction Company Limited -vsJessop & Company Limited).

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2. As per pleading of the parties, facts of the case are that one Jessop & Company Limited availed financial assistance from the Central Bank of India. Required documents were executed. Loan account became irregular and was classified as N.P.A. Demand Notice was issued by the Bank to the Company on 2.8.2012 for an amount of Rs.1,06,28,00,000.00 with pendent lite and future interest. In the meantime Central Bank of India assigned the secured dues along with the underlying assets to the Appellant vide Deed of Agreement dated 28^th March, 2014.

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3. O.A. 33 of 2014 under Section 19 of the Recovery of Debts And Bankruptcy Act, 1993 (hereinafter referred to as the ‘Act’) was filed by the Secured Creditor before the Learned DRT-I, Kolkata which was allowed vide judgment and order dated 11^th January, 2017. Recovery Certificate was issued. Recovery Proceedings under No. 11 of 2017 was initiated by the Appellant before the Recovery Officer. In the Recovery Proceedings the Company was represented through their lawyers. The Respondent No.1, herein, namely, Indo Wagon Engineering Limited, represented through Mr. Sujit Dutta Roy, moved an Intervention Application in the Recovery Proceedings. He was directed

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata vide order dated 4.3.2020 that copy of the Intervention Application be served to the Appellant as well as the Official Liquidator, which was not complied with.

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4. Respondent No.1, namely Indo Wagon Engineering Limited, moved an application for recall of the final order in O.A. 33 of 2014 dated 11.1.2017 in the capacity of Contributory of the Company. An application under Section 5 of the Limitation Act for condonation of delay of 1063 days was also filed which was allowed by the impugned order dated 1.8.2023.

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5. Feeling aggrieved by the impugned orde, condoning the delay in filing the application for recall of the final order passed in O.A. 33 of 2014, Appellant preferred the instant appeal.

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6. Opposition is filed by Respondent No. 1, Indo Wagon Engineering Limited.

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7. Heard the Learned Counsel for the parties and perused the records.

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8. Learned Senior Advocate, Mr. Joy Saha, for the Appellant, would submit that the Respondent No. 1, Indo Wagon Engineering Limited, who filed an application for recall of the final order passed in O.A. 33 of 2014, was not a party in the O.A. proceedings. A Winding Up order was passed by the Hon’ble High Court in CA 203 of 2017 with CP No. 387 of 2014 and CP 300 of 2015 on 18.5.2017 which was passed on an application by one Sujit Dutta Roy, Contributory of the Company (in liquidation) wherein it was observed that :

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata “Since the amount of payment now made to the petitioning creditors are not significant, for the time being, the Official Liquidator will relinquish physical possession immediately but remain in symbolic possession. I make it clear that the Company might resume its business under the aegis of the Official Liquidator.”

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9. On the strength of this order, Learned Counsel submits that the Official Liquidator was in possession over the secured assets of the Company. This order was passed on the application of one Sujit Dutta Roy. Indo Wagon Engineering Limited was not a contributory before the Hon’ble High Court. No authorization of Sri Sujit Dutta Roy to represent Indo Wagon Engineering Limited was filed. Even in the application for recalling of the judgment and order dated 11^th January, 2017, passed by the Learned DRT in O.A. 33 of 2014, Sujit Dutta Roy alleges himself to be the Authorised Signatory but no authorisation was filed.

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10. It is further submitted that it could not be brought on record as to whether Indo Wagon Engineering Limited was a shareholder or contributory to the Jessop & Company Limited? Shareholder has no right on the assets of the Company rather he can only be entitled for profits. Company is a juristic person and is distinct from shareholder. It is further submitted that it is the Company which owns the property and not the shareholders. Learned Senior Advocate has placed reliance upon Sections 9 and 179 of the Companies Act. Learned Counsel has placed reliance upon the judgment of the Constitution Bench of the Hon’ble Apex Court in Bacha F. Guzdar -vsCommissioner of Income Tax, Bombay [(1954) 2 SCC 563].

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata

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11. It is further contented that when the Company was under liquidation, only Official Liquidator can move any application but any Contributory or Shareholder has no right to move an application to recall the decree already passed by a competent forum. In the Writ Petition order the Hon’ble Calcutta High Court has not granted any liberty to the Intervenor to contest the O.A. proceedings. Till date Company has not been revived.

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12. Learned Counsel further submits that law is well settled regarding condonation of delay in moving an application for setting aside an ex parte judgment. It is submitted that the impugned judgment in O.A. proceedings was not an ex parte judgment rather it was a judgment passed on merits. Jessop & Company Limited was duly represented through its Counsel, but subsequently did not appear before the Learned DRT. Consequently, a judgment on merits was passed. Basic ingredient for setting aside a judgment, in an application under Section 5 of the Limitation Act, would be that sufficient cause has to be shown by the Applicant for condonation of delay. The ground shown by the Applicant could not be a sufficient ground for condonation of delay.

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13. It is further submitted that the Learned DRT has passed a very cryptic order wherein it is observed that the Intervenor Applicant has right of hearing in the O.A. proceedings. Further it was held that since Applicant was not a party to the O.A. proceedings it is futile to explain the delay of more than 1000 days. Applicant moved an application for setting aside the ex parte judgment. As per

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata the order of the Hon’ble Calcutta High Court, the Applicant is not required to explain the delay. Learned Counsel submits that no right was conveyed by the Hon’ble High Court to the Applicant for moving an application for condonation of delay. Decree was passed when the Company was in existence. Intervenor Applicant had no right to be impleaded as a party in the O.A. proceedings as it was the Company against whom O.A. was filed. It is further challenged by the Learned Senior Advocate that the date of knowledge, alleged by the Applicant, is not believable.

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14. Per contra, Learned Counsel for Respondents would submit that the management of Jessop & Company was taken over by the Government of West Bengal in February, 2016 by way of passing of a Bill. Jessop & Company was not represented in the O.A. proceedings and an ex parte order was passed on 11^th January, 2017. Jessop & Company was wound-up by the Hon’ble Calcutta High Court order on 6.3.2017. Hon’ble High Court, vide order dated 18.5.2017, directed the Official Liquidator to relinquish physical possession of Jessop & Company properties in favour of Indo Wagon Engineering Limited although Official Liquidator shall remain in the symbolic possession. Applicants came to know about the impugned judgment on 12.11.2019 when a copy of the application under CA 172 of 2019 in CP 387 of 2014 was filed before the Hon’ble High Court by Edelweiss Asset Reconstruction Company Limited wherein the details of the impugned judgment was given. Thereafter, application was

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata moved by the Respondent herein which was allowed by the Learned DRT.

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15. Learned Counsel further argued that there was no requirement for filing separate application, under Section 5 of the Limitation Act, because the recalling application itself was not time barred. Reliance is placed upon Dwarika Prasad -vs- Prithviraj Raj Singh (2024 SCC OnLine SC 3828). It is further submitted that a liberal approach should be taken by the Court in condoning the delay so as to advance substantial justice. The expression ‘sufficient cause’ should be given a liberal construction. It is to be seen whether the Appellant acted with reasonable diligence in prosecuting the appeal? Bona fide of the Applicant have to be looked into. Reliance is placed upon State of Rajasthan

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-vs- Bal Krishan Mathur [(2014) 1 SCC 592], State of Nagaland -vsLipok Ao, [(2005) 3 SCC 752), Shakuntala Devi Jain -vs- Kuntal Kumari (AIR 969 SC 575), O.P. Kathpaliav Lakhmir Singh [(1984) 4 SCC 66), Collector, Land Acquisition, Anantnag -vs- Katiji [(1987 2 SCC 107).

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16. Learned Counsel for Respondent also touched the merits of the case and argued that the Learned DRT committed error in accepting Affidavit-in-Evidence after conclusion of the trial.

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17. O.A. 33 of 2014 was filed by Edelweiss Asset Reconstruction Company Limited against Jessop & Company Limited, Union Bank of India and Bank of India. It was decided by Learned DRT-I, Kolkata on 11.01.2017

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata against Defendant No. 1, who was held liable to pay Rs.1,19,68,35,664.00 as on 31.01.2014 with pendente lite and future interest at the rate of 17.50% per annum with monthly rests. In paragraph 7 of the judgment it was recorded that the postal service of summons has been completed upon Defendant No. 1 and 3. Defendant No. 1, through Advocate, appeared but did not file written statement to controvert the claim of the Bank or EARC and finally heard in absence of the Defendant. This judgment was not challenged by the Defendants and attained finality. Thereafter, Indo Wagon Engineering Limited, being the Intervenor, represented by Sri Sujit Dutta Roy, Authorised Representative, filed an Application Diary 913 of 2019 for recalling of the order dated 11.01.2017 alleging himself to be the Contributory of Jessop & Company, wherein relief was sought for recalling of the judgment and order dated 11^th January, 2017 and to condone the delay in filing the petition.

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18. Ground taken in the petition was that on 19.4.2014, Learned Counsel for Defendant No. 1 appeared and undertook to file vakalatnama and written statement. Again on 6^th October, 2015 Learned Counsel appeared by filing vakalatnama and prayed for a copy of the O.A. In the meantime, Government of West Bengal on 26^th February, 2016 passed a Bill, being Jessop & Company Limited (Acquisition and Transfer Undertaking) Bill 2016, proposing to acquire the property by the State of West Bengal. Then it was the duty of the State of West Bengal to

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata intervene in the proceedings of O.A. 33 of 2014. Again on 4^th March, 2016 Mr. Debabrata Basu Ray, Learned Counsel for Defendant No. 1, appeared but did not have requisite instruction and thereafter stopped appearing. Company was wound-up by the Hon’ble Calcutta High Court vide order dated 6^th March, 2017. CA 203 of 2017 was filed by the Intervenor for stay of the winding up against the Company wherein vide order dated 18.5.2017 Hon’ble High Court directed the Official Liquidator to relinquish physical possession of Jessop & Company properties in favour of Indo Wagon Engineering Limited although Official Liquidator shall remain in the symbolic possession. During pendency of CA 203 of 2017 it was never informed by the Edelweiss Asset Reconstruction Company Limited that any proceedings are pending before the DRT or any decree is passed against Jessop & Company. Intervenor, being Contributory of the Company, contends that he would be seriously prejudiced by the ex parte decree dated 11.01.2017. On 12.11.2019 when a copy of CA 203 of 2017 was received, Intervenor came to know about the ex parte order and moved an application for recalling the said ex parte order.

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19. As far as issue of locus standi is concerned, firstly we have to look into as to whether Respondent No. 1, i.e. Indo Wagon Engineering Limited , has got any right to move the application for recalling the judgment and order dated 11.1.2017, passed in O.A. 33 of 2014?

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20. At the very outset, it is to be observed that no provision is mentioned in the petition for recalling under

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata which the petition for recalling was filed. Applicant alleges himself to be the Contributory of Jessop & Company Limited. In the application for recalling of the order no ground is taken as to how he is the Contributory of Jessop & Company Limited? What is his status? However, in paragraph 6 of the opposition filed it is stated that Indo Wagon Engineering Limited is a shareholder of Jessop & Company Limited. Although an order dated 18.5.2017 was passed by the Hon’ble High Court in CA 203 of 2017 with CP No. 387 of 2014 and CP 300 of 2015, Sri Sujit Dutta Roy , Contributory of the Company, filed an application under Section 466 of the Companies Act, 1956, with a prayer for recalling of the said winding–up order wherein the Hon’ble High Court directed that the Official Liquidator to relinquish physical possession of Jessop & Company properties in favour of Indo Wagon Engineering Limited and he shall remain in symbolic possession. It was further observed that the Company might resume its business under the aegis of the Official Liquidator.

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21. It has been submitted at the Bar that the Company has yet not been liquidated. In that case, Section 9 of the Companies Act provides for registration of the Company. Section 9 of the Companies Act reads as under:

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“ Effect of registration - From the date of incorporation mentioned in the certificate of incorporation, such subscribers to the memorandum and all other persons, as may, from time to time, become members of the company, shall be a body corporate by the name contained in the memorandum, capable of exercising all the functions of an incorporated company under this Act and having perpetual succession [The words “and a common seal” omitted by Act 21 of 2015, sec.3] with to acquire, hold and dispose of property, both movable and

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata

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immovable, tangible and intangible, to contract and to sue and be sued, by the said name.”

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22. Section 179 of the Companies Act provides for the powers of Board, which is as under :

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“179. Powers of Board.-(1) The Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do: Provided that in exercising such power or doing such act or thing, the Board shall be subject to the provisions contained in that behalf in this Act, or in the memorandum or articles, or in any regulations not inconsistent therewith and duly made thereunder, including regulations made by the company in general meeting: Provided further that the Board shall not exercise any power or do any act or thing which is directed or required, whether under this Act or by the memorandum or articles of the company or otherwise, to be exercised or done by the company in general meeting.

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(2) No regulation made by the company in general meeting shall invalidate any prior act of the Board which would have been valid if that regulation had not been made.

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(3) The Board of Directors of a company shall exercise the following powers on behalf of the company by means of resolutions passed at meetings of the Board, namely:-

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(a) to make calls on shareholders in respect of money unpaid on their shares;

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(b) to authorise buy-back of securities under section 68;

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(c) to issue securities, including debentures, whether in or outside India;

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(d) to borrow monies;

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(e) to invest the funds of the company;

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(f) to grant loans or give guarantee or provide security in respect of loans;

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(g) to approve financial statement and the Board's report;

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(h) to diversify the business of the company;

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(i) to approve amalgamation, merger or reconstruction;

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(j) to take over a company or acquire a controlling or substantial stake in another company:

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(k) any other matter which may be prescribed

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Provided that the Board may, by a resolution passed at a meeting, delegate to any committee of directors, the managing director, the manager of any other principal officer of the company or in the case of a branch office of the company. the principal officer of the branch office, the powers specified in clauses (M (1) on such conditions as it may specify:

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Provided further that the acceptance by a banking company in the ordinary course of its business of deposits of money from the public repayable on demand draft, order or placing of monies on deposit by a banking company with another banking company on such conditions as the Board may prescribe, shall not be deemed to be a borrowing of monies or, as the case may be, a making of loans by a banking company within the meaning of this section.

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata Explanation I- Nothing in clause (d) shall apply to borrowings by a banking company from other banking companies or from the Reserve Bank of India, the State Bank of India or any other banks established by or under any Act.

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Explanation II. In respect of dealings between a company and its bankers, the exercise by the company of the power specified in clause (d) shall mean the arrangement made by the company with its bankers for the borrowing of money by way of overdraft or cash credit or otherwise and not the actual day-to-day operation on overdraft, cash credit or other accounts by means of which the arrangement so made is actually availed of.

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(4) Nothing in this section shall be deemed to affect the right of the company in general meeting to impose restrictions and conditions on the exercise by the Board of any of the powers specified in this section.”

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23. No power or offer is given to the Indo Wagon Engineering Limited to represent Jessop & Company Limited. There is no authorisation of the Board of Directors to represent Jessop & Company Limited. Hon’ble High Court, vide order dated 18.5.2017, simply directed the Official Liquidator to relinquish physical possession but Official Liquidator shall remain in symbolic possession. There is no authorization filed by Indo Wagon Engineering Limited authorizing Sri Sujit Dutta Roy to file the petition although he himself alleges to be the Authorised Signatory. Constitution Bench of the Hon’ble Apex Court in Bacha F. Guzdar -vs- Commissioner of Income Tax, Bombay [(1954) 2 SCC 563] has held that :

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“10. The interest of a shareholder vis-à-vis the company was explained in a Charanjit Lal Chowdhury -vs- Union of India. That judgment negatives the position taken up on behalf of the appellant that a shareholder has got a right in the property of the company. It is true that the shareholders of the company have the sole determining voice in administering the affairs of the company and are entitled, as provided by the articles of association, to declare that dividends should be distributed out of the profits of the company to the shareholders but the interest of the shareholder either individually or collectively does not amount to more than a right to participate in the profits of the company. The company is a juristic person and is distinct from the shareholders. It is the company which owns the property and not the

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata shareholders. The dividend is a share of the profits declared by the company as liable to be distributed among the shareholders.”

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24. In view of the law laid down by the Hon’ble Apex Court, Company itself is a jurisdical person who can sue or be sued for that purpose. Even for the sake of argument if it is accepted that Indo Wagon Engineering Limited or Sri Sujit Dutta Roy are shareholders even then, they have no right over the property of the Company since a jurisdical person is distinguished from the shareholder. It is the Jessop & Company Limited which owns the property and not the shareholders. But dividend/share of the profits, declared by the Company, is liable to be distributed amongst the shareholders. As such Indo Wagon Engineering Limited has no right to move any application for recalling of the judgment and decree passed in the O.A. proceedings.

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25. There is no provision in the Recovery of Debts and Bankruptcy Act, 1993 (hereinafter referred to as the ‘RDB Act’) for recalling of the judgment, rather, an application for setting aside an ex parte judgment could have been moved but the same was not done. Since the judgment was not an ex parte judgment, only remedy available to the Applicant was to file an appeal subject to the provisions of Section 21 of the Recovery of Debts And Bankruptcy Act, 1993.

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26. Now we have to see as to whether there is any ground for condonation of delay in moving the application for recalling?

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata 27. Learned Counsel for Respondents submitted that when the Respondents came to know about the ex parte judgment, only then they moved the application for recalling. They came to know about the judgment on 12.11.2019 and filed the application on 10.12.2019. As far as the issue of delay is concerned, the judgment passed by the Learned DRT in O.A. proceedings was not an ex parte judgment. Perusal of the judgment reveals that it was passed by the Learned DRT on merits. Defendant No. 1, i.e. Jessop & Company Limited, was duly represented through its Lawyer, Mr. Debabrata Basu Ray who appeared in the O.A. proceedings. Even after passing of the Bill by the State of West Bengal, Mr. Basu Ray appeared before the Learned DRT. He did not withdraw his vakalatnama. Thereafter when the matter was taken up, the Defendants were not appearing, therefore, Learned DRT passed the order after going through the records. When the matter came up for hearing and the Defendants were not appearing despite filing vakalatnama, Learned DRT rightly, after perusing the material available on record, passed the judgment. It could not be said to be an ex parte judgment by any stretch of imagination; rather, it was passed on the merits of the case. 28. As far as issue of condonation of delay is concerned, Learned Counsel for Respondents has placed reliance upon a recent judgment of the Hon’ble Apex Court in Sheo Raj Singh (Deceased) through Legal Representatives & Others -vsUnion of India & Another [(2023) 10 SCC 531] wherein it was held in paragraphs 30 and 32 that:

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“30. X x x condonation of delay being a discretionary power available to courts, exercise of discretion must necessarily depend upon the sufficiency of the cause shown and the degree of acceptability of the explanation, the length of delay being immaterial.”

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“32. x x x At this stage, we cannot but lament that it is only excuses, and not explanations, that are more often accepted for condonation of long delays to safeguard public interest from those hidden forces whose sole agenda is to ensure that a meritorious claim does not reach the higher courts for adjudication.”

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29. The Hon’ble Apex Court in State (NCT of Delhi) -vsAhmed Jaan [(2008) 14 SCC 582], held that proof of sufficient cause is a condition precedent. In para 10 it is held that

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“There is no general principle saving the party from all mistakes of its Counsel could be laid. The expression ‘sufficient cause’ must receive a liberal construction so as to advance substantial justice and generally delays in preferring the appeals are required to be condoned in the interest of justice where no gross negligence or deliberate inaction or lack of bona fides is imputable to the party seeking condonation of delay.”

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30. The Hon’ble Apex Court in S. Ganesharaju (Dead) through LRs -vs- Narasamma (Dead) through LRs [(2013) 11

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SCC 341] in para 12 it was held that

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“Unless the Respondents are able to show mala fides in not approaching the Court within the period of limitation, generally as a normal rule, delay should be condoned. The trend of the Courts while dealing with the matter with regard to condonation of delay has tilted more towards condoning delay and directing the parties to contest the matter on merits, meaning thereby that such technicalities have been given a go-by.”

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It was further held in para 14 that :

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“Since sufficient cause has not been defined, thus, the Courts are left to exercise a discretion to come to the conclusion whether circumstances exist establishing sufficient cause. The only guiding principle to be seen is whether a party has acted with reasonable diligence and had not been negligent and callous in prosecution of the matter.”

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31. It has been held by the Hon’ble Apex Court that in an application under Section 5 of the Limitation Act sufficient cause has be to shown for condonation of delay. There is

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata difference between excuse and sufficient cause, as has been held by the Hon’ble Apex Court.

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32. The Hon’ble Apex Court in Pathapati Subba Reddy (Died) -vs- The Special Deputy Collector (LA) [2024 LiveLaw (SC) 288] has referred to Collector, Land Acquisition, Anantnag and Others -vs- Katiji & Others [(1987) 2 SCC 107] wherein it was

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held that :

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“ x x x x ordinarily a litigant does not stand to benefit by lodging an appeal late; it is not necessary to explain every day's delay in filing the appeal; and since sometimes refusal to condone delay may result in throwing out a meritorious matter, it is necessary in the interest of justice that cause of substantial justice should be allowed to prevail upon technical considerations and if the delay is not deliberate, it ought to be condoned. Notwithstanding the above, howsoever, liberal approach is adopted in condoning the delay, existence of 'sufficient cause' for not filing the appeal in time, is a condition precedent for exercising the discretionary power to condone the delay. The phrases liberal approach', justice-oriented approach' and cause for the advancement of 'substantial justice' cannot be employed to defeat the law of limitation so as to allow stale matters or as a matter of fact dead matters to be revived and re-opened by taking aid of Section 5 of the Limitation Act.”

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33. It is further held that it must be borne in mind, while construing ‘sufficient cause’ in deciding application under Section 5 of the Limitation Act, that on the expiry of the period of limitation prescribed for filing an appeal, substantive right in favour of the decree-holder accrues and this right ought not to be lightly disturbed.

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34. Hon’ble Apex Court has also referred to Basawaraj and Another -vs- Special Land Acquisition Officer (2013) 14 SCC 81 wherein it was held in paragraph 23 that:

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“The discretion to condone the delay has to be exercised judiciously based upon the facts and circumstances of each case. The expression 'sufficient cause' as occurring in Section 5 of the Limitation Act cannot be liberally interpreted if negligence, inaction or lack of bona fide is writ large. It was also observed that

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata even though limitation may harshly affect rights of the parties but it has to be applied with all its rigour as prescribed under the statute as the courts have no choice but to apply the law as it stands and they have no power to condone the delay on equitable grounds.”

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35. Hon’ble Apex Court also placed reliance on paragraphs 12 and 15 of the Basawaraj (supra) which reads as under :

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"12. It is a settled legal proposition that law of limitation may harshly affect a particular party but it has to be applied with all its rigour when the statute so prescribes. The Court has no power to extend the period per of limitation on equitable grounds. "A result flowing from a statutory provision is never an evil. A Court has no power to ignore that provision to relieve what it considers a distress resulting from its operation. The statutory provision may cause hardship or inconvenience to a particular party but the court has no choice but to enforce it giving full effect to the same. The legal maxim dura lex sed lex which means "the law is hard but it is the law", stands attracted in such a situation. It has consistently been held that, "inconvenience is not" a decisive factor to be considered while interpreting a statute."

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“15. The law on the issue can be summarised to the effect that where a case has been presented in the court beyond limitation, the applicant has to explain the court as to what was the "sufficient cause" which means an adequate and enough reason which prevented him to approach the court within limitation. In case a party is found to be negligent, or for want of bona fide on his part in the facts and circumstances of the case, or found to have not acted diligently or remained inactive, there cannot be a justified ground to condone the delay. No court could be justified in condoning such an inordinate delay byimposing any condition whatsoever. The application is to be decided only within the parameters laid down by this Court in regard to the condonation of delay. In case there was no sufficient cause to prevent a litigant to approach the court on time condoning the delay without any justification, putting any condition whatsoever, amounts to passing an order in violation of the statutory provisions and it tantamounts to showing utter disregard to the legislature."(emphasis supplied).”

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36. In paragraph 26 of the Pathapati Subba Reddy

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(supra) Hon’ble Apex Court held that

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“26. On a harmonious consideration of the provisions of the law, as aforesaid, and the law laid down by this Court, it is evident that:

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(i) Law of limitation is based upon public policy that there should be an end to litigation by forfeiting the right to remedy rather than the right itself;

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(ii) A right or the remedy that has not been exercised or availed of for a long time must come to an end or cease to exist after a fixed period of time;

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(iii) The provisions of the Limitation Act have to be construed differently, such as Section 3 has to be construed in a strict sense whereas Section 5 has to be construed liberally;

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(iv) In order to advance substantial justice, though liberal approach, justice-oriented approach or cause of substantial justice may be kept in mind but the same cannot be used to defeat the substantial law of limitation contained in

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Section 3 of the Limitation Act;

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(v) Courts are empowered to exercise discretion to condone the delay if sufficient cause had been explained, but that exercise of power is discretionary in nature and may not be exercised even if sufficient cause is established for various factors such as, where there is inordinate delay, negligence and want of due diligence;

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(vi) Merely some persons obtained relief in similar matter, it does not mean that others are also entitled to the same benefit if the court is not satisfied with the cause shown for the delay in filing the appeal;

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(vii) Merits of the case are not required to be considered in condoning the delay; and condoning the delay for the reason that the conditions have been imposed, tantamounts to disregarding the statutory provision.

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(viii) Delay condonation application has to be decided on the parameters laid down for condoning the delay and condoning the delay for the reason that the conditions have been imposed, tantamounts to disregarding the statutory provision.”

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37. It was further held that if sufficient cause is not shown, delay cannot be condoned. Further condonation of delay merely for the reason that the claimants have been deprived of the interest for the delay while holding that they had made out a case for condoning the delay is not a correct approach.

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38. Learned Counsel for Respondents have placed reliance upon the judgment passed by the Hon’ble Apex Court in the case of Dwarika Prasad -vs- Prithviraj Raj Singh (2024 SCC OnLine SC 3828) wherein it was held that Court should not shut out a case on mere technicality rather afford

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata opportunity to both sides and thresh out the matter on merits. In the facts of the Dwarika Prasad (supra) case, as referred in paragraph 10 of the judgment, the Appellant had trusted his counsel to manage the suit proceedings. However, he was not made aware of the ex parte decree by his previous counsel. It is only after the appointment of the new counsel, the appellant got to know about the ex parte decree. In the facts of the present case, Learned Counsel for Respondent No. 1 was continuously appearing but stopped appearing pending proceedings. Then the Learned DRT passed the impugned judgment. Respondents cannot take advantage of the law laid down in Dwarika Prasad (supra). Further, no doubt the Hon’ble Apex Court has held that there is no need to file a separate application for condonation of delay. However, in the present case when a separate application is already filed and disposed of by the Learned DRT and an appeal is preferred by the Secured Creditor, Indo Wagon Engineering Limited cannot take advantage of this judgment.

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39. Learned Counsel further placed reliance upon the judgment passed by the Hon’ble Apex Court in the case of State of Rajasthan -vs- Bal Krishan Mathur [(2014) 1

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SCC 592] wherein it was held that unless the explanation furnished for the delay is wholly unacceptable or if no explanation whatsoever is offered or if the delay is inordinate and third-party rights had become embedded during the interregnum the courts should lean in favour of condonation.

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata 40. Learned Counsel also placed reliance upon the judgment passed by the Hon’ble Apex Court in the case of State of Nagaland -vs- Lipok Ao, [(2005) 3 SCC 752) wherein it was held that sufficient cause has to be constituted. It has to be seen as to whether the Applicant was prosecuting the proceedings diligently. Further, in Shakuntala Devi Jain -vs- Kuntal Kumari (AIR 969 SC 575) it was held that ‘sufficient cause’ receiving a liberal construction so as to advance substantial justice when no negligence or in-action nor want of bona fides is imputable to the appellant. In O.P. Kathpaliav Lakhmir Singh [(1984) 4 SCC 66) Hon’ble Apex Court held that delay should be condoned if refusal of the same would lead to miscarriage of justice.

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41. Learned Counsel for Appellant places reliance upon Pathapati Subba Reddy (supra) wherein Hon’ble Apex Court held that merits of the case are not required to be considered in condoning the delay and Courts are empowered to exercise discretion to condone the delay if sufficient cause has been explained. Delay cannot be condoned if there is negligence, inaction or lack of bona fide is there on the part of the Applicant. Reliance is also placed in Basawaraj (supra) wherein it was held that even though statutory provision may cause hardship or affect the rights of the Applicant, but the Court has no choice but to apply the law as it has no power to condone the delay on equitable grounds.

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata 42. Learned DRT has simply recorded that since the Applicant was a third party to O.A. proceedings, it is futile to explain the ground for delay of 1063 days. It is a very cryptic order. An order should always be a speaking order. Speaking order means that it must contain reasons for arriving at a conclusion by the Courts only then it can inspire the confidence of public at large who are the ultimate beneficiaries or the sufferers of the orders. Reasons are the soul of an order, as has been held by the Hon’ble Apex Court

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in Brijmani Devi -vs- Pappu Kumar and Another, reported in [(2022) 4 SCC 497] which reads as under:

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“22. On the aspect of the duty to accord reasons for a decision arrived at by a court, or for that matter, even a quasijudicial authority, it would be useful to refer to a judgment of this Court in Kranti Associates (P) Ltd., v. Masood Ahmed Khan, (2010) 9 SCC 496 wherein after referring to a number of judgments this Court summarised at para 47 the law on the point. The relevant principles for the purpose of this case are extracted as under:

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(a) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well.

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(b) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasijudicial or even administrative power.

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(c) Reasons reassure that discretion has been exercised by the decision-maker on relevant grounds and by disregarding extraneous considerations.

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(d) Reasons have virtually become as indispensable a component of a decision making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies.

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(e) The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the lifeblood of judicial decision-making justifying the principle that reason is the soul of justice.

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(f) Judicial or even quasi-judicial opinions these days can be as different as the Judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata

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objectively considered. This is important for sustaining the litigants’ faith in the justice delivery system.

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(g) Insistence on reason is a requirement for both

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judicial accountability and transparency.

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(h) If a Judge or a quasi-judicial authority is not candid enough about his/her decision-making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism.

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(i) Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or "rubber-stamp reasons" is not to be equated with a valid decision-making process.

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(j). It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the Judges and decision-makers less prone to errors but also makes them subject to broader scrutiny.

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(k) In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "due process".

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“24. The Latin maxim “cessante ratione legiscessat lex” meaning “reason is the soul of the law, and when the reason of any particular law ceases, so does the law itself, is also apposite.”

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43. The impugned order does not contain any reason for passing of the order which on this ground itself is liable to be set aside. However, the Applicants/Respondents have utterly failed to make out any sufficient cause for condonation of delay in preferring an application under Section 5 of the Limitation Act. This finding has to be read along with the finding that the Indo Wagon Engineering Limited has no locus standi to file the application for recall of the judgment and order dated 11^th January, 2017 passed by the Learned DRT in O.A. 33 of 2014, which was not an ex parte judgment rather a judgment passed by Learned DRT on merits.

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44. Having considered the submissions made by the Learned Counsel for the parties, I am of the considered view

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata that the Learned DRT has utterly failed to exercise its jurisdiction in passing the impugned order. It is an unreasoned order. However, even on merits, Indo Wagon Engineering Limited has no locus standi to file the application for recall of the judgment and order dated 11^th January, 2017 passed by the Learned DRT in O.A. 33 of 2014. Learned Counsel for Respondents made an attempt to touch the merits of the matter by referring to Section 19 (10A) and (10B) of the RDB Act. However, as has been held by the Hon’ble Apex Court that merits of the matter cannot be considered at the time of hearing of the application under Section 5 of the Limitation Act. Accordingly merits of the matter are not being considered here.

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45. Furthermore, sufficient cause could not be shown for condonation of delay. Accordingly, I am of the considered view that the impugned order deserves to be set aside and appeal is liable to be allowed.

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O R D E R

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Appeal is allowed. The impugned order dated 1.8.2023 passed by Learned DRT-I, Kolkata in case No. NDN 913 of 2019 (MA)/O.A. 33 of 2014 (Edelweiss Asset Reconstruction Company Limited -vs- Jessop & Company Limited), is set aside.

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Accordingly, application under Section 5 of the Limitation Act filed by Respondent No. 1, Indo Wagon Engineering Limited, is dismissed.

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Misc.Appeal No. 29 of 2023-DRAT-Kolkata

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Consequently, application for recall of the final order in O.A. 33 of 2014 dated 11.1.2017 also stands dismissed as time barred.

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No order as to costs.

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Copy of the order be supplied to Appellant and the Respondents and a copy be also forwarded to the concerned DRT.

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