India's Legal Response to COVID 19 #3 - Extending Limitation

Unprecedented situations requires unprecedented measures. So did the Supreme Court of India in suo motu Case 3 of 2020 on 23rd March 2020, taking "cognizance of the situation arising out of the challenge faced by the country on account of Covid-19 Virus and resultant difficulties that may be faced by litigants across the country in filing their petitions/applications/suits/ appeals/all other proceedings within the period of limitation prescribed under the general law of limitation or under Special Laws (both Central and/or State)". Exercising the power under Article 142 (order as is necessary for doing complete justice in any cause) read with Article 141 (Law declared by Supreme Court to be binding on all courts) of the Constitution of India Supreme Court declared that "a period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further order/s to be passed by this Court in present proceedings". This order is binding upon all Courts/Tribunals and authorities in India.

Law of Limitation: It is concerned with the procedural laws wherein a claimant has to approach the judicial forum within a prescribed time. It is also important for people to be vigilant of their rights and remedies. The law of limitation extinguishes the right of a person to bring an action for seeking remedy against infringement of his/her right. One of the logic is that stale claims creates lot of complications and evidence may fade away. There is also requirement to provide stability to the legal rights (say for example the law of adverse possession).

In Balakrishnanv. M.A. Krishnamurthy (1998) 7 SCC 123, it was held by the Supreme Court “that the Limitation Act is based upon public policy which is used for fixing a life span of a legal remedy for the purpose of general welfare. It has been pointed out that the Law of Limitation are not only meant to destroy the rights of the parties but are meant to look to the parties who do not resort to the tactics but in general to seek remedy. It fixes the life span for legal injury suffered by the aggrieved person which has been enshrined in the maxim ‘interest reipublicaeut sit finis litium’ which means the Law of Limitation is for general welfare and that the period is to be put into litigation and not meant to destroy the rights of the person or parties who are seeking remedy. The idea with regards to this is that every legal remedy must be alive for a legislatively fixed period of time.”

However, there is a provision under limitation law for 'condonation of delay' on showing 'sufficient cause'. Courts have condoned years of delay in some cases on the interpretation of word 'sufficient cause'. COVID19 has changed the way one used to look at limitation period. COVID-defence for 'condonation of delay' would be a new-normal in courts and tribunals. This has already been taken cognizance by various courts and tribunals.

Company cases including corporate Insolvency: National Company Law Appellate Tribunal (NCLAT) which hears appeals in company matters including insolvency and competition cases has taken cognizance of the suo motu decision of the Supreme Court and has come up with following measures:

• the period of lockdown ordered by the Central Government and the State Governments including the period as may be extended Page 1 of 2 either in whole or part of the country, where the registered office of the Corporate Debtor may be located, shall be excluded for the purpose of counting of the period for ‘Resolution Process under Section 12 of the Insolvency and Bankruptcy Code, 2016, in all cases where ‘Corporate Insolvency Resolution Process’ has been initiated and pending before any Bench of the National Company Law Tribunal or in Appeal before this Appellate Tribunal
• any interim order/ stay order passed by this Appellate Tribunal in anyone or the other Appeal under Insolvency and Bankruptcy Code, 2016 shall continue till next date of hearing, which may be notified later
• any interim order/ stay order passed by this Appellate Tribunal in anyone or the other Appeal under the Companies Act, 2013 shall continue till next date of hearing, which may be notified later
• interim direction / stay order passed in all competition Appeals shall continue until further order. In the event of expiry of period of Fixed Deposits, the concerned bank shall renew the same for further period of six months. 

The Insolvency and Bankruptcy Board of India (IBBI) has made amendment to CIRP Regulations to provide for an exclusion of the period of disruption due to COVID19 in relation to a corporate insolvency resolution process (special provision relating to timeline). Similar amendment has been done in relation to liquidation proceedings.

Income Tax: Similar kind of extensions could be seen in matters relating to taxation compliance:

• Extension of the last date for income tax returns for (FY 18-19) from 31st March, 2020 to 30th June, 2020.
• Aadhaar-PAN linking date to be extended from 31st March, 2020 to 30th June, 2020.
• Vivad se Vishwas scheme – no additional 10% amount, if payment made by June 30, 2020.

Supreme Court's suo motu cognizance and relaxation provided in 'period of limitation' would be very helpful for the litigants who are already going under a lot of stress and difficulty. Once the courts/tribunals would open, this order is going to be one of the basic references to help sail through the difficulties in not bringing the matter on time. however, it is important to note that this order would not help people who have not been vigilant in filing cases before the COVID period. There may be several notifications issued by different central, state and local authorities giving relaxation in timelines of compliance due to COVID19. It would be great, if these orders/notifications are made available at a single source for the citizens.