The Delhi High Court Condoned the delay in payment of the disputed amount under the Vivad Se Vishwas (VSV )Act due to the death of the Director and Covid.
I A Housing Solution Private Limited and Srishtii Infra Housing Pvt. Ltd, the petitioners had filed Form 1 as well as Form 2 within the time stipulated as per the provisions of the VSV Act on 04th March 2021 and Form No. 3 was issued to Petitioners on 07th May 2021 and 22nd June 2021. The Petitioner Companies were unable to pay the disputed amount as determined by Respondents in Form 3 before the last date due to the death of a Director of the companies, who was looking after the taxation.
It was stated that the delay in payment was not intentional and the Petitioners always intended to settle the dispute with the Income tax department and avail the benefit of the VSV Act. Per contra, the Respondents submitted that payment had to be mandatorily made within fifteen days of the determination of the demand and there was no provision permitting the Respondents to extend the time for payment. Further argued that the VSV Act was mandatory in nature as it provided for consequences on account of non-compliance.
The petitioners further stated that in an ordinary situation, the provisions of the law are to be mandatorily applied and relief on equitable consideration cannot be granted. But in an extraordinary and exceptional situation like death and Covid, the non-grant of relief on equitable consideration would be irrational.
The HC Bench consisting of Justice Manmohan and Justice Manmeet Pritam Singh Arora has viewed that the timeline to pay under the VSV was not mandatory as the last date stipulated under the VSV Act (3 of 2020) was extended by Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020.
The HC observed that the delay in payments of the amounts is attributable to unforeseen and extraneous circumstances that were beyond the control of the Petitioners. It was observed that the country was in lockdown on account of the COVID-19 pandemic from 25th March 2020. Moreover, the death of the Managing Director of the companies was an extraordinary and exceptional event which would render the non-grant of relief on equitable consideration irrational.
As the delay in payment was unintentional and supported by justifiable reasons, the Delhi HC condoned the delay and allowed the petition. The respondents are directed to accept the declarations/applications filed by the petitioners as valid declarations/applications within two weeks and accept the balance of disputed amounts.
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