NCLAT held that the failure to establish sufficient cause for the delay in refiling led to the dismissal of the application, emphasizing the time-bound framework of the IBC.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising Justice Ashok Bhushan (Chairperson) and Technical Member Mr. Barun Mitra, addressed an appeal on 17-02-2025 and ruled that the Applicant failed to establish sufficient cause for a 205-day delay in refiling the appeal. The Tribunal emphasized that repeated defects, lack of due diligence, and unsubstantiated claims regarding the Registry's mishandling indicated negligence. It held that condoning such an inordinate delay would undermine the time-bound framework of the Insolvency and Bankruptcy Code (IBC), warranting dismissal of the application.
The National Company Law Appellate Tribunal (NCLAT) adjudicated upon I.A. No. 3202 of 2024, an application seeking condonation of a 205-day delay in the refiling of Company Appeal (AT) (Insolvency) No. 1700 of 2024. Notice was issued on 01.10.2024, allowing the Respondent two weeks to file a reply and the Applicant two weeks thereafter to submit a rejoinder. The Applicant contended that the delay was attributable to procedural hurdles, including obtaining the signature of the authorized representative, misplacement of the physical file by the NCLAT Registry, and repeated intimation of defects that the clerk failed to comprehend. It was asserted that these constituted justifiable reasons and that there was no negligence or inaction on the part of the Applicant. The Applicant relied on Rule 14 of the NCLAT Rules and the Supreme Court's ruling in Mool Chandra v. Union of India, emphasizing that any delay falling within the scope of "sufficient cause" should be condoned in the interest of substantial justice.
The Respondent opposed the application, arguing that the explanations provided lacked substance and failed to meet the threshold of "sufficient cause" required for condonation of such an inordinate delay. It was submitted that the allegations of mishandling by the Registry were dubious and that the engagement of a local clerk was unjustified, given that the Applicant’s counsel and law firm were both based in Delhi. Reliance was placed on the Supreme Court's ruling in Ram Lal v. Rewa Coal Fields Ltd., which underscored the necessity of diligence in seeking condonation of delay. The Respondent asserted that the Applicant’s repeated failure to rectify defects demonstrated negligence and a casual approach, which could not justify the condonation of delay.
The Tribunal, after hearing both parties and examining the records, found that the Applicant’s claim of procedural lapses lacked credibility. The defect sheets indicated that the same set of defects had been pointed out multiple times, evidencing a lack of serious effort to rectify them. The assertion that the physical file had been misplaced by the Registry was unsupported by any documentation, correspondence, or evidence of follow-up. The Tribunal observed that the Applicant had failed to demonstrate that the delay was beyond its control or that due diligence had been exercised. Moreover, no proof was furnished to substantiate the claim that regular follow-ups with the Registry had been undertaken.
Given that the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016, is a time-bound mechanism with a mandated completion period of 330 days, the Tribunal held that allowing a delay of 205 days would disrupt the resolution process. It found that permitting such a delay without compelling justification would undermine the objective of expeditious adjudication. Consequently, the Tribunal concluded that the Applicant had failed to establish sufficient cause for condonation of delay. Accordingly, I.A. No. 3202 of 2024 was dismissed, and the Memo of Appeal was rejected.
Mr. Saurabh Kansal and Mr. Suraj Kumar Jha, Advocates represented the Appellant.
Mr. Abhishek Anand, Mr. Karan Kohli and Ms. Palak Kalra, Advocates appeared for the Respondent.
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REEDLAW 2025 NCLAT Del 02538
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