Condonation rejected for 125-day delay in IBC claim filing under Form-C, "seeking legal advice" insufficient cause

NCLAT Chennai dismissed an appeal challenging rejection of condonation application for 49-day delay in filing claim under Form-C. The actual delay was 125 days, with additional 100-day delay in approaching the Adjudicating Authority. Appellant's sole ground of "seeking legal advice" was held insufficient cause for delay. NCLAT distinguished cited precedent involving homebuyers with Builder Buyer Agreements, noting different factual circumstances. Court emphasized IBC's time-bound nature as established by SC precedents, ruling that appellant failed to demonstrate substantial grounds for condonation of delay.

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Issues involved:
The main issue in this Appeal is whether the 'Adjudicating Authority' was justified in rejecting the Condonation of Delay of 49 days in filing the 'Claim' together with the delay in filing the Application before the 'Adjudicating Authority'.

Judgment Details:

Issue 1: Condonation of Delay in Filing Claim

The Appellant filed an Appeal against the Impugned Order dismissing the Application seeking Condonation of Delay of 49 days in filing the Claim under Form - C. The Adjudicating Authority noted the lack of proper grounds for the delay and relied on the Supreme Court judgment in 'Esha Bhattacharjee' to dismiss the Application, emphasizing that Condonation of Delay cannot be granted as a matter of course.

Issue 2: Classification of Claim as Financial Debt

The Appellant argued that the Claim should be recognized as a 'Financial Debt' due to an unsecured loan against the payment of interest, falling within the ambit of Financial Debt. It was contended that the delay in filing the Claim was not willful, and the Adjudicating Authority erred in not considering the legal arguments presented. The Appellant highlighted the distinction between inordinate delay and a short duration of delay, urging the Authority to exercise its inherent powers to condone the delay.

Issue 3: Relevance of Previous Judgments

The Appellant cited judgments such as 'Puneet Kaur' and 'Punjab National Bank' to support the argument that belated Claims could be considered by the Tribunal. However, the Respondent contended that the decisions relied upon were not relevant to the present case, and the Adjudicating Authority was correct in relying on 'Esha Bhattacharjee' to dismiss the Application.

Assessment:

The Adjudicating Authority found that the Appellant's reasons for the delay, including seeking legal advice and a change in family relationships, were not sufficient grounds to condone the delay. The timelines under the Insolvency and Bankruptcy Code were to be strictly adhered to, and the delay in submitting the Claim Form was deemed to be 125 days, not 49 days as claimed by the Appellant. The lack of substantial grounds for condonation of delay led to the dismissal of the Appeal.

Conclusion:
The Appeal was dismissed as the Adjudicating Authority's decision to reject the Condonation of Delay was upheld. The Appellant's explanations for the delay were deemed insufficient, and the timelines under the Insolvency and Bankruptcy Code were held to be crucial. The Appeal failed, with no costs imposed, and any connected pending Interlocutory Applications were closed.

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