Tribunal dismisses application for delay in filing under Insolvency Code

The Tribunal dismissed the Operational Creditor's application under Section 5 of the Limitation Act, 1963, seeking to condone a delay of 48 days in filing the main application under Section 9 of the Insolvency and Bankruptcy Code, 2016. Despite citing legal precedents, the Applicant's explanation for the delay was deemed inconsistent and unsatisfactory. The Tribunal emphasized the need for a valid and justifiable explanation for each day of delay in insolvency proceedings, ultimately leading to the dismissal of the application and closure of the case IBA/103/2020.

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Issues Involved:
Delay in filing the application under Section 9 of Insolvency and Bankruptcy Code, 2016.

Analysis:
The Applicant, an Operational Creditor, filed an application seeking to condone the delay of 48 days in filing the main application under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Applicant maintained that the delay was due to operational reasons as the Corporate Debtor's documents were in the custody of officials in Chennai, hindering the issuance of the Demand Notice. The Applicant cited relevant legal precedents, including the Supreme Court judgments in B.K. Educational Services Private Limited Vs. Parag Gupta and Associates and Gaurav Hargovindbhai Dave Vs. Asset Reconstruction Company (India) Ltd., to support the application under Section 5 of the Limitation Act, 1963. The Respondent, Corporate Debtor, contended that Section 5 of the Limitation Act does not apply to applications under Sections 7 or 9 of the IBC, 2016.

The Tribunal noted that Section 5 of the Limitation Act, 1963 applies to proceedings under Sections 7 or 9 of the IBC, 2016, based on established legal principles and the Constitution of India. Despite a previous contrary view expressed by the Tribunal, it emphasized the need for the Applicant to provide a satisfactory explanation for the delay, meeting the requirements of 'sufficient cause' and 'reasonableness'. The Tribunal referred to judicial precedents, such as Kandaswamy vs. Krishnamandiram Trust and Oriental Aroma Chemical Industries vs. Gujarat Industrial Development Corporation, to underscore the importance of a valid explanation for condonation of delay.

The Tribunal found the Applicant's explanation for the delay inconsistent, as the Applicant initially sought to condone a delay of 48 days but later mentioned a delay of 79 days. Emphasizing the significance of accurate and justifiable explanations for each day of delay, especially in insolvency proceedings affecting multiple stakeholders, the Tribunal dismissed the application. It concluded that the Applicant failed to provide a satisfactory reason for the delay, leading to the dismissal of the application seeking condonation under Section 5 of the Limitation Act, 1963.

In light of the above analysis, the Tribunal dismissed the application filed by the Operational Creditor, as the delay of 48 days was not adequately explained to the satisfaction of the Tribunal. Consequently, the application under Section 5 of the Limitation Act, 1963 was dismissed, leading to the closure of the case IBA/103/2020.

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