2023 (11) TMI 831 - AT - Insolvency and Bankruptcy

Tribunal Allows Delay in Appeal Refiling; Upholds Liquidator's Obligation to Consider Claim Amid Arbitral Proceedings.

The Tribunal allowed the condonation of a 103-day delay in refiling the appeal, finding sufficient cause due to the appointment of new counsel. The appeal ... Prayer for condonation of 103 days refiling delay - delay on the ground of change of the counsel on record - HELD THAT:- The earlier order dated 22.02.2023 passed in Appeal No.39 of 2021 was for deferring the hearing to 20.03.2023. There was no decision taken by the Adjudicating Authority regarding claim of the Respondent in the said order on merits - It is satisfying that the said order cannot be reason to say that the Adjudicating Authority could not have passed order on 10.05.2023. The order dated 10.05.2023 is not a review or modification of the earlier order as contended by learned counsel for the Appellant. Thus, there is no error in the order dated 10.05.2023 passed by the Adjudicating Authority issuing directions. Learned counsel for the Respondent submits that the order has not yet been complied by the Liquidator in which the Adjudicating Authority has granted two weeks’ time to the Liquidator to take appropriate steps - the time granted to the Liquidator extended for further period of two weeks from today to comply with the order of the Adjudicating Authority. Appeal dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether condonation of refiling delay of 103 days is justified where change of counsel and defect-clearing by the Registry are asserted as causes. 2. Whether a subsequent adjudicatory order directing the Liquidator to take a view on a claim within two weeks (subject to rights in arbitral proceedings) on 10.05.2023 amounted to a review or modification of an earlier interim order which had deferred hearing to a later date (22.02.2023 order deferring to 20.03.2023). 3. Whether the time granted by the Adjudicating Authority to the Liquidator to comply with directions may be extended by the Appellate Tribunal and, if so, for what period. ISSUE-WISE DETAILED ANALYSIS Issue 1: Condonation of refiling delay (103 days) based on change of counsel and Registry defects Legal framework: Applications for condonation of delay require demonstration of sufficient cause for delay; factors considered include change of counsel, procedural impediments, whether delay is deliberate or wilful, and supporting documentary evidence. Precedent treatment: No specific precedents were relied upon or distinguished in the judgment. Interpretation and reasoning: The Tribunal scrutinised the Vakalatnama dated 18.09.2023 executed by the counsel who filed the condonation application. That document corroborated the appellant's explanation of a change in counsel in September 2023 and supported the contention that the new counsel pursued the matter and addressed Registry-marked defects, which caused refiling delay. The Tribunal found the delay neither deliberate nor wilful. The Respondent's contrary assertion (that the same counsel had signed the original memo of appeal) was considered but did not negate the proved change of counsel and the time taken to clear defects. Ratio vs. Obiter: Ratio - where a change of counsel is supported by a Vakalatnama and allied facts showing engagement of new counsel and administrative delay in clearing registry defects, a refiling delay may be condoned if the delay is not deliberate or wilful. No obiter commentary on other grounds for condonation. Conclusions: Refiling delay of 103 days is condoned; the condonation application is allowed. Issue 2: Whether the order dated 10.05.2023 amounted to review or modification of the earlier order dated 22.02.2023 Legal framework: An appellate/adjudicatory order taken on merits is distinct from an interlocutory order deferring hearing; an adjudicatory authority may decide merits unless restrained by an operative earlier order that finally adjudicates the same relief. Precedent treatment: None cited or applied; the Tribunal examined the text and effect of the two orders. Interpretation and reasoning: The earlier order (22.02.2023) merely deferred hearing to a specified date (20.03.2023) based on an oral statement that arbitral proceedings were pending and that the Liquidator would honour any arbitral award. It did not decide the respondent's claim on merits. The subsequent order (10.05.2023) issued directions to the Liquidator to take a view on the claim within two weeks, referencing Section 39 and applicable liquidation regulations and subject to the parties' rights in arbitral proceedings. The Tribunal held that an order deciding or directing substantive action is not a review or modification of a pure interlocutory adjournment unless the earlier order had itself adjudicated the claim. Consequently, there was no procedural impropriety in passing the 10.05.2023 order. Ratio vs. Obiter: Ratio - an interlocutory order deferring hearing does not preclude a later adjudicatory direction or decision on the subject matter, provided the earlier order did not finally decide the issue; such later directions are not inherently a review/modification of the earlier adjournment. Obiter - none expansive beyond the immediate distinction drawn between deferral and adjudication. Conclusions: The Adjudicating Authority's order dated 10.05.2023 was not a review or modification of the earlier adjournment order and contained no error warranting interference. Issue 3: Extension of time for compliance by the Liquidator with directions of the Adjudicating Authority Legal framework: Tribunals possess incidental powers to extend time for compliance with directions issued by an adjudicating authority where compliance remains outstanding and extension is justified by the circumstances. Precedent treatment: No precedent was referenced; the Tribunal exercised its supervisory and appellate control to grant extension. Interpretation and reasoning: The Respondent informed the Tribunal that the Liquidator had not yet complied with the two-week timeline given by the Adjudicating Authority. Recognising the non-compliance and the need for administrative feasibility, the Tribunal extended the compliance period by a further two weeks from the date of the order. Ratio vs. Obiter: Ratio - an appellate tribunal may extend time for compliance with directions previously issued to a Liquidator where the earlier timeline has not been complied with and circumstances warrant a limited extension. Obiter - the order does not lay down conditions for such extensions beyond the specific factual context. Conclusions: The time granted to the Liquidator by the Adjudicating Authority was extended by two weeks; the appeal was dismissed subject to this extension and compliance with the directions.