NCLAT Chennai rejects 28-day delay condonation citing insufficient justification for geographical constraints and legal advice needs

NCLAT Chennai dismissed an appeal after rejecting the delay condonation application. The appellant sought condonation of 28 days delay in filing the appeal, citing need for legal advice and geographical constraints due to placement in Bengaluru. The tribunal held these reasons unjustifiable and not prevalent during the limitation period. The counsel's arguments were beyond pleadings and hypothetical. Given technological developments, the cited reasons lacked plausible justification for accepting delay condonation under Section 61's second proviso.

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Issues Involved:
1. Determination of limitation period for filing an appeal u/s 61 of the Insolvency and Bankruptcy Code, 2016.
2. Validity of forfeiture of Earnest Money Deposit (EMD) by the Liquidator.
3. Condonation of delay in filing the appeal.

Summary:

1. Determination of Limitation Period:
The primary issue was the determination of the limitation period for filing an appeal u/s 61 of the Insolvency and Bankruptcy Code, 2016. The Tribunal highlighted that the appeal should be filed within 30 days from the date of the judgment, as per (sub section 2) of Section 61. The judgment was pronounced on 17th November 2023, and the Appellant applied for the certified copy only on 21st December 2023, which was beyond the prescribed limitation period. The Tribunal emphasized that the limitation period starts from the date of pronouncement of the judgment and not from the date of receiving the certified copy.

2. Validity of Forfeiture of Earnest Money Deposit (EMD):
The Appellant contended that the Liquidator forfeited the EMD without providing clarification regarding the access to the auctioned property. The Tribunal noted that the auction was conducted on an "as is where is, as is what is, and without recourse basis," and the Liquidator's action of forfeiting the EMD due to non-payment of 25% of the sale consideration within the prescribed time was upheld by the National Company Law Tribunal, Chennai Bench.

3. Condonation of Delay:
The Appellant sought condonation of delay in filing the appeal, citing reasons such as seeking legal advice, being situated in Bengaluru, and cyclone conditions in Chennai. The Tribunal rejected these reasons, stating that the Appellant showed a lack of diligence. The Tribunal referred to the judgment in V. Nagarajan Vs SKS Ispat and Powers Ltd. and Ors., which clarified that the period for obtaining a certified copy can be excluded only if the application for the same is made within the statutory limitation period. The Tribunal also referenced the judgment in Sanjay Pandurang Kalad vs Vespara ICTL, which emphasized that the limitation period starts from the date of pronouncement of the judgment.

Conclusion:
The Tribunal concluded that the appeal was filed beyond the permissible period of limitation and rejected the application for condonation of delay. Consequently, the appeal was dismissed, and the forfeiture of the EMD by the Liquidator was upheld.

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