2024 (5) TMI 331 - AT - Insolvency and Bankruptcy

NCLAT rejects company appeal for condoning 14-day delay in filing beyond statutory 30-day period under IBC

Korah John Versus JM Financial Asset Reconstruction Company Ltd., (acting in capacity as trustee of JMF ARC- Federal Bank March 2013-Trust), CA. Francis Mathew

The NCLAT Chennai rejected a company appeal seeking condonation of 14-day delay in filing beyond the statutory 30-day period. The appellant failed to ... Seeking to Condone Delay of 14 days in filing the Appeal - Sufficient cause for delay or not - HELD THAT:- It is seen that the Respondent has at least offered the index of the typed set of papers annexed to the Appeal before NCLAT and the Application filed before NCLT to support his contention. On the other hand, the Appellant has not shown a single document which as per his claim took a long time to trace and collect. This makes to come to the conclusion that ‘sufficient cause’ has not been demonstrated to merit condonation of delay of 14 days beyond the 30-day period. The Appellant has cited a number of decisions of Hon’ble Supreme Court to support his plea that a liberal approach be adopted for condonation of delay even in matters arising under the IBC. In this matter, it is said that the objective of IBC is to ensure timely resolution of insolvency and accordingly provisions have been put in place including strict timelines for the legal and administrative processes and therefore, adopting a liberal approach, needless to say, will defeat the objectives of the Code and will run counter to the view expressed in V NAGARAJAN VERSUS SKS ISPAT AND POWER LTD. & ORS. [2021 (10) TMI 941 - SUPREME COURT]. The Company Appeal is not ‘entertained’, and hereby ‘Rejected’. ISSUES PRESENTED AND CONSIDERED 1. Whether the period of limitation for filing an appeal against an adjudicatory order commences from the date of pronouncement of the order or from the date of upload/receipt of the certified copy, where the order was pronounced in virtual mode and digitally signed on the date of pronouncement. 2. Whether a 14-day delay beyond the 30-day limitation period (but within the outer 45-day limit under the enabling provision) constitutes 'sufficient cause' to warrant condonation of delay under the statutory provision conferring discretionary power to condone delay not exceeding 15 days. 3. The applicability and weight to be given to precedents advocating a liberal approach to condonation of delay in insolvency/other proceedings vis-à-vis precedents emphasizing strict adherence to timelines under the statutory scheme designed for timely resolution. ISSUE-WISE DETAILED ANALYSIS - Commencement of limitation period Legal framework: Section prescribing time for filing appeal establishes a 30-day period with a discretionary extension not exceeding 15 days; the computation of limitation requires identification of the date from which the period runs. Precedent treatment: Earlier authoritative rulings treat the date of pronouncement as the starting point where the order is pronounced and available to the parties; subsequent rulings in a limited factual matrix have treated the date of uploading/availability as the relevant date where pronouncement and the making of the order occurred at different times. Interpretation and reasoning: The Tribunal recognizes that when an order is pronounced on the hearing date and is digitally signed on that same date (as acknowledged by the appellant), the pronouncement date is the operative starting point for limitation. Departure to treat upload/receipt as the start is justified only in circumstances where the order was not pronounced on the hearing date or where there was clear factual inability to know the content of the order from the date of pronouncement. Here, the order was pronounced and digitally signed on the same date and the appellant was present, hence the pronouncement date governs. Ratio vs. Obiter: Ratio - where pronouncement and signing occur on the same date and the party was present, limitation commences from pronouncement. Obiter - comments on scenarios where upload date may govern (reserved for differing factual matrices). Conclusion: The limitation period commenced on the date of pronouncement/digital signing; absence of an application for certified copy within the period does not shift the commencement to the date of upload/receipt in these facts. ISSUE-WISE DETAILED ANALYSIS - Condonation of delay: sufficiency of cause for 14-day delay Legal framework: The statutory provision permits exercise of discretion to condone delay not exceeding 15 days if 'sufficient cause' is shown; courts apply established tests requiring credible, specific, and substantiated reasons for delay. Precedent treatment: A line of authorities promotes a liberal approach in condoning delay, including in insolvency matters, but another authoritative line emphasizes strict timelines to preserve the objective of statutory schemes that mandate prompt resolution. Interpretation and reasoning: The Tribunal examined the appellant's asserted reasons - remote residence, age/ailments, and time needed to trace old documents - against evidence on record. The Tribunal found the reasons general, unsupported by documentary proof, and inconsistent with contemporaneous filings indicating access to the records. In the present digital era, remote residence and smartphone/internet availability do not, without more, establish inability to act within prescribed time. The objective and policy of the insolvency regime favour adherence to timelines; liberal inference is not warranted absent credible, particularized proof. Ratio vs. Obiter: Ratio - generalized or unsupported assertions about remoteness, age, or the need to retrieve old documents do not constitute 'sufficient cause' for condoning delay under the statutory provision. Obiter - observations on the interplay between a liberal approach and the time-sensitive objectives of the insolvency framework. Conclusion: The appellant failed to demonstrate sufficient cause to condone a 14-day delay beyond the 30-day period; exercise of discretion to extend time was declined. ISSUE-WISE DETAILED ANALYSIS - Interaction of competing precedents on commencement and condonation Legal framework: Courts reconcile earlier and later decisions by focusing on factual matrices; where facts align with prior rulings the legal principle applies, while different fact patterns may justify departure. Precedent treatment: The Tribunal distinguishes rulings that treated upload/availability as the commencement date on facts where judgments were pronounced later than their digital finalization or where parties could not reasonably know the content upon pronouncement. It adheres to the precedent that the pronouncement date is operative where the order was pronounced and signed on that same date and the party had presence/notice. Interpretation and reasoning: The Tribunal applies the precedential balance to the facts before it: because the order was pronounced and digitally signed on the same day and the appellant was present, the Tribunal declined to adopt the upload/receipt date as the commencement. Likewise, while acknowledging authorities advocating liberal condonation, the Tribunal held such approach cannot defeat the statutory objective of timely resolution and cannot substitute for demonstrable 'sufficient cause.' Ratio vs. Obiter: Ratio - factual distinctions determine which precedent governs; where pronouncement and signing coincide and the party had notice, pronouncement date governs. Obiter - general endorsement of liberal approach subject to statutory objectives and factual proof. Conclusion: The Tribunal applied precedent consistently with the factual matrix, refusing to extend limitation based on upload/receipt and refusing to apply a liberal condonation principle absent compelling, supported reasons. FINAL DETERMINATION ON RELIEF SOUGHT Having concluded that the appeal was filed after the prescribed outer limit and that no sufficient cause was shown to condone the 14-day delay, the application for condonation is dismissed and the appeal is not entertained/rejected; consequential interlocutory application for interim stay is closed.