Company appeal dismissed after 104-day delay in refiling despite initial condonation for strategic waiting tactics

NCLAT Principal Bench rejected an application for condonation of 104 days delay in refiling a company appeal. The appellant initially filed the appeal with only 2 days delay, which was condoned. However, after registry intimated defects with 7 days to cure, the appellant refiled after 104 days. The Tribunal found the explanation of difficulty obtaining client instructions insufficient, noting the appellant was strategically waiting and watching CoC proceedings regarding resolution plan rather than genuinely attempting to cure defects. The Tribunal emphasized IBC's time-bound nature and rejected the delay application, finding the appellant deliberately kept the appeal defective as strategy.

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Issues Involved:

1. Condonation of delay in refiling the appeal.
2. Justification for the delay provided by the Appellant.
3. Respondent's objections to the condonation of delay.
4. Tribunal's scrutiny and decision on the application for condonation of delay.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Refiling the Appeal:

The primary issue before the Tribunal was whether to condone a delay of 104 days in refiling the Company Appeal (AT)(Ins) No. 1901 of 2024. The Tribunal noted that the appeal was initially filed on 01.06.2024, and defects were communicated by the Registry on 14.06.2024. The Appellant, however, only refiled the appeal on 03.10.2024, resulting in a delay of 104 days. The Tribunal emphasized that while the condonation of delay in refiling is generally more lenient than the initial filing, it still requires reasonable and cogent grounds to be presented.

2. Justification for the Delay Provided by the Appellant:

The Appellant argued that the delay was due to personal difficulties faced by the Counsel and the need to obtain instructions from the client, who was based in Germany. The Appellant also highlighted ongoing issues with the Resolution Professional (RP) and the need to decide whether to challenge certain orders or pursue the appeal. The Appellant contended that these circumstances justified the delay and sought to submit a detailed affidavit explaining the reasons for the delay.

3. Respondent's Objections to the Condonation of Delay:

The Respondent opposed the application, arguing that the Appellant had not provided any cogent explanation for the inordinate delay. The Respondent contended that the Appellant had willfully allowed the appeal to remain defective as a strategic choice rather than due to genuine reasons. The Respondent emphasized that condonation of delay must be substantiated by sufficient grounds and cited a previous Tribunal judgment to support their position.

4. Tribunal's Scrutiny and Decision on the Application for Condonation of Delay:

The Tribunal carefully examined the explanations provided by the Appellant and the objections raised by the Respondent. It found that the Appellant had not demonstrated due diligence in curing the defects and that the reasons cited for the delay were not convincing. The Tribunal observed that the Appellant's conduct suggested a strategic delay rather than unavoidable circumstances. The Tribunal concluded that the Appellant had failed to provide genuine grounds for the delay and rejected the application for condonation of delay. Consequently, the Memo of appeal was also rejected.

In summary, the Tribunal emphasized the importance of timely compliance with procedural requirements in insolvency proceedings and held that the Appellant's failure to provide adequate justification for the delay warranted the rejection of the application for condonation of delay.

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