2025 (2) TMI 853 - AT - IBC

NCLAT rejects 205-day delay condonation for company appeal citing insufficient cause and IBC time constraints

Employees Provident Fund Organization Versus HL Buildwell Pvt. Ltd.

NCLAT dismissed application for condonation of 205-day delay in refiling company appeal. Registry repeatedly notified applicant of clerical defects ... Condonation of 205 days delay in refiling of Company Appeal - sufficient cause of the delay - HELD THAT:- In the present facts of case where delay in refiling is indisputably and unduly prolonged for 205 days, it becomes incumbent on the Bench to be satisfied with the cogency and plausibility of the reasons set forth by the Applicant to explain the delay. It is found that on each of the dates on which scrutiny was undertaken by the NCLAT Registry, the defects noticed by the Registry were intimated on the very same date to the Applicant and seven days’ time period was allowed each time to correct the defects. Most of the defects pointed out are clerical and routine in nature such as illegible/dim copies, incorrect indexation, non-pagination, non-filing of caveat clearance, non-filing of declaration and verification supporting of memorandum of appeal etc. - The very fact the Registry had to repeatedly intimate the same set of defects each time shows that the Applicant did not take proper interest in pursuing his own application in a timely manner. Neither has any explanation been given to show that the delay was on account of reasons beyond the control of the Applicant. This not only indicates the casual disposition of the Applicant but also their gross indifference towards the need of respecting timeliness in the completion of the insolvency resolution process which is one of the avowed objectives of the IBC. Such a lack-lustre, careless and negligent approach does not meet our countenance. Under IBC, CIRP is envisaged to be a time-bound process which has to be completed in 330 days. Allowing refiling delay of 205 days without convincing reasons would tantamount to encouraging parties to play havoc with timelines and put unwarranted speed-breakers in the resolution process which does not commend. In the given circumstances, it is required to allow the Applicant the luxury of 205 days delay in refiling in IBC proceedings. Conclusion - The Applicant failed to demonstrate sufficient cause for condonation of the 205-day delay in refiling the appeal. There are no merit in the Application filed for seeking condonation of 205 days delay in refiling the appeal. Sufficient grounds have not been made out for condonation of delay in refiling - application dismissed. The present application before the National Company Law Appellate Tribunal sought condonation of a 205-day delay in refiling a Company Appeal (AT) (Insolvency) No. 1700 of 2024. The Applicant contended that the delay was due to genuine reasons such as obtaining signatures, misplacement of the appeal file by the NCLAT Registry, and difficulties in rectifying defects. The Applicant argued that Rule 14 of the NCLAT Rules empowered the Tribunal to exempt parties from compliance and cited relevant case law emphasizing condonation of delay for sufficient cause. The Respondent challenged the Applicant's explanations, alleging lack of diligence and negligence. The Tribunal considered the arguments, analyzed the facts, and applied legal principles to determine whether the delay should be condoned.The Applicant explained the delay in their Rejoinder-Reply, detailing the steps taken to rectify defects and the challenges faced, including misplacement of the appeal file by the Registry. The Applicant asserted that they had diligently followed up with the Registry to address the defects, but faced repeated issues despite their efforts. Conversely, the Respondent disputed the Applicant's justifications, alleging lack of diligence and negligence on the Applicant's part, leading to the prolonged delay. The Respondent argued that condoning the delay would undermine the judicial process.The Tribunal analyzed the submissions and evidence presented by both parties. It referenced the legal framework and precedent, including the principle of condonation of delay for sufficient cause as established by the Supreme Court. The Tribunal scrutinized the defect sheets provided by the Applicant, noting repeated defects and lack of substantial progress in rectifying them. The Tribunal found that the Applicant's explanations lacked credibility and diligence, indicating a casual approach towards fulfilling legal obligations. The Tribunal also dismissed the Applicant's claim of the appeal file being misplaced by the Registry, citing lack of supporting evidence.In its conclusion, the Tribunal emphasized the importance of timeliness in insolvency resolution processes under the IBC. The Tribunal found that the Applicant failed to demonstrate sufficient cause for condonation of the 205-day delay in refiling the appeal. It noted that allowing such a prolonged delay without convincing reasons would disrupt the time-bound nature of insolvency proceedings. Therefore, the Tribunal rejected the application for condonation of delay and consequently dismissed the Memo of Appeal.In summary, the Tribunal carefully considered the arguments, evidence, and legal principles related to the condonation of delay in refiling the appeal. It found that the Applicant's justifications were insufficient to warrant condonation of the prolonged delay, emphasizing the need for diligence and timeliness in insolvency resolution processes.