2025 (7) TMI 1783 - AT - IBC

Delay of 152 Days in Appeal Filing Rejected Due to Negligence and Lack of Justifiable Cause Under Insolvency Rules

Lakhani Realty LLP Versus Kailash Shah, RP of Jaatvedas Construction Co. Pvt. Ltd.

The NCLAT Principal Bench dismissed the application for condonation of a 152-day delay in refiling the appeal, finding no sufficient or justifiable cause. ... Condonation of delay in filing appeal - sufficient/justifiable cause has been made out by the Applicant for condonation of delay or not - whether the delay was on account of reasons beyond the control of the Applicant which inspite of sincere efforts and endeavors made by the Applicant could not be avoided? - HELD THAT:- There is no explanation offered substantiating the nature of roadblock and complexities faced by the Applicant in tracing the clear copies which led to inability on their part to cure these defects in timely manner. The Applicant has neither given any details on the number of documents which had been marked dim and illegible by the Registry which required to be cured. What is more surprising is that the Applicant has filed the present appeal with IA No. 1182 of 2025 seeking exemption from filing true typed copies of the dim/illegible documents annexed with the appeal. This goes to show that even after taking so much time to purportedly cure the defects, the same defect of dim/illegible documents continue to subsist. This clearly shows that this ground for refiling delay lacks foundation. The delay in the instant case was not caused by reasons beyond the control of the Applicant but manifests lack of earnest and bonafide efforts made to correct the defects. Any serious litigant would have been more careful and vigilant in removing the defects on time. When this applicant on his own choosing did not act with due diligence and dispatch to remedy the defects pointed out to it by the Registry within a reasonable period of time, it is a clear case of negligence and callousness. As time is of essence in insolvency proceedings, condonation of refiling delay on the basis of such unsound and implausible pleas cannot be encouraged. In such circumstances, the Applicant has failed to effectively demonstrate reasonable and genuine ground to explain the refiling delay. Thus, sufficient ground has not been made out warranting the condonation of 152 days delay in refiling of the appeal. The refiling delay application is rejected. ISSUES: Whether the delay of 152 days in refiling the company appeal qualifies for condonation under the applicable legal principles.Whether the explanation offered by the applicant regarding defects in the appeal documents and holidays constitutes 'sufficient cause' for condonation of delay.Whether the applicant demonstrated bona fide and earnest efforts to remove the defects within the prescribed time frame under the National Company Law Appellate Tribunal Rules, 2016.Whether the principles of time-bound proceedings under the Insolvency and Bankruptcy Code (IBC) preclude condonation of unjustified delays in filing appeals during Corporate Insolvency Resolution Process (CIRP). RULINGS / HOLDINGS: The court held that the applicant failed to demonstrate 'reasonable and genuine ground' to explain the 152 days delay in refiling the appeal, and therefore, the delay cannot be condoned.The explanation based on defects in dim/illegible pages and holiday periods was found to be 'bald,' 'feeble and frivolous,' and lacking in substantiation or details regarding efforts made to cure defects.The applicant's filing of an interlocutory application seeking exemption from filing legible copies after the delay undermined the credibility of their explanation for the delay.The court emphasized that 'time is of essence in insolvency proceedings' and that condonation of delay on unsound and implausible grounds 'cannot be encouraged.'The application for condonation of delay was rejected, and consequently, the appeal and all related interlocutory applications were dismissed. RATIONALE: The court applied the settled legal principle that 'there should be sufficient cause for condoning the delay,' referencing the National Company Law Appellate Tribunal Rules, 2016, specifically clause 26(4), which empowers the Registrar to decline registration of appeals where defects are not cured within the fixed time.The court relied on precedents emphasizing the need for clear, substantiated explanations and bona fide efforts to remove defects in time-bound insolvency proceedings under the Insolvency and Bankruptcy Code.The court rejected the applicant's reliance on festive holidays as a justification for the majority of the delay, finding that the registry remained operational and the applicant did not explain the delay during non-holiday periods.The decision reflects a strict adherence to the time-bound nature of CIRP proceedings, underscoring that procedural delays without sufficient cause are detrimental to the insolvency resolution process.