2025 (11) TMI 206 - AT - Companies Law

147-day delay in refiling appeal under Rule 26 refused due to no sufficient justification or due diligence

Amit Somani Versus National Financial Reporting Authority

NCLAT PB refused condonation of a 147-day delay in refiling an appeal under Rule 26, holding the appellant failed to show sufficient justification beyond ... Condonation of 147 day delay in refiling an appeal after defects were pointed out under Rule 26 of the NCLAT Rules, 2016 - delay beyond the reasonable control of the Appellant and his counsel or not - Deficiencies in the EQCR's role - alleged failure to exercise due diligence or gross negligence - HELD THAT:- No sufficient case has been made out by the Appellant to cross hurdles of Rule 26 of NCLAT Rules, 2016. The larger bench in the case of V.R. Ashok Rao and Ors. Vs. TDT Copper Ltd. [2022 (9) TMI 219 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] has held that no limitation prescribed for refiling of appeal and party who is exercising its right to file the statutory appeal in time has not to be shut out on procedure or technical defects however, they should be justifiable cause for delay. The larger bench also held that representation of appeal after expire of period of 7 days or after extended period was not to be a fresh filing and shall only be refiling/ representation. It is important to note that the larger bench only held that given in refiling which is more the period of limitation prescribed for filing appeal under Section 61 of the Code or Section 421 of the Companies Act, 2013 shall not governed the period taken in appeal for removal of the defects in refiling/ representation, the same can be condoned on “sufficient justification”. Hence, although there should not be any upper limit on days prescribed for refiling, however, the applicant is required to be responsible and careful and has to submit the reasons for delay in refiling beyond his control. In the present case, we do not find such prevailing circumstances which could have prevented the Appellant from refiling within time. There are no reasonable reasons for justifying delay of 147 days in re-filing and curing the defects. It is noted that in spite of multiple intimations made by the Registry, same defects remained uncured, which shows the carelessness on the part of the Appellant. Defects that could have been cured together were unnecessarily prolonged by the Appellant, without any justifiable reason. It is not satisfied with the reasons given for condonation of delay in refiling. The Application fails and stand rejected. ISSUES PRESENTED AND CONSIDERED 1. Whether the Appellate Tribunal should condone a 147-day delay in refiling an appeal after defects were pointed out under Rule 26 of the NCLAT Rules, 2016. 2. Whether the limitation periods under statutory provisions for filing appeals (Section 61 of IBC / Section 421 of the Companies Act) apply to the period for re-presentation/refiling of an appeal after defects were returned under Rule 26. 3. Whether the Registrar's repeated communications and specific defect sheets satisfy the requirement of notice for rectification, and whether the appellant cured defects within the time reasonably required by Rule 26. 4. Whether principles and authorities concerning condonation of re-filing delay (including the larger bench ruling on re-presentation/refiling) control the exercise of discretion to condone delay in the present facts. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Condonation of 147-day refiling delay under Rule 26 Legal framework: Rule 26 (Endorsement and Scrutiny) of the NCLAT Rules, 2016 provides that defective documents shall, after notice, be returned for compliance and if not complied with within seven days, the matter shall be placed before the Registrar who may pass appropriate orders; the Registrar may for sufficient cause allow reasonable time for rectification; failure may result in declining to register the appeal. Precedent treatment: The Tribunal relied on its five-member (larger) bench holding which clarified that re-presentation/refiling after expiry of seven days is not necessarily a fresh filing and that condonation of refiling delay is open on sufficient justification; other three-member decisions treating late re-presentation as fresh filing were held not to state the correct law. The Tribunal also cited prior decisions (including IBC-context authorities) emphasizing that an appellant must explain each day's delay and that undue, unexplained delays have been refused relief. Interpretation and reasoning: The Court examined the registry defect sheets and communications showing 14 distinct defects repeatedly notified between October 2024 and January/February 2025 and recorded that only one defect was cured on the first refile date while the remaining defects persisted across multiple notices. The Tribunal assessed whether defects were being cured piecemeal through bona fide efforts or whether the appellant was casual/careless. The Appellant's IA asserting that defects were cured when notified and attributing delay to lack of intimation and other unspecified causes was held inadequate-no cogent chronology or day-to-day explanation was furnished and multiple notices were shown to have been sent to the appellant's email/phone. The Tribunal applied the larger bench principle that condonation of refiling delay requires sufficient justification and the applicant must be responsible and careful; absence of such justification disentitled the appellant to relief. Ratio vs. Obiter: Ratio - where registry repeatedly notifies specific defects and the appellant fails to cure them or explain delay, the Tribunal may refuse condonation under Rule 26 and treat the appeal as not legally constituted. Obiter - observations regarding the directory nature of the seven-day period and general policy comments on time-bound proceedings in IBC context were explanatory of approach but the dispositive holding is the refusal to condone delay on the facts. Conclusion: The Tribunal found no reasonable or sufficient cause for the 147-day refiling delay, held the condonation application failed, and dismissed the appeal as not legally constituted for want of timely refiling. Issue 2 - Application of statutory limitation (Section 61 / Section 421) to refiling/re-presentation Legal framework: Sections prescribing limitation for filing appeals (statutory 30/45-day periods with limited extended periods) govern filing of appeals; Rule 26 governs endorsement/scrutiny and re-presentation. Precedent treatment: The larger bench ruling (cited) held that limitation for filing an appeal under statutory provisions cannot be imported to govern the period for removal of defects in refiling/re-presentation under Rule 26; re-presentation after expiry of seven days is not to be treated automatically as a fresh filing; condonation of refiling delay is available on sufficient justification. Interpretation and reasoning: The Tribunal recited the larger bench conclusion that Rule 26 sub-rule (3) empowers the Registrar to allow reasonable time for rectification and that no statutory limitation is prescribed specifically for re-presentation. However, the larger bench also stressed that condonation of refiling delay must be justified on a case-by-case basis and that unlimited indulgence is not permissible where the appellant fails to demonstrate justifiable cause. The present appeal was evaluated under that standard. Ratio vs. Obiter: Ratio - statutory limitation for initial filing does not automatically govern refiling under Rule 26; condonation of refiling delay remains discretionary and fact-sensitive. Obiter - policy statements about timelines in IBC context informing strictness of scrutiny (useful but not controlling in non-IBC matters). Conclusion: The Tribunal applied the larger bench principle that statutory filing limitation does not per se bar condonation of refiling delay, but held that condonation remains discretionary and requires sufficient justification, which was absent here. Issue 3 - Adequacy of registry notices and appellant's cure of defects Legal framework: Rule 26 requires notice to the party of defects and permits the Registrar, for sufficient cause, to allow reasonable time; where defects are not removed, the Registrar may decline registration. Precedent treatment: Prior decisions require clear, credible explanations for delays and expect appellants to act diligently once defects are notified; repeated failure to cure may indicate negligence and justify refusal to condone refiling delay. Interpretation and reasoning: The Tribunal reviewed multiple defect sheets (dated 16.10.2024 through 21.02.2025) with detailed, repeated communications sent to the appellant's phone and email. The registry's records demonstrated persistent uncured defects until 21.02.2025, with only limited partial curing earlier. The appellant's explanation that some defects were not notified or that counsel's personal circumstances impeded refiling was not supported by the record; the Tribunal found the registry had repeatedly intimated defects and that the appellant did not provide day-by-day reasons for the prolonged inactivity. The Tribunal contrasted the facts with authorities where unexplained long delays warranted refusal to condone refiling. Ratio vs. Obiter: Ratio - where registry has given repeated, specific defects and the appellant does not cure them or provide adequate day-to-day reasons for delay, condonation may be refused. Obiter - the note that registry may assist parties with defect removal is advisory. Conclusion: Registry notices were adequate and duly communicated; the appellant failed to cure defects in a timely or adequately explained manner; this justified refusal to condone the refiling delay. Issue 4 - Effect of refusal to condone on jurisdiction to hear merits Legal framework: If a condonation application fails and the appeal is not properly re-presented under Rule 26, the appeal may be treated as not legally constituted and dismissed without adjudication on merits. Precedent treatment: Authorities recognize that procedural defaults that render an appeal unregistered preclude adjudication on merits; courts may refuse to exercise jurisdiction where procedural thresholds are not met unless exceptional justification exists. Interpretation and reasoning: Given the Tribunal's conclusion that condonation was not warranted, it followed the legal consequence that the main appeal was not legally constituted. The Tribunal therefore dismissed the appeal without examining merits, consistent with the procedural rule that an unregistered/defective appeal cannot be entertained substantively. Ratio vs. Obiter: Ratio - refusal to condone refiling delay results in the appeal being treated as not legally constituted and dismissal without merits. Obiter - remarks about absence of costs and closure of interlocutory applications are procedural adjuncts. Conclusion: The appeal was dismissed for failure to obtain condonation of the refiling delay; merits were not reached.