2026 (4) TMI 74 - AT - IBC

Mandatory limitation under the Insolvency and Bankruptcy Code barred a delayed appeal; internal approval delays were not sufficient cause.

Section 42 of the Insolvency and Bankruptcy Code was treated as mandatory, requiring strict compliance with liquidation timelines, so the appeal filed ... Condonation of delay - Sufficiency of cause - delay of 207 days in filing the appeal - vigilance and diligence - Limitation for appeal against rejection of claim in liquidation - Mandatory nature of appellate time-limit. Limitation for appeal against rejection of claim in liquidation - HELD THAT:- The Tribunal held that where the statute prescribes a specific and restricted period for filing an appeal in the liquidation framework, in which timeliness is integral to completion of the process, that period cannot be treated as merely directory. Internal or in-house approval procedures of the appellant are variable matters within its own control and do not constitute a reasonable or definite explanation for belated filing. A financial institution, being conscious of legal proceedings and already pursuing its claim before the liquidator, was expected to act with diligence and vigilance. The contention that absence of prejudice to the opposite side justified condonation was also rejected, since prejudice is not the statutory test under Section 42. The earlier decision in M/s. Prakash Oil Depot V. G. Madhusudhan Rao & Anr [2025 (8) TMI 176 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, CHENNAI], concerning extension of time in the context of a scheme of arrangement, was held inapplicable to an appellate limitation provision under the Code. [Paras 20, 21, 23, 24, 25] The delay in filing the appeal under Section 42 was held not liable to be condoned, and the dismissal of the application challenging rejection of the claim was sustained. Final Conclusion: The Tribunal held that the appeal against the liquidator's rejection of the claim had been filed far beyond the statutory period and that the explanation based on internal approvals did not furnish sufficient cause. The appeal was accordingly dismissed. Issues: Whether the appeal under Section 42 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation and whether the delay of 207 days in filing the appeal could be condoned.Analysis: The limitation under Section 42 was treated as mandatory because the liquidation process requires strict adherence to statutory timelines. The reason offered for the delay, namely internal approval formalities within a financial institution, was held to be insufficient and incapable of constituting sufficient cause. The Court also held that no evidence was produced to justify the inordinate delay, and that the plea that the provision was directory could not be accepted. The absence of prejudice to the opposite party was held to be irrelevant to condonation under the statute.Conclusion: The delay was not condonable, and the appeal was rightly rejected as time-barred.