Delay Of 115 Days In Refiling Appeal Cannot Be Condoned On Frivolous Grounds: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) has held that allowing refiling delay condonation on frivolous grounds would be an anathema to the timeliness and integrity of the liquidation process. In this case,the tribunal refused to condone delay of 115 days in refiling the present appeal. Brief Facts: The present application has been filed seeking condonation of delay of 115 days in refiling the appeal. Contentions: The applicant submitted that the delay was primarily caused by unforeseen and exceptional circumstances beyond the control of the Applicant since the original set of documents had been inadvertently misplaced/lost by the Delhi based local clerk entrusted with the physical filing of the application. It was also argued that the period of 7 days prescribed in Rule 26(2) of NCLAT Rules with respect to removal of defects is directory in nature and not mandatory and hence the delay can be condoned if sufficient grounds are shown. In 'Mool Chandra vs. Union of India (2024)' the Supreme Court held that if no fault can be laid at the doors of the Applicant and cause for delay shown is sufficient, then a liberal and justice-oriented approach should be adopted to condone the delay. The respondent submitted that the delay was for an inordinately long period and does not deserve condonation as the delay was intentional. It was further argued that in the application for condonation of delay, the reason for delay depicted was time taken in seeking legal opinion. On the other hand, in the refiling delay condonation application, an entirely new and specious ground has been created which is “misplacement of documents”. It was also argued that as misplacement of documents is solely attributable to the wilful negligence and lack of diligence on the part of the Applicant, this cannot constitute a valid ground for condonation of delay at the refiling stage and deserves to be rejected. It was also submitted that the Delhi High Court in 'Dy. CE/C/ Jalandhar City Vs. Spacechem Enterprises 2023' held that while the courts enjoy jurisdiction to condone refiling delay, the conduct of the Applicant seeking condonation must be tested on the anvil of whether the Applicant acted in this direction with due diligence and dispatch. Observations: The tribunal at the outset observed that the standard for condoning the delay in refiling the appeal is less rigorous than the delay in filing the appeal. However, there must be a reasonable, sufficient and justifiable cause on the part of the applicant before the delay can be condoned. While condoning the delay, the importance of timeliness which forms the cornerstone of the IBC cannot be completely forgotten. It further added that there is no quarrel with the proposition that the time period of 7 days provided under NCLAT Rules for rectifying the defects is directory in nature. However, it does not mean that the Tribunal is not precluded from scrutinizing the tenability and reasonability of the grounds on which refiling delay condonation has been sought. The tribunal while rejecting the submission that the distance between Delhi and Ahmedabad led to delay, observed that alibi of geographical distance between Ahmedabad and Delhi acting as an impediment in refiling the appeal on time does not meet the reality on ground. Any prudent person would agree that there is no dearth of transport infrastructure and communication network interlinking these two cities. The tribunal further noted that defence taken by the applicant that due to significant time lost in coordinating with the clerk a lot of time lapsed due to which application seeking another certified copy of the order could not be filed,is farcical. It said that the certified copy of the order was provided to the applicant by the registry on the same day on which the application was filed. It opined that it clearly shows that had the Applicant been serious and earnest in their efforts in pursuing the matter with the NCLT Registry, there would have been no need to wait for nearly four months to obtain certified copy of the impugned order which was pronounced as early as 21.06.2024. Coming to the explanation that translation of documents took time, the tribunal observed that “by no stretch of imagination can two pages of translation work consume a period of nearly four months' time. This explanation also fails to inspire our confidence.” The tribunal concluded that “the Applicant is found to have remained nonchalant and callous about the need to correct the defects pointed out in the Appeal Petition by the NCLAT Registry in a timely manner. In such circumstances, allowing refiling delay condonation on such frivolous grounds would be an anathema to the timeliness and integrity of the liquidation process and...

Delay Of 115 Days In Refiling Appeal Cannot Be Condoned On Frivolous Grounds: NCLAT

Mohd Malik Chauhan

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