NCLT Refuses To Condone 384 Day Delay In Filing Reply In CIRP Citing Voluminous Records

The National Company Law Tribunal (NCLT) at Ahmedabad has refused to condone a 384 day delay in filing a reply to an interlocutory application, holding that reasons such as the volume of documents, a change of advocates and internal communication issues do not amount to “sufficient cause” under Section 5 of the Limitation Act. Invoking the principle of dura lex sed lex (The law is harsh, but it is the law), the tribunal said that permitting such a prolonged delay would defeat the purpose of limitation. Eramus Trading Company and Unique Warehouse were among the entities whose transactions were examined in the insolvency proceedings of Krishna Knitwear Technology Limited. They were required to respond to an interlocutory application through which the Committee of Creditors, relying on a Chartered Accountant's report, sought scrutiny of these transactions, and they sought condonation only after their opportunity to file a reply had already been closed. However, observing that such a prolonged delay cannote be condoned, a Judicial Member Shammi Khan and Technical Member Sanjeev Sharma refused to allow the condonatuon application that sought to condone over an year delay. The record shows that Union Bank of India, acting on behalf of the Committee of Creditors, placed the CA report before the tribunal on August 13, 2024. On 21 August 2024, the tribunal directed Eramus Trading and Unique Warehouse to file their replies within two weeks of receiving notice. A further 14 days was granted on 11 November 2024. Despite these directions, no reply was filed, leading the tribunal to close their right to respond on 29 November 2024. In seeking condonation, the two entities said that the Search Report they received in September 2024 was voluminous and required detailed examination. They also pointed to a change in legal counsel, difficulty in obtaining documents from their previous advocate and the need for the newly appointed counsel to familiarise themselves with the records. They submitted that the delay was neither intentional nor deliberate and that it arose from circumstances beyond their control. The tribunal found these explanations inadequate.It held that “none of the reasons pleaded demonstrate circumstances which were unavoidable or which prevented the applicants from acting with normal diligence.” It observed that “despite multiple opportunities and an extended period granted, the applicants did not file even a preliminary or incomplete reply, nor sought specific directions from the tribunal for additional time, nor established any documentary material evidencing exceptional circumstances preventing timely filing.” Describing the grounds urged as administrative and internal to the applicants, the tribunal held that they “do not meet the threshold of circumstances beyond control”. It further held that the conduct of Eramus Trading and Unique Warehouse “reflects lack of due diligence, particularly when the proceedings were known to them and adequate time was available.” Subsequently, the tribunal declined to condone the 384-day delay.Case Title: Eramus Trading Company Pvt. Ltd. & Ors v. Ravi Kapoor & Ors.Case Number: IA/1346(AHM)2025 and IA/1214(AHM)2023 in CP(IB)/279(AHM)2018For Applicants: Advocate Arjun SethFor Respondent: Advocate Ravi PahwaClick Here To Read/Download Order

NCLT Refuses To Condone 384 Day Delay In Filing Reply In CIRP Citing Voluminous Records

Shivangi Bhardwaj

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