2016 (9) TMI 1022 - HC - Central Excise

Condonation of delay - 117 days - because of financial constraint since the company was unable to deposit the 10% requisite amount, there is delay in preferring the appeal - Held that - it is by now well settled that the condonation of delay though is required to be sufficiently explained but at the same time, if the Court finds that there is substantial case to be considered in the appeal, the Court may also examine as to whether the delay could be condoned by imposing suitable costs or not. It is true that, the delay may operate as bar in pursuing the proceedings but, to what extent the discretion should be exercised would vary from facts to facts. Financial inability cannot be a ground which need not be considered at the time of condonation of delay. On the contrary, financial inability can be one of the valid grounds for accepting the contention that the appellant was prevented by sufficient reasons in not preferring the appeal. We do not want to express any view on the merits of the appeal but it suffices to observe that it was the case to be considered in the appeal. It may be that in a given case, Court may decline to exercise discretion for condoning the delay, if, during the period of delay, the rights of the parties are substantially altered and/or irreversible situation is created but we do not find any of the requirements are satisfied in the present case. The Tribunal ought to have exercised the discretion for condonation of delay. Further, declining the exercise of discretion for condonation of delay may result into grave injustice to the appellant and appellant would be deprived of the case to be considered on merits, more particularly, when no prejudice is going to be cause to the respondent-Department, since on the demand, the interest if ultimately is maintained, it is to follow. Under these circumstances, we find that the appeal deserves to be allowed. Delay deserves to be condoned and the Tribunal should be directed to decide the appeal on merits. Therefore, the impugned order of the Tribunal is set aside with the observation that the delay in preferring the appeal shall stand condoned on condition that the appellant pays a cost of ₹ 10,000/- to the respondent within a period of four weeks from today. - Decided in favour of appellant

Summary

Issues: Appeal against dismissal for delay in filing, condonation of delay, financial constraint as a reason for delay, discretion of the Court in condoning delay, injustice due to failure to condone delay, setting aside the Tribunal's order, directing payment of costs, restoring the appeal before the Tribunal, deposit of costs with Karnataka State Legal Services Authority.

Analysis:
1. Delay in Filing Appeal: The appeal was directed against the Tribunal's order dismissing the appeal due to a delay of 117 days in filing. The appellant attributed the delay to financial constraints that prevented the company from depositing the requisite amount. The respondent contended that the delay was not properly explained, as the appellant failed to put the case before the Board of Directors despite having knowledge of the issue.

2. Condonation of Delay: The Court emphasized that while delay must be sufficiently explained, the presence of a substantial case to consider in the appeal allows for the examination of whether the delay can be condoned by imposing suitable costs. Financial inability can be a valid reason for not filing an appeal promptly, and the Court may exercise discretion in condoning the delay based on the circumstances of each case.

3. Exercise of Discretion: The Court noted that the Tribunal should have exercised discretion in condoning the delay, as failing to do so could result in grave injustice to the appellant by depriving them of having their case considered on merits. In this case, no irreversible situation or substantial alteration of rights occurred during the delay period, justifying the condonation of delay and allowing the appeal to proceed.

4. Setting Aside Tribunal's Order: The Court set aside the Tribunal's order and directed the appellant to pay a cost of ?10,000 to the respondent within four weeks. Upon compliance with this condition, the appeal would be restored before the Tribunal for a hearing on merits, ensuring both sides have an opportunity to present their arguments.

5. Deposit of Costs: To ensure the proper utilization of the costs paid, the Court directed the appellant to deposit the ?10,000 cost with the Karnataka State Legal Services Authority. The receipt of this deposit was required to be produced during the proceedings before the Tribunal as compliance with the Court's order.

In conclusion, the Court allowed the appeal, condoned the delay in filing, set aside the Tribunal's order, directed the payment and deposit of costs, and instructed the Tribunal to reconsider the appeal on its merits, ensuring a fair hearing for both parties.