2024 (8) TMI 1515 - HC - Companies Law

Condonation of delay in instituting an appeal - sufficient cause for delay or not - Section 466 of the Companies Act 1956 - HELD THAT - The delay is not inordinate and is sufficiently explained. The applicants have pleaded that they were not a party to the Interim Application and on being aware of the order dated 09 October 2023 the applicants applied for certified copies and some time was spent in obtaining the same. The conduct of the applicants is not such as would stigmatise them as some irresponsible litigants. There was no malafide involved or at least presently alleged. No undue advantage is taken by the applicants of their delay in instituting the accompanying appeal. Upon a cumulative consideration of all such circumstances this is not a matter where the applicant should be denied an opportunity to have his appeal heard on merits. The delay is condoned.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal issues presented and considered in this judgment include:

• Whether the delay in instituting an appeal against the orders dated 09 October 2023 and 21 December 2022 should be condoned.
• Whether the order dated 21 December 2022 was final or interim, impacting the timing and necessity of an appeal.
• Whether the applicants demonstrated sufficient cause for the delay in appealing the decisions.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Delay in Instituting an Appeal

• Relevant Legal Framework and Precedents: The legal framework involves the application of the Companies Act, 1956, specifically Section 466, which pertains to the stay of winding-up proceedings. The principles for condoning delay generally require showing sufficient cause for the delay.
• Court's Interpretation and Reasoning: The court considered the sequence of events and the nature of the orders. It noted that the order dated 21 December 2022 imposed conditions for compliance and was not final. The applicants argued that the order dated 09 October 2023 was the relevant date for delay calculation as it was contingent on the compliance with the previous order.
• Key Evidence and Findings: The court examined the order dated 21 December 2022, which required the deposit of Rs. 240 Crores and other conditions for the revival of the company. The compliance with these conditions was a prerequisite for the subsequent order dated 09 October 2023.
• Application of Law to Facts: The court applied the principle that an interim order, which is conditional, does not necessitate an immediate appeal. The applicants were not parties to the interim application and pursued the matter diligently upon becoming aware of the final order.
• Treatment of Competing Arguments: The respondents argued that the delay was unexplained concerning the order dated 21 December 2022. However, the court found that the order was not final and that the applicants acted diligently once the final order was made.
• Conclusions: The court concluded that the delay was not inordinate and was sufficiently explained. There was no malafide intent or undue advantage taken by the applicants.

Issue 2: Nature of the Order Dated 21 December 2022

• Relevant Legal Framework and Precedents: The nature of the order impacts whether it is appealable immediately or only upon final disposition. The order's conditional nature was central to this determination.
• Court's Interpretation and Reasoning: The court interpreted the order as interim and conditional, noting that it did not dispose of the interim application. The conditions imposed were prerequisites for further court consideration.
• Key Evidence and Findings: The order required the deposit of funds and compliance with other conditions, which were not yet fulfilled at the time of the order.
• Application of Law to Facts: The court applied the principle that an interim order with conditions does not necessitate an immediate challenge unless those conditions are fulfilled.
• Treatment of Competing Arguments: The applicants argued that the order was not final, while the respondents contended that the delay in challenging it was unjustified. The court sided with the applicants, finding the order interim.
• Conclusions: The court concluded that the order was not final, and therefore, the delay in appealing was justified.

3. SIGNIFICANT HOLDINGS

• Verbatim Quotes of Crucial Legal Reasoning: "The delay is not inordinate and is sufficiently explained. The applicants have pleaded that they were not a party to the Interim Application and on being aware of the order dated 09 October 2023, the applicants applied for certified copies and some time was spent in obtaining the same."
• Core Principles Established: The judgment establishes that an interim order with conditions does not necessitate an immediate appeal. Sufficient cause for delay can be shown by demonstrating diligence and absence of malafide intent.
• Final Determinations on Each Issue: The court condoned the delay in instituting the appeal, allowing the applicants to have their appeal heard on merits. The order dated 21 December 2022 was deemed interim, justifying the timing of the appeal.