2024 (12) TMI 474 - AT - IBC

Condonation of delay in refiling of Company Appeal - delay was intentional or deliberate or not - sufficient reasons for delay condonation or not - HELD THAT - The delay has to be tested on the parameters of reasonableness so that the objectives of IBC of time-bound resolution is not diluted and the interest of either of the parties involved is not prejudicially affected in any manner. The question of condoning any delay in refiling would have to be seen in the context of the explanation offered to find out whether the reasons cited were beyond the control of the Applicant and all efforts were made to overcome the delay with due diligence and utmost despatch. There is no hard and fast rule to measure due diligence and due despatch. However, due diligence and despatch can always be assessed from how a prudent person would act or can be expected to act in a timely manner in similar circumstances - It becomes clear that the Applicant was actively litigating before other judicial forum while being clearly negligent in following-up the present matter before the Tribunal. This is indicative of negligence and inaction on the part of the Applicant. No sufficient cause has been made out which would warrant overlooking the delay caused in curing the defects on the grounds of ill-health of the clerk. There are some other grounds cited to explain the delay in rectifying the defects. One such ground was that as several duplicate emails/SMSs were received from the NCLAT Registry, this had hampered them in effectively attending to the defects in a timely manner. This is a facile explanation as the Registry was duty-bound to convey the defects and since there were admittedly five related appeals with a host of applications, there was nothing unusual for the Registry in communicating the defects to the Applicant by sending bunched automated emails and SMSs. Interestingly, on the one hand, the Applicant has relied on this plea to explain the delay in redressing the defects while on the other hand they have admitted their failure to place on record the duplicate emails/SMSs which impeded their swift action. The lackadaisical approach of the Applicant is further borne out from the fact that it has admitted that their counsel was unable to access these communications sent by the Registry from their own clerk. The Applicant has clearly failed to indicate any circumstance beyond his control which warranted 121 days to clear the defects. This renders all their explanations for delay to be bald and facile. Since the time of intimation of defects, the Applicant was prevaricating over the defects for nearly four months. No credible, genuine endeavours were made by the Applicant to correct the defects. This shows that the Applicant was casual, callous, careless and negligent in refiling the appeal on time and such inaction or dereliction cannot be countenanced. The Applicant cannot be shown indulgence keeping in view that the IBC proceedings have stringent timelines to be followed and the adjudicatory proceedings have to be completed in a prompt, expeditious and time bound manner. Thus, sufficient grounds have not been made out for condonation of 121 days delay in refiling of the application - application rejected.

Summary

Issues:
Delay in refiling of Company Appeal, condonation of delay, grounds for delay, negligence in curing defects, sufficiency of reasons for delay condonation.

Analysis:
The judgment deals with an application for condonation of delay in refiling Company Appeal (AT)(Ins) No. 1524 of 2024. The delay of 121 days was attributed to logistical difficulties due to the ill health of the clerk. The Respondent opposed the condonation, alleging negligence on the part of the Applicant in addressing defects promptly. The Respondent argued that the grounds cited for delay were implausible and unsubstantiated, emphasizing the need for valid reasons for delay condonation, referencing a previous judgment. The Applicant, in response, explained the delay was due to multiple appeals with numerous defects, compounded by duplicate communications from the Registry and the clerk's ill health. The Tribunal noted the need for a liberal approach in condoning delays but emphasized that delays must be justified with reasonable causes to uphold the time-bound nature of proceedings under the IBC.

The Tribunal examined the explanations provided by both parties regarding the delay. It found that the Applicant's reasons for delay, such as the clerk's ill health and communication issues from the Registry, were not substantiated adequately. The Tribunal observed that the Applicant failed to demonstrate circumstances beyond their control that warranted the extensive delay in rectifying defects. The Tribunal criticized the Applicant's lackadaisical approach and negligence in addressing the defects promptly, especially considering the stringent timelines mandated by the IBC. Ultimately, the Tribunal concluded that the Applicant's explanations for the delay were insufficient and rejected the application for condonation of delay in refiling the appeal. Consequently, all related applications for delay condonation and the Memos of Appeal were rejected in other related cases as well.

In summary, the judgment underscores the importance of justifiable reasons for condoning delays in legal proceedings, particularly in matters governed by stringent timelines like those under the IBC. It highlights the need for diligence and prompt action in addressing defects and filing appeals to ensure expeditious resolution of cases. The Tribunal's decision to reject the condonation application was based on the Applicant's failure to provide compelling reasons for the extensive delay, thereby upholding the principles of timely adjudication and procedural efficiency in insolvency proceedings.