Delay Beyond 30‑Day Limit Not Justified by Counsel’s Inaction: NCLT Dismisses Restoration Application [Read Order]

The National Company Law Tribunal (NCLT), Kolkata Bench, dismissed a restoration application filed by the applicant, holding that a delay beyond 30 days cannot be justified as counsel’s inaction.

Implex Metal & Ferro Alloys Ltd. was admitted into the Corporate Insolvency Resolution Process (CIRP) in March 2018 on a petition by the State Bank of India. The company was ordered into liquidation as no resolution plan was forthcoming. And then the CD was sold as a going concern.

During liquidation, Eastern Power Distribution Company of Andhra Pradesh Ltd, the applicant filed the interim application claiming dues of ₹20.72 crore as CIRP costs. The applicant also asserted that electricity charges paid during CIRP and liquidation qualified for priority payment under Section 53 of the Insolvency and Bankruptcy Code (IBC). The application was dismissed for default on 8 November 2023 after repeated non-appearance of its counsel.

The applicant wanted to recall the dismissal order and restoration. It was argued that the default occurred solely due to the negligence of its earlier counsel, who continuously failed to appear despite assurances. The applicant claimed it had diligently pursued other related applications but was unable to secure a " No Objection” from its former counsel in time to engage new representation.

The applicant also emphasised that its claim constituted CIRP costs, which by law must be paid before any distribution to creditors. It was also contended that the delay in filing the restoration plea was attributable to procedural hurdles in obtaining the no objection certificate and coordinating between its headquarters in Visakhapattanam and counsel based in Delhi.

The company relied on Supreme Court precedents (Rafiq v. Munshilal, Lichi Tewari v. Director of Land Records, B.K. Educational Services v. Parag Gupta) to argue that litigants should not suffer for counsel’s inaction and that Limitation Act provisions apply to IBC proceedings.

The liquidator opposed restoration, asserting that the application was hopelessly barred by limitation. Under Rule 48(2) of the NCLT Rules, restoration must be sought within 30 days of dismissal. IA No. 1061/2021 was dismissed on 8 November 2023, but the restoration plea was filed only on 25 July 2024, after a delay of over seven months.

The liquidator further argued that the applicant had not shown sufficient cause for non-appearance or delay. It noted that the applicant was aware of the dismissal but failed to act quickly. Moreover, liquidation distribution had already been completed under Section 53 of the IBC, with only insignificant balances left. At this advanced stage, restoration would disrupt the closure of liquidation.

The Tribunal examined Rule 48 of the NCLT Rules, which permits restoration only if filed within 30 days of dismissal and supported by sufficient cause. It was observed that the applicant was aware of the dismissal order but waited over 230 days to file the restoration plea. The delay was not explained satisfactorily, and reliance on counsel’s failure did not absolve the applicant of responsibility.

The Bench of Labh Singh (Judicial Member) and Rakha Kantilal Shah (Technical Member)acknowledged Supreme Court rulings emphasising liberal treatment of restoration applications but stressed that such mercy cannot extend to litigants who deliberately fail to act within the limitation. It noted that the applicant had actively pursued other applications during the same period, demonstrating the capacity to act, yet chose not to file for restoration in time.

Given that liquidation distribution was nearly complete and the corporate debtor sold as a going concern, the Tribunal held that reopening the matter would prejudice finality of proceedings.

The NCLT concluded that EPDCL had not established sufficient cause for condonation of delay. The restoration application was barred by limitation and lacked merit. Accordingly, IA No. 1570/2024 was dismissed.

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