IBC’s Time-Bound Framework Bars Relief: NCLAT Refuses to Condone 389-Day Appeal Refiling Delay [Read Order]

The appellant, LBF Publications Private Limited, an operational creditor, had approached the NCLT, Mumbai Bench, under Section 9 of the IBC, seeking initiation of insolvency proceedings against A & A Business Consulting Private Limited, the corporate debtor. The application was dismissed by the Adjudicating Authority on 10 August 2023 in, primarily on grounds related to the date of default and maintainability.

Aggrieved, the appellant filed an appeal before the NCLAT under Section 61 of the Code. The appeal was initially e-filed on 9 September 2023, but the Registry pointed out certain defects on 16 September 2023. As per Rule 26 of the NCLAT Rules, 2016, the appellant was required to cure these defects within seven days. However, the appeal was refiled only on 16 October 2024, after a delay of 389 days.

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The appellant then filed an appeal seeking condonation of the delay in refiling, which became the central issue before the Tribunal.

Counsel for the appellant urged that the delay was unintentional and caused by circumstances beyond its control. It was contended that the appeal involved important questions of law arising under the IBC and that a hyper-technical approach should not defeat substantive justice.

The appellant also sought liberty to rely upon the grounds raised in the main appeal as part of its condonation application, asserting that no prejudice would be caused to the respondent if the appeal was heard on the merits.

The respondent opposed the condonation plea, arguing that the appellant’s explanation was vague and failed to disclose any specific reason or supporting evidence. It was contended that the delay, extending over one year, demonstrated a complete lack of diligence and that the IBC’s scheme, being time-bound, leaves no room for discretionary condonation of such prolonged delay.

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The respondent urged that entertaining the appeal after an unexplained lapse would undermine the Code’s objective of expeditious resolution.

The Bench comprising N. Seshasayee (Judicial Member) and Arun Baroka (Technical Member) held that the only explanation offered, “delay was unintentional and for reasons beyond control”, did not constitute sufficient cause under law.

The Tribunal observed that the NCLAT Rules require rectification of defects within seven days and that extensions are permissible only upon demonstration of reasonable and justifiable grounds.

Referring to Rules 26 and 14 of the NCLAT Rules, 2016, the Bench reiterated that exemption or condonation can be granted only where genuine obstacles are shown. The Tribunal emphasised that the IBC is a “self-contained code” designed to ensure time-bound resolution of insolvency disputes, and procedural laxity undermines this legislative intent.

Finding no sufficient cause for the extraordinary delay of 389 days, the NCLAT dismissed the appeal seeking condonation of delay and consequently rejected the appeal itself.

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