No Separate Application Needed for Condonation of Delay if Cause is Evident: NCLAT Rejects Appeal [Read Order]

The Chennai Bench of the National Company Law Appellate Tribunal (NCLAT) has dismissed an appeal where an application filed by the Resolution Professional was under challenge. The Tribunal held that the plea of limitation was miscalculated as delay can be condoned even in the absence of a separate application.

The appeal was filed by two individuals claiming to be nominal directors of the corporate debtor, Bhuwalka Steel Industries Private Limited. They challenged an order passed by the Adjudicating Authority which had refused to reject an application filed by the Resolution Professional under Sections 43, 44, 66 and 69 of the IBC, 2016 on the ground of limitation.

The appellants contended that the application filed by the Resolution Professional was barred by limitation as it was presented beyond the timelines prescribed under Regulation 35A of the IBBI (CIRP) Regulations, 2016. It was argued that the original application under Section 66 had itself been filed beyond the stipulated period and therefore, the subsequent application could not be entertained.

The Resolution Professional opposed the appeal, and submitted that the timelines under Regulation 35A are directory in nature and not mandatory. Reliance was also placed on the directions issued by the Supreme Court, as well as settled law that delay can be condoned even without a formal application if sufficient cause is evident.

After examining the record, the Bench comprising Justice Sharad Kumar Sharma (Judicial Member), and Jatindranath Swain (Technical Member), noted that the application in question had been filed in compliance with the liberty granted by the Adjudicating Authority while disposing of an earlier application.

Therefore, it could not be treated as time-barred. The Tribunal observed that the statute has no mandate of filing a separate application for condonation of delay.

It was further observed that the principles laid down by the Supreme Court in Sesh Nath Singh v. Baidyabati Sheoraphuli Cooperative Bank Ltd. clearly permit condonation of delay even in the absence of a formal application, given that sufficient material exists on record.

The Appellate Tribunal also held that the benefit of excluding the limitation period granted by the Supreme Court during the Covid-19 pandemic was applicable to the present case.

Finding no legal infirmity in the order of the Adjudicating Authority, the NCLAT dismissed the appeal.

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