Appeals under IBC : Procedural negligence or lack of diligence does not constitute valid grounds for condonation.

NCLAT Denies Condonation of 125-Day Delay in Refiling Appeal Under IBC. Tribunal Emphasizes Time-Bound Nature of Insolvency Proceedings, Dismisses Appeal for Procedural Negligence

In a significant judgment, the National Company Law Appellate Tribunal (NCLAT) Principal Bench in New Delhi dismissed an application seeking condonation of a 125-day delay in refiling an appeal under the Insolvency and Bankruptcy Code (IBC), 2016. The appeal was filed by Shri B. Mahesh and others against Abhay Narayan Manudhane and others, with the primary issue revolving around the procedural delays that hindered the timely refiling of the appeal.

The bench, comprising Justice Ashok Bhushan, Chairperson, and Barun Mitra, Member (Technical), emphasized the importance of adhering to procedural timelines under the IBC, which is designed to be a time-bound process to ensure efficient resolution of insolvency cases. The Tribunal noted that the explanations provided for the delay, including technical issues and personal difficulties faced by the counsel, were insufficient and failed to establish unavoidable or exceptional circumstances.

The judgment highlighted that procedural negligence and lack of diligence do not constitute valid grounds for condonation of delay. It was observed that the repeated procedural lapses and negligent approach by the applicants undermined the integrity of the judicial processes, and the balance of convenience and equity did not favor leniency.

The Tribunal referred to several precedents, including the Supreme Court's decision in Ram Lal v. Rewa Coal Fields Limited, which stressed the necessity for a party seeking condonation of delay to exhibit diligence and substantiate their claims with credible evidence. The NCLAT reiterated that the burden of proving sufficient cause for condonation of delay lies with the applicant, and in this case, the applicants failed to convincingly demonstrate sufficient cause.

In its order, the NCLAT stated, "Sufficient grounds not having been made out to justify the refiling delay of 125 days, IA No. 1527 of 2025 is rejected. Consequent upon the dismissal of the application for condonation of delay in refiling, the Memo of Appeal and other accompanying IAs are also disposed of."

This judgment underscores the rigorous adherence to procedural timelines mandated by the IBC and serves as a cautionary note to litigants and counsels about the importance of diligence and prompt action in legal proceedings.

Bottom Line:

Condonation of delay in refiling appeals under IBC requires sufficient and justifiable cause. Procedural negligence or lack of diligence does not constitute valid grounds for condonation.

Statutory provision(s): Insolvency and Bankruptcy Code (IBC), 2016

Shri B. Mahesh v. Abhay Narayan Manudhane, (NCLAT)(Principal Bench, New Delhi) : Law Finder Doc Id # 2766638