national company law appellate tribunal

National Company Law Appellate Tribunal: While rejecting an application for condonation of delay, a Division bench comprising Rakesh Kumar Jain, J., and Shreesha Merla* (Technical Member), held that filing of a claim under a wrong category is neither a substantial reason nor can it be construed as a sufficient cause.

Factual Matrix

In the instant matter, the appellant initially filed a claim on 02.08.2022 in an incorrect form which was later rejected on ground of delay and the appellant was advised to re-submit the claim in correct form. The appellant on 29.11.2022 filed an application seeking Condonation of Delay of 49 days in filing of the claim before the Adjudicating Authority and for acceptance of the claim.

The Adjudicating Authority vide order dated 12-05-2023 dismissed the said Application filed by the appellant seeking Condonation of Delay of 49 days in filing of the claim on the ground that no proper pleadings or material placed on record to substantiate reason for delay except for a vague averment that there was a delay seeking legal advice.

Aggrieved by the impugned order passed by the Adjudicating Authority, the appellant preferred an appeal under S. 61 of the Insolvency and Bankruptcy Code, 2016 (IBC) challenging the same.

Moot Point

Whether the Adjudicating Authority was justified in rejecting the Condonation of Delay of 49 days in filing the claim together with the delay in filing the Application?

NCLAT’s Observation

Rejecting the contention of the appellant that delay was due to filing the claim in the wrong category, the NCLAT observed that the appellant’s explanation regarding delay is neither substantial nor can it be construed as a sufficient cause. The NCLAT further observed that the actual time-period of delay is 125 days, and the appellant later approached the Adjudicating Authority with a further delay of 100 days, therefore the Adjudicating Authority has rightly held that “it is only a bald explanation and does not construe a ‘sufficient cause for the delay’”.

NCLAT’s Verdict

While rejecting the appeal, the NCLAT held that IBC is a time bound process which needs to be strictly adhered to and explanation regarding laches as given by the appellant is “neither ‘substantial’ nor can be construed as a ‘sufficient cause’”.

[Toral Rathod v. Gopalsamy Ganesh Babu, 2023 SCC OnLine NCLAT 296, order dated 02-06-2023]

*Judgment by Shreesha Merla (Technical Member)

Advocates who appeared in this case :

Ms. Deepika Murali,, Counsel for the Appellant;

Mr. A. Karthikeyan, Counsel for the Respondent.

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