NCLAT Rejects Condonation Of Delay Application Due To Non-Compliance With Limitation Period U/S 61 Of IBC

Facts of the Case

The appeal arises out of the order dated January 31, 2020, passed in the company petition under the Insolvency and Bankruptcy Code, 2016 (IBC). The appealed order had been approved by the tribunal and a revised final resolution plan was presented by M/s SVSS Commercial Pvt. LTD., which was approved the Committee of Creditors (Coc) under Section 31(1) of the IBC.

The appellant was duly informed of the case and had not made an application for a certified copy of the same within the stipulated time. The window for the same was up to 1st March 2020.The appellants main contention was that it was not aware that the case had progressed and as a result could not make an application for a certified copy on time

Therefore, they sought to condone the delay in filing the appeal. However, emails of the Appellant reflected that it was aware regarding the case long before the crossing of limitation period. It was on 4^th August, 2021 that this application for condonation of delay had been filed after which appeal had been preferred on May 28, 2021, making it much more beyond the prescribed limitation period under Section 61 of the IBC.

The appellant relied on the Suo Moto orders of the Supreme Court for extending the period of limitation in the wake of COVID-19 pandemic.The tribunal stated that the orders would not be of any use this case and cannot be applicable because the appellant did not take due diligence nor it acted diligently during the period of limitation and therefore, the same application for condonation of delay was dismissed and the appeal for was declared to be barred by limitation.

Contention of both the Parties

The appellants main argument from the starting of the case is that it was not part of the original proceedings and has not been aware of the progress of the case. It was also argued by the appellant that he would be barred from being considered as a party to the proceeding under Section 21(2) of the IBC Code. The appellant further tends to rely on the orders of the supreme court for extending the period of limitation which was adopted by the court during the period of COVID 19 pandemic. To summarize the argument, the appellant stated that even though appellant participated in the CoC meetings, the mere presence of the same cannot be considered same to as being party to the proceedings.

The Resolution Professional who was the respondent in this case contended that the appellant was indeed aware of the proceedings as it is clearly visible from emails that are originating from the appellant's email address. Another contention put forward was that the appellant having participated in the Coc meetings, had sufficient knowledge of the ongoing proceedings and the lack of claim of knowledge was not valid. It was appellants duty to apply for a certified copy of the judgement within prescribed period and failure to do so barred the appeal.

Tribunal's Decision

The Tribunal dismissed the application of the Appellant for condonation of delay in filling the appeal. The tribunal stated that the appellant was aware of the proceedings well before the expiration of the time and as a result not acting diligently to get a copy of the judgement within the prescribed time-period under Section 61 of the IBC does not allow it to file for condonation of delay. The Tribunal also ruled out the COVID-19 defence of the appellant stating that the same is not applicable in this case as the delay started much before the extended time-period.

As a result, the appeal was dismissed and the condonation application was also rejected.

Case Title: Southern Power Distribution Company of Telangana Ltd. Vs. Kalvakolanu Murali Krishna Prasad RP for Vaksh Steels Pvt. Ltd. and Ors

Case Number: Company Appeal (AT) (CH) (Ins) No.177 /2021(IA Nos. 360 & 362 / 2021)

Tribunal: NCLAT, Chennai

Judge: Justice Sharad Kumar Sharma, Member (Judicial)

Technical Member: Jatindranath Swain

Advocate For Appellants: Mr. T.K. Bhaskar, Advocate for Mr. Adithya Reddy, Advocate

Advocate For Respondents: Ms. Devangi, PCS For Mr. Y. Suryanarayana, Advocate for R2

Date of Judgement: 01/10/2024

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