Tribunal Upholds Strict Adherence to Limitation Act, Denies Application for Restoration of Dismissed Petition
In a significant ruling, the National Company Law Tribunal (NCLT) Kolkata Bench has dismissed the restoration application filed by Eastern Power Distribution Company of Andhra Pradesh Ltd., seeking to revive its petition against Implex Metal & Ferro Alloys Ltd. The judgment, passed by Mr. Labh Singh, Member (Judicial), and Ms. Rakha Kantilal Shah, Member (Technical), emphasized the importance of adhering to prescribed timelines under the Limitation Act, 1963 and NCLT Rules, 2016.
The case revolved around the restoration of IA No. 1061/2021, a petition filed by the applicant concerning the CIRP cost of Rs. 20,72,84,722/- related to Implex Metal & Ferro Alloys Ltd. The petition was dismissed for default on November 8, 2023, and the restoration application was filed on July 25, 2024, considerably beyond the 30-day limitation period stipulated under Rule 48(2) of the NCLT Rules, 2016.
The Tribunal noted that the applicant failed to act diligently and did not provide sufficient cause for the delay in filing the restoration application. Despite the applicant’s argument that the delay was caused by their previous advocate's inaction and the subsequent delay in obtaining a "No Objection" certificate, the Tribunal highlighted that mere reliance on an advocate does not exempt the applicant from adhering to procedural requirements.
The judgment referenced several Supreme Court decisions, including Rafiq v. Munshilal and Smt. Lichi Tewari v. Director of Land Records, which discuss the repercussions of advocate inaction on the client's case. However, the Tribunal concluded that the applicant did not demonstrate adequate steps to protect its interests, particularly given its timely pursuit of other pending applications through newly engaged counsel.
The NCLT's decision underscores the critical importance of respecting statutory timelines in legal proceedings, particularly under the Insolvency and Bankruptcy Code (IBC), which incorporates the provisions of the Limitation Act, 1963. The Tribunal's ruling reinforces the principle that while procedural laws should be interpreted liberally to allow parties to represent their causes, deliberate or negligent delay without sufficient cause cannot be condoned.
As the Corporate Debtor, Implex Metal & Ferro Alloys Ltd., has already been sold as a going concern, the liquidation process is nearing closure, further complicating the applicant's position in seeking restoration. The Tribunal's decision is a reminder of the judiciary’s firm stance on procedural rigor and timely legal action, reflecting the ethos of efficiency and expediency in insolvency proceedings.
Bottom Line:
Restoration of dismissed application - Application for restoration must be filed within 30 days from the date of dismissal as per Rule 48(2) of the NCLT Rules, 2016. Applicant must show sufficient cause for non-appearance and delay in filing restoration application. Delay due to advocate's inaction or absence may not always suffice for condonation.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016, NCLT Rules, 2016 Rule 48(2), Limitation Act, 1963
