R Mall Developers Pvt Ltd. Vs Lemon Chilli Veg Gaurmet Foods LLP (NCLAT Delhi)
Conclusion: A commercial litigant could not evade the consequences of repeated non-appearance and negligence in prosecuting proceedings by shifting blame to counsel, and the Adjudicating Authority was justified in dismissing restoration applications under Rule 48 of the NCLT Rules, 2016 when the litigant demonstrated persistent lack of diligence.
Held: Appellant had filed a Section 9 application under the Insolvency and Bankruptcy Code, 2016 before the NCLT, Mumbai Bench (Court-III). The petition was dismissed for non-prosecution after appellant repeatedly failed to appear before the Adjudicating Authority, despite being represented earlier and being aware of the case’s transfer to another bench. Appellant thereafter filed a Restoration Application (RA), which too was dismissed for non-appearance. A second Restoration Application was then filed, along with a Delay Condonation Application, which sought to explain a delay of 160 days in filing the second RA. NCLT dismissed both applications, holding that assessee had shown continued negligence and lack of bona fide diligence in prosecuting the matter. Aggrieved, assessee preferred the present appeal under Section 61 of the IBC before the NCLAT. Appellant contended that Adjudicating Authority possessed inherent powers under Rule 48 of the NCLT Rules, 2016 to restore a petition dismissed for default if sufficient cause was shown. Appellant had acted promptly by filing restoration applications each time, indicating diligence. Authority erred in dismissing the second RA without giving a fair opportunity of hearing, thus violating principles of natural justice. Respondent contended that assessee had been grossly negligent, as both the main petition and two successive RAs were dismissed for non-appearance. The delay condonation application itself was filed after 160 days, without satisfactory cause. Appellant’s conduct showed a pattern of indifference and abuse of process, not an isolated lapse. It was held that Tribunal examined Rule 48 of the NCLT Rules, 2016, which allows restoration of a petition dismissed for default only if an application is made within 30 days and sufficient cause is shown for non-appearance. NCLAT noted the chronology of repeated defaults: Despite being aware of case transfer, the Appellant failed to appear two times, leading to dismissal of the main petition. Even during hearings on the second RA, Appellant again sought adjournments or remained absent. Tribunal held that the case reflected a sustained and deliberate pattern of non-appearance and lack of diligence. A commercial litigant, unlike an uninformed rural party, could not take shelter under the plea of counsel’s mistake. The precedents cited (Rafiq and Katiji) were found inapplicable, as those involved genuine hardship of ordinary litigants, not repeated negligence by a corporate entity. NCLAT concurred with the Adjudicating Authority’s view that no sufficient cause had been shown to justify restoration or condonation of delay. The repeated non-appearance and procedural defaults evidenced lack of bona fides and deliberate disregard of the judicial process.
FULL TEXT OF THE NCLAT JUDGMENT/ORDER
