Delay In Commercial Appeals Cannot Be Condoned Routinely Without Sufficient Cause: Karnataka High Court

The Karnataka High Court recently observed that delay in filing appeals in commercial matters cannot be condoned as a matter of routine and must be treated as an exception only when the party demonstrates sufficient cause and bona fide conduct.

The observation came from a division bench of Justices Anu Sivaraman and Vijaykumar A. Patil while dismissing a commercial appeal filed by the Union of India, represented by the Chief Engineer, Southern Railway. The appeal had challenged a July 4, 2024 order passed by the Commercial Court.

The court observed, “In commercial matters, the condonation of delay should not be done in a routine manner, and it should be an exception on showing sufficient cause for the delay. In a fit case, in which a party otherwise acted bona fide and not in a negligent manner, a short delay beyond such period can in the discretion of the Court be condoned, always bearing in mind that the other side of the picture is that the opposite party may have acquired both equity and justice what may now be lost by the first party's inaction, negligence, or latches.”

The appeal arose out of arbitration proceedings between the Union of India (Southern Railway) and Malu Sleepers Ltd concerning an arbitral award dated June 23, 2022 passed by a sole arbitrator in Bengaluru. After the award was challenged under Section 34 of the Arbitration and Conciliation Act before the Commercial Court, the court rejected the challenge.

The Union of India subsequently sought to file a commercial appeal but did so with a delay of 220 days. The centre argued that the delay occurred because the file had to move through several administrative levels and approvals were required within the government department before taking a decision to file the appeal.

The High Court found that the affidavit filed by the appellant did little more than make general statements about seeking legal opinion and obtaining administrative approvals. It did not set out any concrete particulars, nor did it place on record material showing how the file moved within the department or when the required approvals were actually granted.

Relying on settled precedent governing limitations in commercial matters, the bench noted that the Commercial Courts Act is intended to ensure speedy resolution of disputes, which leaves limited room for condoning delay. The court held that such discretion can be exercised only in exceptional cases. As no sufficient explanation was shown for the delay of 220 days, the application for condonation was rejected, and, as a result, the appeal itself stood dismissed.