495-Day Delay Is 'Gross Negligence': NCLAT Rejects Cethar Liquidator's Plea To Amend Avoidance Application

The National Company Law Appellate Tribunal at Chennai has dismissed an appeal filed by the liquidator of Cethar Limited, refusing to excuse a 495-day delay in amending an avoidance application filed during a company's insolvency proceedings.

The tribunal held that the delay amounted to “gross negligence” and could not be condoned by relying on Section 148 of the Code of Civil Procedure, a provision that allows courts to extend procedural timelines but limits such extension to 30 days.

A bench of Judicial Member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain ruled that this power cannot override Order VI Rule 18 of the CPC, which requires amendments to pleadings to be carried out within 14 days when no specific time is fixed.

"The said application is in absolute contradiction to the provisions and mandate of law as contained under Order VI Rule 18 of C.P.C. for the reason being that, the general law of condonation of delay under Section 148 of the Code of Civil Procedure, 1908, to be read with Section 5 of the Limitation Act, 1963, will not be attracted to be made applicable under the facts and circumstances of the instant case, where the aspect of limitation for carrying out the amendment is specifically governed and self-contained by the provision mandated under Order VI Rule 18 of the C.P.C., which will regulate the procedure for amendment and its incorporation".

The dispute arose from an avoidance application filed in the insolvency of Cethar Limited, which sought to set aside the sale of the company's property by alleging that the transaction violated insolvency safeguards against improper or preferential dealings.

On August 17, 2018, the NCLT, Chennai, allowed the Resolution Professional to amend the avoidance application to make certain changes. 

The tribunal directed that the amended pleadings be filed within one week. That direction was not complied with.

Instead, after a delay of 495 days, the liquidator sought permission to carry out the amendment and asked the tribunal to excuse the delay.

The NCLT rejected the request, leading to the present appeal.

Before the appellate tribunal, the Liquidator blamed his counsel and the counsel's clerk, claiming they had failed to act on instructions.

The NCLAT rejected this explanation, noting that no written instructions or proof of follow-up had been placed on record.

It held that a litigant cannot conduct proceedings “as per his whims and fancies” and that it was reasonably expected of the appellant to personally ensure that the amendment was actually carried out.

Rejecting any scope for leniency, the bench held that the plea for condonation was “in absolute contradiction to the provisions and mandate of law” governing amendments to pleadings.

It emphasised that where procedural timelines are strictly prescribed, general powers to extend time do not apply.

Holding that the delay reflected a careless and negligent approach, the tribunal dismissed the appeal and closed all connected applications.

For Appellant: Advocate Santhosh

For Respondent: Senior Advocate E. Om Prakash For Shivakumar & Suresh, Advocates