When Procedure Trips Substantive Justice: Supreme Court’s Nudge on Condonation of Refiling Delay under the IBC.


03 November 2025
In Sahara Export v. About U Fashions Pvt. Ltd. (Civil Appeal No. 13182 of 2025), the Supreme Court examined an apparent procedural oversight that proved very costly for the appellant. The appeal arose from the National Company Law Appellate Tribunal's (NCLAT) order refusing the application of the appellant, Sahara Exports, for condonation of delay of 91 days in refiling the appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016.

The NCLAT had held that there was an unexplained delay of 91 days, apparently counting the entire period from the first set of defects being pointed out by the Registry until the final refiling. As a result, the appeal was non-suited on the ground of delay.

 

 

Analysis by the Supreme Court:

It was before the Supreme Court that the appellant produced the refiling chronology showing that each time defects were pointed out by the Registry--on six different dates between October 2023 and January 2024--the appeal was refiled within the prescribed seven days allowed under NCLAT procedure.

A Bench comprising Justice Sanjay Kumar and Justice Alok Aradhe observed that while the refiling had been diligently undertaken within each correction period, these vital facts were never explained in the condonation application before the NCLAT. The application was described as "cryptic in the extreme," giving an impression that there was a continuous 91-day delay in a single stretch.

Thus, the order of dismissal by the NCLAT was based on incomplete disclosure-owing to the lapse of counsel and not by the fault of the appellant.

The Court’s Direction:

The Supreme Court, while upholding the order of the NCLAT on procedural grounds, extended a measure of equity by granting liberty to the appellant to approach the NCLAT by a recall petition. The Court thus observed that in case such an application is filed, the same should be considered sympathetically by the NCLAT in view of the clarified record.

Significance of the Ruling: 

This judgment has brought to the forefront how apparently minor lapses in procedural compliance-particularly in refiling defective pleadings-can derail substantive justice. It recognizes the role of counsel for correct presentation of procedural timelines whenever there is a condonation of delay and how appellate tribunals have limited leeway under IBC, as timelines are treated to be paramount. At the same time, the humane approach of the Supreme Court reins in that where the litigant is blameless and delay arises from counsel’s lapse, the door to justice should not be irreversibly shut. 

Key Takeaway: 

The ruling strengthens the view that refiling within the available intervals is different from actual delay, and tribunals must consider cumulative compliance with regard to such periods. Similarly, counsel is obliged to ensure full disclosure in the condonation applications, particularly in time-sensitive IBC proceedings where procedural exactitude is of utmost importance.


Section 61, INSOLVENCY AND BANKRUPTCY CODE - 2016  

INSOLVENCY AND BANKRUPTCY CODE, 2016