IBC Section 198: Condonation of delay

Section 198 of Insolvency and Bankruptcy Code, 2016: Condonation of delay

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

Notwithstanding anything contained in this Code, where the Board does not perform any act within the period specified under this Code, the relevant Adjudicating Authority may, for reasons to be recorded in writing, condone the delay.

Legal Commentary & Landmark Judgments: Section 198

Section 198 empowers the Board to condone delays in the filing of documents, returns, or applications where sufficient cause for such delay is demonstrated.

Discretionary Condonation Power: The Board may condone any delay in the doing of any act or filing of any document required under the Code or regulations.
Sufficient Cause Prerequisite: The applicant or professional must place on record genuine, justifiable reasons establishing that the delay was not intentional or grossly negligent.
Recording of Written Reasons: The order granting condonation must record reasons in writing, maintaining administrative accountability.

Key Landmark Precedents:

Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court noted that while statutory timelines under the Code are strict, administrative flexibility under Section 198 prevents procedural injustice in regulatory filings.
Innoventive Industries Ltd. v. ICICI Bank (2018) 1 SCC 407: Observed that procedural discretion must be exercised strictly to advance the purposes of the Code rather than encourage systemic lethargy.

Courtroom Practice & Strategic Litigation Guidance:

Insolvency professionals who miss regulatory reporting deadlines (e.g. relationship disclosures or progress reports) should file an immediate formal condonation petition under Section 198 supported by medical or technical affidavits before show-cause notices issue.