Karvy Stock Brocking Ltd vs SEBI
- Court
- Securities Appellate Tribunal
IN THE SECURITIES APPELLATE TRIBUNAL
AT MUMBAI
TH
DATED THIS THE 9 DAY OF SEPTEMBER, 2026
CORAM: Justice P.S. Dinesh Kumar, Presiding Officer
Ms. Meera Swarup, Technical Member
Dr. Dheeraj Bhatnagar, Technical Member
Appeal No.319 of 2025
[Along with Misc. Application Nos.744 and 745
of 2025]
Karvy Stock Broking Limited
Plot No.31/P, Karvy Millenium,
Nanakramguda, Financial District,
Gachibowli, Hyderabad,
Telangana – 500032.
…..Appellant
(By Mr. Zal Andhyarujina, Senior Advocate with Mr. Abhishek
Venkatraman, Mr. Joby Mathew, Ms. Serena Jethmalani and
Mr. Aditiya Joby, Advocates i/b. Joby Mathew and Associates
for the Appellant.)
Securities and Exchange Board of India
SEBI Bhavan, C-4A, G Block,
Bandra Kurla Complex, Bandra (E),
Mumbai – 400051.
…..Respondent
(By Mr. Shiraz Rustomjee, Senior Counsel with Mr. Sumit
Yadav, Ms. Smriti Singh, Mr. Abhay Chauhan, Mr. Karthik
K.P. and Mr. Devya Shah, Advocates i/b. The Law Point for
the Respondent.)
2
THIS APPEAL IS FILED UNDER SECTION 15T OF THE SEBI ACT,
1992 TO SET ASIDE THE ORDER DATED APRIL 28, 2023 PASSED
BY THE WTM, SEBI.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
ORDERS ON AUGUST 14, 2026 COMING ON FOR
PRONOUNCEMENT OF ORDER THIS DAY, THE TRIBUNAL MADE
THE FOLLOWING:
ORDER
Per: Justice P.S. Dinesh Kumar, Presiding Officer
This miscellaneous application is filed to condone the
delay of 688 days in filing the Appeal No.319 of 2025 directed
against order dated 28.04.2023 read with the corrigendum dated
1 2
19.06.2023, passed by the WTM , SEBI issuing various
directions and imposing penalties.
2. We have heard Mr. Zal Andhyarujina, learned Senior
Advocate for the appellant and Mr. Shiraz Rustomjee, learned
Senior Advocate for the SEBI.
3. Brief Facts of the case are:
i. Karvy Stock Broking Limited (‘Karvy/appellant Company’
for short) was a SEBI registered stock broker and
registered with NSE and BSE for stock broking activities. It
1
Whole Time Member
2
Securities and Exchange Board of India
3
was also a SEBI registered Depository Participant with
3 4
NSDL and CDSL ;
ii. On 19.08.2019, NSE conducted an investigation into the
affairs of the appellant Company and submitted a
preliminary report to the SEBI. It revealed that the Karvy
unauthorizedly raised funds by pledging clients’ securities
by misusing Power of Attorneys (‘PoAs’ for short) and
diverted money to the group entities. Appellant Company
5
also sold excess securities (not available in DP account) of
₹485 Crore through 9 related client entities till 31.05.2019.
Further, Karvy also transferred excess securities to 6 out of
these 9 related entities;
iii. On 22.11.2019, SEBI passed an ex parte interim order.
On 02.12.2019, NSE suspended appellant Company’s
trading membership and on 23.11.2020, expelled it from
NSE’s membership. On 24.11.2020, SEBI passed the
confirmatory order confirming the interim directions;
iv. NSE appointed Ernst & Young LLP (‘EY’ for short) to
conduct a forensic audit of appellant Company’s records for
the period between 01.04.2016 and 19.10.2019. On
09.01.2020, EY submitted its report to NSE. On
23.11.2020, NSE forwarded its comprehensive findings to
SEBI;
3
National Securities Depository Limited
4
Central Depository Services Limited
5
Depository Participant
4
v. Based on the joint inspection and forensic findings, SEBI
6
issued an SCN dated 29.01.2021 to 9 noticees, alleging
violation of Securities laws. Appellant Company filed its
reply. After adjudication, SEBI passed the impugned
order.
4. Mr. Zal Andhyarujina, learned Senior Advocate for the
appellant submitted that appellant Company (Karvy) was served
7
with the certified copy of the corrigendum on 26.05.2025,
through an intermediary, JM Financial Services Limited, along
with a letter dated 26.11.2024. He submitted that the appellant
Company never received certified copy of the impugned order.
5. He submitted that the delay in filing this appeal has
occurred because several proceedings initiated by various
8
regulatory agencies including ED had conduct search and seized
voluminous records relevant for drafting the statutory appeal.
Thus, the appellant Company faced immense difficulty in
obtaining the documents to challenge the impugned order. He
submitted that Parthasarthy, Chairman and Managing Director of
the appellant Company was in judicial custody and he was
having serious health aliments. Appellant Company was not
having dedicated legal team to deal with the SEBI orders and all
bank accounts were frozen pursuant to SEBI’s ex parte order.
6
Show Cause Notice
7
dated 19.06.2023
8
Enforcement Directorate
5
6. Mr. Andhyarujina urged that a liberal approach must be
adopted while considering an application for condonation of delay
as this is a statutory first appeal before this Tribunal for
adjudication on both facts and law. He relied upon Khelo MCX
9
Research Services v. SEBI and submitted that the Hon’ble Apex
Court has held that first appeal on facts is a precious right and
condoned a delay of 1,059 days subject to payment of costs. He
also relied upon the judgment of this Tribunal in M/s. Al-Falah
10
Investments Ltd. v. SEBI .
7. In reply, Mr. Shiraz Rustomjee, learned Senior Advocate
for SEBI vehemently opposed the application for condonation of
delay. He submitted that the delay in filing this appeal is
inordinate and the application for condonation of delay does not
contain satisfactory reasons to condone the delay and it is liable
to be rejected.
8. He submitted that the ED conducted search and seizure in
11
September 2021 and EPFO attached appellant Company’s
registered office on 22.09.2023. Though it is claimed that delay
is due to seizure of documents by Enforcement Agencies, the
appellant Company has filed about 70 legal proceedings in
various fora. Appellant Company replied to SEBI’s SCN on
20.05.2022 but curiously there is no mention about the seizure
of the data.
9
Civil Appeal No.3055 of 2026, decided on 30.04.2026 by the Hon’ble
supreme Court of India
10
Appeal No.107 of 2006, decided on 08.09.2006 by the Securities Appellate
Tribunal, Mumbai
11
Employee Provident Fund Organisation
6
9. He submitted that the appellant Company was aware of
the SEBI’s proceedings and it has participated actively in every
stage of adjudication proceedings. The impugned order was duly
served upon the appellant Company’s promoter cum CMD,
Parthasarathy on 06.05.2023. The application for condonation of
delay is verified and sworn by the very same CMD,
Parthasarathy. Hence, appellant Company’s contention that the
impugned order was not served is untenable.
10. He submitted that the grounds urged by the appellant
Company that the CMD was incarcerated, CMD’s health
complications and his inability to access records due to various
parallel proceedings and searches at appellant Company’s
premises are afterthought, frivolous and an attempt to mislead
12
this Tribunal. The Company has enclosed Parthasarathy’s
medical records which pertain to the period between January and
November, 2023. He submitted that between August, 2023 and
September 2024, appellant Company’s CMD has filed and
prosecuted as many as 9 writ petitions and 3 petitions under
Section 482 of Cr.P.C. before the Hon’ble Telangana High Court
both in his personal capacity and also representing Karvy group
companies. In particular, he has filed Writ Petition No.31124 of
2023 on 07.11.2023, before the Hon’ble Telangana High Court
against Union of India and others. The appellant Company along
with its CMD had filed criminal petition CRLP No.11071 of 2023
13
under Section 482 of Cr.P.C., on 08.11.2023 before the Hon’ble
Telangana High Court seeking quashment of an FIR and also
12
in additional affidavit
13
Code of Criminal Procedure, 1973
7
pursued about 70 proceedings before various fora. Thus, the
appellant Company and its CMD were actively pursuing cases in
the High Court and cannot be heard to contend that the
appellant Company was incapacitated or prevented from
preferring the statutory appeal before this Tribunal within the
prescribed period of limitation. He relied upon Udayan Banerjee
14
v. SEBI , wherein this Tribunal has held that general medical
prescriptions without proof of serious illness or hospital
confinement, do not constitute ‘sufficient cause’ to condone
inordinate delay.
11. He also placed strong reliance on Shivamma (Dead) by
15
LRs v. Karnataka Housing Board & Ors. and Subhash Chandra
16
v. SEBI .
12. In rejoinder, it was argued by Mr. Andhyarujina that this
is a statutory appeal under Section 15T of the SEBI Act and the
appellant is entitled for consideration of his first appeal as held in
Khelo MCX Research Services . Therefore, the aspect of delay
may be considered leniently. With regard to the authorities cited
by Mr. Rustomjee, he submitted that they can be distinguished
on facts. Adverting to Shivamma , he submitted that the delay in
that case was about 11 years by the Housing Board.
14
Appeal No. 496 of 2022, decided on 20.09.2022 by the Securities Appellate
Tribunal, Mumbai
15
2025 SCC OnLine SC 1969:Civil Appeal No.11794 of 2025, Paragraph
Nos.116 to 134 and 139 to 142
16
Appeal No.132 of 2024, decided on 02.05.2025 by the Securities Appellate
Tribunal, Mumbai
8
13. We have carefully considered rival contentions and
perused the records.
14. Admitted facts are, appellant Karvy Stock Broking Limited
(‘Karvy/appellant Company’ for short) is a public limited
company and a listed entity. Appellant Company has participated
in the adjudication proceedings before the SEBI. After
adjudication, SEBI has passed the impugned order.
15. The point for consideration is, whether ‘sufficient
cause’ is shown to condone the delay in filing the appeal?
16. The application for condonation of delay is strongly
contested by the SEBI. Mr. Rustomjee relied upon Shivamma
(Dead) by LRs v. Karnataka Housing Board & Ors and submitted
that while considering an application for condonation of delay,
the inquiry must be confined to find out whether ‘sufficient
cause’ has been demonstrated for not filing the appeal within the
prescribed period of limitation. He argued that ‘sufficient cause’
cannot be substituted by examining the merits of the case.
17. In the miscellaneous application for condonation of delay,
appellant Company has urged following grounds and prayer:
“2. The Applicant states that the following reasons for the delay
in filing the Appeal:
a) The said delay in filing the Appeal has occurred due to the
following unavoidable circumstances that were beyond the
control of the Applicant and the same was inadvertent and
unintentional.
9
b) The Applicant states that on May 26, 2025, the Applicant
was served with the certified copy of the Corrigendum dated
June 19, 2023, through an intermediary named JM Financial
Services Limited, along with a letter dated November 26,
2024. However, the Applicant states that it has not yet
received a certified copy of the Impugned Order and has
merely been served with a certified copy of the Corrigendum.
The Applicant has filed a separate application for exemption
from filing the certified copy of the Impugned Order in this
regard (Please refer to Exhibit "A1 (Colly)" of the Appeal
Memo).
c) The Applicant states that due to the Impugned Order of the
Respondent, various regulatory agencies had searched the
office of the Appellant where a major portion of the
documents relevant to the Appeal Memorandum were
located. Thus, there was immense difficult to obtain
documents to rebut the charges in the Impugned Order.
d) The Appellant states that there was also a delay in availing
the services of advocates to prepare and file the Appeal
Memorandum, and the documents referred to in the Order
were voluminous and required Impugned examination. The
Applicant was also in the process of obtaining additional
information that was relevant and to be included in the
Appeal Memorandum, from other offices of the Applicant.
e) The Applicant states that the Respondent has failed to
consider relevant material on record as well the submissions
of the Applicant. Furthermore, the Applicant's submissions
are intrinsically connected to the submissions of Karvy
Capital Limited, which has filed an appeal before this
Hon'ble Tribunal, as well as the submissions of Mr.
Comandur Parthasarthy, the Chairman and Managing
Director of the Applicant, who has also filed an appeal
before this Hon'ble Tribunal against the Impugned Order.
Without hearing the Applicant, there would be irreparable
harm caused to the aforementioned parties, as well as the
Applicant, and would be in violation of the principles of
natural justice.
3. Therefore, this Hon'ble Tribunal will be justified in condoning
the delay for the reasons aforesaid.
10
4. In view of the abovementioned, the Applicant prays that:
a. This Hon'ble Tribunal may be pleased to condone the
delay of 688 days in filing the abovementioned Appeal.
b. Any other relief as the nature and circumstances may
require, and as directed by this Hon'ble Tribunal .”
18. Subsequently, an additional affidavit has been filed urging
additional grounds for condonation of delay. In substance, the
grounds urged by the appellant Company can be broadly divided
into the following heads:
Non-service of the impugned order;
Health condition and incarceration of the Managing
Director; and
Not having access to the documents.
19. So far as non-service of impugned order is concerned,
SEBI, in its affidavit in reply, has produced a copy of the speed
post acknowledgment as proof of delivery of the impugned order.
In its rejoinder, appellant Company has stated thus:
“b) The claim that the Impugned Order was served by Speed
Post does not imply that the Appellant had knowledge of the
same, give the multiple legal proceedings and the absence of
staff. It also does not explain why the Respondent then chose to
serve the Impugned Order through JM Financial Services in
May 2025. The Reply does not even bother to explain this fact;”
11
20. The above rejoinder is not a complete denial of receipt of
the impugned order. All that is stated is, the acknowledgment
does not imply that the appellant Company had knowledge of the
order. In our view, this argument is not tenable because the
applicant has not taken a definite stand whether the notice was
served or not. On the other hand, SEBI has filed a speed post
acknowledgement leading to a presumption that applicant was
served with the speed post.
21. So far as the health condition and incarceration of the
Managing Director is concerned, appellant Company has stated
in its additional affidavit that the Managing Director was released
on 22.06.2022 and he was suffering from various health issues.
We may record that the Managing Director was released nearly
one year prior to the date on which the impugned order was
passed i.e.28.04.2023. The appellant Company in its additional
affidavit has furnished a list of 70 cases from 2019 to 2024
pursued by the appellant Company and its Managing Director.
22. It is, therefore, clear that the appellant Company and its
Managing Director were pursuing/defending as many as 70
cases.
23. We have considered both the appeals filed by the
Company and the Managing Director simultaneously. In MD’s
appeal, it is admitted that he had received the impugned order
on 06.05.2023. It is relevant to note that the Managing Director
did not choose to challenge the impugned order before this
Tribunal, but challenged the recovery certificate before the
12
17
Hon’ble Telangana High Court and thereafter, filed appeals
both on behalf of himself and the Company belatedly.
24. Admittedly, appellant Company’s Managing Director was
prosecuting other cases from August, 2023, but did not choose
to challenge the impugned order before this Tribunal on behalf of
the appellant Company.
25. So far as the health ground is concerned, medical records
furnished by the appellant show that the Managing Director
underwent a surgery for fracture in the leg and he was
discharged on 19.01.2023, much before the date of the
impugned order.
26. The records also disclose that Company’s Managing
Director who had received the impugned order on 06.05.2023,
was pursuing several cases. The appellant Company has also
filed following cases during 2022 - 2023:
S.
No.
Case Details Forum Date of Filings Present
Case Status
1 C.P (IB) No.
62/7/HDB/2023:
Vardhaman Bank v.
KSBL.
NCLT-II,
Hyderabad.
(i) Counter filed in main
CP on 26.08.2023.
(ii) Maintainability I.A.
No. 1723/2024 filed on
16.08.2024.
Pending
hearing
2 CP No.
8/242/HDB/2022:
Meka Rajini v. KSBL
and Others, C.
Parthasarathy
NCLT-II,
Hyderabad.
(i) Counter filed in
CP(IB) No.
8/242/HDB/2022.
Pending
hearing
17
Appeal No.723 of 2024 (Comandur Parthasarathy v. SEBI) and Appeal
No.319 of 2025 (Karvy Stock Broking Ltd. v. SEBI)
13
(Respondent No.2)
3 CP/8/2022:
Meka Rajini v.
KSBL.
NCLT-II,
Hyderabad.
-Do- Pending
hearing
4 OA 44/2023:
SBI v. KDMSL and
Ors, Karvy Stock
Broking Limited
(D2) and C.
Parthasarathy (D3).
Debt Recovery
Tribunal-I
(i) OA filed on
30.10.2023.
(ii) WS filed (D2 and D4)
on 21.10.2024.
(iii) Additional WS (D2
and D4) filed on
24.02.2025.
(iv) Defendant Evidence
(D2 and D4) filed on
21.04.2025.
(v) Additional Defendant
Evidence (D2 and D4)
filed on 25.06.2025.
For final
arguments.
5 OA 30/22:
Bank of Baroda v.
KDMSL and Ors,
Karvy Stock Broking
Limited (D2) and C.
Parthasarathy (D3).
Debt Recovery
Tribunal-I
(i) OA filed on
18.01.2022.
(ii) Set aside petition (IA
1420 of 2023) for filing
WS filed on 07.07.2023.
(iii) WS taken on record
on 07.11.2023.
(iv) IA 314 to 316 of
2024 (Set aside Petition,
Stay Petition) filed on
19.03.2024.
Counter to
be filed by
the Bank in
IA 314 to
316 of 2024.
6 OA 79/22:
South Indian Bank v.
KDMSL and Ors, C.
Parthasarathy (D2),
Karvy Stock Broking
Limited (D3).
Debt Recovery
Tribunal-II
(i) OA filed on
05.02.2022.
(ii) Set aside petition (IA
946 of 2025) for filing
WS (D3) filed on
13.03.2025.
(iii) WS (D3) filed and
taken on record on
02.04.2025.
For
applicant
evidence.
7 OA 336/22:
Tamil Nadu
Mercantile Bank v.
KDMSL and Ors,
Karvy Stock Broking
Limited (D2) and C.
Debt Recovery
Tribunal-II
(i) OA filed on
18.05.2022.
(ii) Set aside Petition for
filing WS D2 and D3 (IA
3779 of 2024) and Stay-
D4 (IA 3780 of 2024)
For hearing
in IA
3779/2024
and IA
3780/2024.
14
Parthasarathy (D4). filed on 29.10.2024.
8 OA 863/22:
Shinhan Bank v.
KDMSL and Ors, C.
Parthasarathy (D2),
Karvy Stock Broking
Limited (D3).
Debt Recovery
Tribunal-II
(i) OA filed on
01.07.2022.
(ii) WS of D3 filed on
08.02.2024.
To file
Written
Statement.
9 CRLP
No.11071/2023:
KSBL & Or v. State
of Telangana and
Other; C.
Parthasarathy (2nd
Petitioner)
High Court of
Telangana
(i) Quash Petition filed
on 08.11.2023.
(ii) I.A.1/2023: Dispense
with Petition filed on
08.11.2023.
(iii) I.A.2/2023: Stay
Petition filed on
08.11.2023.
(iv) I.A.3/2023:
Permission Petition filed
on 11.12.2023.
(v) I.A.1/2024:
Permission Petition filed
on 24.01.2024.
(vi) Rejoinder filed on
19.03.2024.
(vii) Reply affidavit filed
on 26.06.2025.
The
Assistant
Public
Prosecutor
sought time
for filing the
chargesheet.
10 CRLP
No.8472/2023:
KSBL and Other v.
State of Telangana
and Other.
High Court of
Telangana
(i) Quash Petition filed
on 31.08.2023.
(ii) I.A.1/2023: Stay
Petition on 01.09.2023.
(iii) I.A.1/2024:
Permission Petition on
24.01.2024.
(iv) Reply Affidavit filed
on 03.06.2024.
Stay granted
against A1
and A2 in
FIR
proceedings.
11 W.P.No.38980/2022:
KSBL and Others v.
Adjudicating
Authority, PMLA
and Others, C.
Parthasarathy (4th
Petitioner)
High Court of
Telangana
(i) Writ Petition filed on
18.10.2022.
(ii) Suspension Petition
filed on 18.10.2022.
(iii) Stay Petition filed on
18.10.2022.
Interim
suspension
vide dated
orders
19.10.2022
for
impugned
orders dated
25.08.2022.
15
12 W.P.No.30732/2022:
KSBL v.
Adjudicating
Authority (PMLA),
C. Parthasarathy
(Petitioner No.6)
High Court of
Telangana
(i) Writ Petition filed on
26.07.2022.
(ii) I.A.No.1/2022: Stay
Petition filed on
26.07.2022.
Disposed
13 W.P.No.44343/2022:
KSBL v.
Adjudicating
Authority (PMLA),
C. Parthasarathy
(Petitioner No.6)
High Court of
Telangana
(i) Writ Petition filed on
07.12.2022.
(ii) I.A.No.1/2022:
Suspension Petition filed
on 08.12.2022.
Disposed
14 W.P.No.27051/2022:
KSBL v.
Adjudicating
Authority (PMLA),
C. Parthasarathy
(Petitioner No.6)
High Court of
Telangana
(i) Writ Petition filed on
24.06.2022.
(ii) I.A.No.1/2022: Stay
Petition filed on
24.06.2022.
Disposed
15 W.P.No.31124/2023:
KSBL v. Union of
India and others.
High Court of
Telangana
(i) Writ petition filed on
07.11.2023.
(ii) I.A.No.1/2023:
Suspension filed on
08.11.2023.
(iii) I.A.No.2/2023:
Injunction filed on
08.11.2023.
(iv) Rejoinder filed on
09.01.2024.
Disposed
16 W.P.No.21223/2023:
KSBL v. Union of
India and others.
High Court of
Telangana
(i) Writ petition filed on
07.08.2023.
(ii) I.A.No.1/2023:
Suspension filed on
07.08.2023.
(iii) I.A.No.2/2023:
Amendment filed on
03.11.2023.
(iv) I.A.No.3/2023:
Direction filed on
03.11.2023.
(v) Rejoinder filed on
03.11.2023.
Disposed
17 W.A.No.604/2023:
ED v. KSBL,
High Court of
Telangana
(i) Appeal filed on
14.06.2023.
Disposed
16
(Respondent No.6:
C. Parthasarathy.)
18 COS 47/2023:
Bharat Co-
Operative Bank
Limited v. KSBL.
Commercial
Court, Ranga
Reddy
(i) Written Statement
filed on 12.03.2024.
(ii) Counter Affidavit in
I.A.No.358/2023 on
12.03.2024.
(iii) Order VII Rule 11:
Rejection of Plaint
I.A.No.173/2024 filed on
12.03.2024.
For framing
of issues.
19 COS 22 of 2022:
BKG Mining Private
Limited v. KSBL
(D1), C.
Parthasarathy (D2)
and Ors
Commercial
Court, Ranga
Reddy
(i) Written Statement
filed on 14.11.2022.
(ii) Counter in I.A.No.
269/2022: Attachment of
Property filed on
14.11.2022.
(iii) List of Documents
filed on 14.11.2022.
(iv) Additional
Documents Petition filed
on 25.07.2025.
For framing
of issues.
20 COS 23 of 2022:
BKG Mining Private
Limited v. KSBL
(D1), C.
Parthasarathy (D2)
and Ors
Commercial
Court, Ranga
Reddy
(i) Written Statement
filed on 14.11.2022.
(ii) Counter in I.A.No.
269/2022: Attachment of
Property filed on
14.11.2022.
(iii) List of Documents
filed on 14.11.2022.
(iv) Additional
Documents Petition filed
on 25.07.2025.
For framing
of issues.
21 COS 24 of 2022:
BKG Mining Private
Limited v. KSBL
(D1), C.
Parthasarathy (D2)
and Ors
Commercial
Court, Ranga
Reddy
(i) Written Statement
filed on 14.11.2022.
(ii) Counter in I.A.No.
269/2022: Attachment of
Property filed on
14.11.2022.
(iii) List of Documents
filed on 14.11.2022.
(iv) Additional
Documents Petition filed
For framing
of issues.
17
on 25.07.2025.
22 COS 25 of 2022:
BKG Mining Private
Limited v. KSBL
(D1), C.
Parthasarathy (D2)
and Ors
Commercial
Court, Ranga
Reddy
(i) Written Statement
filed on 14.11.2022.
(ii) Counter in I.A.No.
269/2022: Attachment of
Property filed on
14.11.2022.
(iii) List of Documents
filed on 14.11.2022.
(iv) Additional
Documents Petition filed
on 25.07.2025.
For plaintiff
evidence.
23 CC 7591/2022 /
CNR No.
TSHM01008299202
2:
State of Telangana
PS C-Division, CCS,
DD Vs KSBL, Mr.
C.Parthasarathy
and others
XII Addl. Chief
Metropolitan
Magistrate
Pending
Hearing
24 CC 21/2023 / CNR
No.
TSHM01000026202
3:
State of Telangana
PS C-Division, CCS
Vs KSBL, Mr. C
Parthasarathy and
others
XII Addl. Chief
Metropolitan
Magistrate
Pending
Hearing
27. The next ground urged is, non-availability of the
documents. The fact that appellant Company has filed and
prosecuting above mentioned cases belies the contention that
the documents were not available/ accessible. No material is
placed on record to show that any effort was made to obtain any
document.
18
28. Appellant Company has relied upon Khelo MCX and
contended that this Tribunal provides an appeal on facts and it is
important that appellant must have one appellate forum to
contest the case against him on facts and first appeal is a
precious right.
18
29. Mr. Rustomjee has relied upon Shivamma , wherein it is
held thus:
“140. However, at the same time, the courts must be mindful
that strong case on merits is no ground for condonation of
delay. When an application for condonation of delay is placed
before the court, the inquiry is confined to whether “sufficient
cause” has been demonstrated for not filing the appeal or
proceeding within the prescribed period of limitation. The
merits of the underlying case are wholly extraneous to this
inquiry. If courts were to look into the merits of the matter at
this stage, it would blur the boundaries between preliminary
procedural questions and substantive adjudication, thereby
conflating two distinct stages of judicial scrutiny. The purpose
of Section 5 of the Limitation Act is not to determine whether the
claim is legally or factually strong, but only whether the
applicant had a reasonable justification for the delay.”
141. Test of “sufficient cause” cannot be substituted by an
examination of the merits of the case. Condonation of delay is
a matter of discretion based on explanation for the delay, not on
the prospects of success in the case. If merits are considered, a
litigant with a stronger case may be favoured with condonation
despite negligence, while a weaker case may be rejected even if
sufficient cause is made out. This would lead to an inequitable
and inconsistent application of the law, undermining the
uniform standard that the doctrine of limitation is designed to
maintain.
142. Another practical reason why merits must not be
considered at the stage of delay condonation is that it risks
18
2025 SCC OnLine SC 1969
19
prejudicing the mind of the court against one party even before
the matter is substantively heard. By glancing into merits
prematurely, the court may inadvertently form a view that
colours the fairness of the subsequent adjudication. The judicial
discipline required at this stage demands that only the cause for
delay be scrutinized, and nothing more. This ensures that the
ultimate adjudication of rights occurs in a neutral and
unprejudiced setting.
143. The law of limitation is meant to apply uniformly across
cases, regardless of the intrinsic strength or weakness of the
claims involved. To import merits into condonation proceedings
would effectively dilute this uniformity.”
19
30. It is further held in Shivamma as follows:
“258. …….. The court owes a duty to first ascertain the bona
fides of the explanation offered by the party seeking
condonation. It is only if the sufficient cause assigned by the
litigant and the opposition of the other side is equally balanced
that the court may bring into aid the merits of the matter for the
purpose of condoning the delay.”
31. Appellant is a big stock broking company. The pleadings
disclose that appellant Company has been prosecuting/
defending several cases. The Managing Director has admitted to
have received the impugned order on 06.05.2023. The appellant
Company has not expressly denied the receipt of the impugned
order by speed post. The cause shown in the application for
condonation of delay are not based on genuine facts. Hence, the
application for condonation of delay lacks bona fides. Though this
is a first appeal, in view of appellant’s conduct, it shall not be
entitled for the discretionary remedy of condonation of delay.
19
2025 SCC OnLine SC 1969, para 258
20
Accordingly, we answer the point for consideration in the
negative .
32. In the result, the miscellaneous application No.744 of
2025 for condonation of delay is dismissed as being devoid of
merits. Consequently, the Appeal No.319 of 2025 stands
dismissed . Pending interlocutory application(s), if any, stand
disposed of. No costs.
Justice P.S. Dinesh Kumar
Presiding Officer
Ms. Meera Swarup
Technical Member
Dr. Dheeraj Bhatnagar
Technical Member
09.09.2026
RHN
RAJALA
KSHMI
H NAIR
Digitally signed
by
RAJALAKSHMI H
NAIR
Date: 2026.09.09
13:20:58 +05'30'