Supreme Court

V Nagarajan vs. SKS Ispat and Power Ltd.& Ors.

MANU/SC/0956/2021

22.10.2021

Insolvency

Aggrieved party is expected to exercise due diligence and apply for a certified copy upon pronouncement of the order

Present appeal arises under Section 62 of the Insolvency and Bankruptcy Code, 2016 (IBC) from the judgement of the National Company Law Appellate Tribunal. The NCLAT dismissed the appeal as barred by limitation. The Appellant had filed an appeal against the National Company Law Tribunal, Chennai’s order which had dismissed the appellant’s miscellaneous application in a liquidation proceeding, seeking interim relief against the invocation of a bank guarantee by Respondent No. 10 against the Corporate Debtor.

The question involved in present case is when will the clock for calculating the limitation period run for proceedings under the IBC; and is the annexation of a certified copy mandatory for an appeal to the NCLAT against an order passed under the IBC.

The Court is not empowered to condone delays beyond statutory prescriptions in special statutes containing a provision for limitation. The act of filing an application for a certified copy is not just a technical requirement for computation of limitation but also an indication of the diligence of the aggrieved party in pursuing the litigation in a timely fashion.

Sections 61(1) and (2) of the IBC consciously omit the requirement of limitation being computed from when the “order is made available to the aggrieved party”, in contradistinction to Section 421(3) of the Companies Act. Owing to the special nature of the IBC, the aggrieved party is expected to exercise due diligence and apply for a certified copy upon pronouncement of the order it seeks to assail, in consonance with the requirements of Rule 22(2) of the NCLAT Rules, 2013. Section 12(2) of the Limitation Act allows for an exclusion of the time requisite for obtaining a copy of the decree or order appealed against. It is not open to a person aggrieved by an order under the IBC to await the receipt of a free certified copy under Section 420(3) of the Companies Act 2013 read with Rule 50 of the NCLT and prevent limitation from running. Accepting such a construction will upset the timely framework of the IBC.

The litigant has to file its appeal within thirty days, which can be extended up to a period of fifteen days, and no more, upon showing sufficient cause. A sleight of interpretation of procedural rules cannot be used to defeat the substantive objective of a legislation that has an impact on the economic health of a nation. On the second question, Rule 22(2) of the NCLAT Rules mandates the certified copy being annexed to an appeal, which continues to bind litigants under the IBC. The tribunals, and even this Court, may choose to exempt parties from compliance with this procedural requirement in the interest of substantial justice, as re-iterated in Rule 14 of the NCLAT Rules, the discretionary waiver does not act as an automatic exception where litigants make no efforts to pursue a timely resolution of their grievance. The Appellant having failed to apply for a certified copy, rendered the appeal filed before the NCLAT as clearly barred by limitation.

The Appellant was present before the NCLT on 31 December 2019, when interim relief was denied and the miscellaneous application was dismissed. The Appellant has demonstrated no effort on his part to secure a certified copy of the said order and has relied on the date of the uploading of the order (12 March 2020) on the website. The period of limitation for filing an appeal under Section 61(1) against the order of the NCLT dated 31 December 2019, expired on 30 January 2020 in view of the thirty-day period prescribed under Section 61(2). Any scope for a condonation of delay expired on 14 February 2020, in view of the outer limit of fifteen days prescribed under the proviso to Section 61(2). The lockdown from 23 March 2020 on account of the COVID-19 pandemic and the suo motu order of this Court has had no impact on the rights of the Appellant to institute an appeal in present proceeding and the NCLAT has correctly dismissed the appeal on limitation. Accordingly, the present appeal under Section 62 of the IBC stands dismissed.

Tags : Time period Extension Entitlement

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