1. Appeal under Section 62, IBC — Limitation for filing appeal against NCLT order — Dispute over whether limitation commences from date of hearing or date of upload. (Para 2 , 4 , 5 , 8 , 9 )
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2023 Supreme(SC) 1220
SUPREME COURT OF INDIA
Dhananjaya Y Chandrachud, CJI., J B Pardiwala, Manoj Misra, JJ.
Sanjay Pandurang Kalate - Appellant
Versus
Vistra ITCL (India) Limited and Others - Respondents
Civil Appeal Nos 7467-7468 of 2023
Decided On : 04-12-2023
Important Points
IMPORTANT POINT
Appeal – Limitation stops running on e-filing of appeal before NCLAT and not on presentation of physical copy – Date on which limitation begins to run is intrinsically linked to date of pronouncement – There is clear distinction between ‘hearing’ of appeal and ‘pronouncement’ of order – Pronouncement of order is necessary and cannot be dispensed with.
Appeal – Limitation stops running on e-filing of appeal before NCLAT and not on presentation of physical copy – Date on which limitation begins to run is intrinsically linked to date of pronouncement – There is clear distinction between ‘hearing’ of appeal and ‘pronouncement’ of order – Pronouncement of order is necessary and cannot be dispensed with.
Subject
Insolvency and Bankruptcy Law - Limitation Period for Appeals
Act Referred
COMPANIES ACT: S.421(3), S.420(3)
INSOLVENCY AND BANKRUPTCY CODE: S.62, S.7, S.61
LIMITATION ACT: S.12(2)
NCLAT Rules: R.22(2), R.50, R.89(1)
INSOLVENCY AND BANKRUPTCY CODE: S.62, S.7, S.61
LIMITATION ACT: S.12(2)
NCLAT Rules: R.22(2), R.50, R.89(1)
Headnote
Insolvency and Bankruptcy Code, 2016 – Section 61 – National Company Law Tribunal Rules, 2016 – Rules 146 and 150 – Appeal – Limitation – Limitation stops running on e-filing of appeal before NCLAT and not on presentation of physical copy – Date on which order is pronounced is to be excluded from calculation of limitation – Time taken by NCLT to provide appellant with certified copy would be excluded from calculation of limitation, provided appellant applies within prescribed period of limitation under Section 61(2) of IBC – Date on which limitation begins to run is intrinsically linked to date of pronouncement – There is clear distinction between ‘hearing’ of appeal and ‘pronouncement’ of order – Pronouncement of order is necessary and cannot be dispensed with – Impugned order of NCLAT declining to condone delay set aside and proceedings are restored to file of NCLAT. (Paras 15, 16, 18 and 21)
Facts of the case:
Present appeals arise under Section 62 of Insolvency and Bankruptcy Code, 2016 from a judgment dated 14 September 2023 of National Company Law Appellate Tribunal.[“NCLAT”]. NCLAT dismissed appeal against order of National Company Law Tribunal, Mumbai [“NCLT”] on the ground of limitation. Findings in this judgement are limited to determination of question of limitation.
Findings of Court:
On 15 May 2023, soon after decision in Sanket Agarwal (2023 SCC OnLine SC 976), an order was issued by Registrar, NCLAT noting that “filing of hard copies of Appeals/ Interlocutory Applications/ Reply / Rejoinder etc. shall not be mandatory with immediate effect.” Such proactive action by Tribunals is essential to ensure that move towards a modernized and technology-friendly judiciary trickles down to every judicial forum across the country. We record our appreciation of proactive steps taken by Chairperson, Members and Registry of NCLAT.
Result : Appeals disposed of.
Legal Category Hierarchy
- insolvency and bankruptcy law
- practice and procedure
Advocates appeared:
For the Appellant(s) : Mr. Shyam Divan, Sr. Adv. Mr. Nakul Dewan, Sr. Adv. Mr. Sandeep S. Salunkhe, Adv. Mr. Satyajit A Desai, Adv. Mr. Amit K. Pathak, Adv. Mr. Kiran Shinde, Adv. Mr. Siddharth Gautam, Adv. Mr. Abhinav K. Mutyalwar, Adv. Mr. Gajanan N Tirthkar, Adv. Mr. Vijay Raj Singh Chouhan, Adv. Ms. Anagha S. Desai, AOR
For the Respondent(s): Mr. Dhruv Mehta, Sr. Adv. Mr. Samir Malik, Adv. Mr. Varun Kalra, Adv. Mr. Mahip Singh, Adv. Mr. Farha Malik, Adv. M/s. D.S.K. Legal, AOR
For the Appellant(s) : Mr. Shyam Divan, Sr. Adv. Mr. Nakul Dewan, Sr. Adv. Mr. Sandeep S. Salunkhe, Adv. Mr. Satyajit A Desai, Adv. Mr. Amit K. Pathak, Adv. Mr. Kiran Shinde, Adv. Mr. Siddharth Gautam, Adv. Mr. Abhinav K. Mutyalwar, Adv. Mr. Gajanan N Tirthkar, Adv. Mr. Vijay Raj Singh Chouhan, Adv. Ms. Anagha S. Desai, AOR
For the Respondent(s): Mr. Dhruv Mehta, Sr. Adv. Mr. Samir Malik, Adv. Mr. Varun Kalra, Adv. Mr. Mahip Singh, Adv. Mr. Farha Malik, Adv. M/s. D.S.K. Legal, AOR
Table of Contents
2. Whether limitation commences from the date of order upload or the date of hearing — Whether summer vacation period should be excluded from limitation calculation. (Para 6 , 7 )
3. Distinction between hearing and pronouncement under NCLT Rules — Limitation commences from pronouncement; where no pronouncement occurs in open court, the date of upload is the commencement date. (Para 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 22 , 23 )
4. Limitation for appeals under Section 61, IBC commences from the date of pronouncement of the order, which is distinct from the date of the final hearing. (Para 18 , 19 , 20 )
5. Impugned order set aside — Appeal restored to NCLAT for consideration of condonation of delay beyond the initial thirty-day period. (Para 21 , 24 , 25 )
6. When does the limitation period for filing an appeal under Section 61 of the IBC begin?
Limitation commences from the date of pronouncement of the order, not the date of upload or receipt of a certified copy. However, the time taken to procure a certified copy is excluded if the application is made within the prescribed limitation period. (Para 13 , 14 , 15 )
7. How is the date of pronouncement determined if the order is not delivered in open court?
Under NCLT Rules, there is a clear distinction between the hearing of a case and the pronouncement of the order. If no substantive order is pronounced in open court on the hearing date, the limitation period commences from the date the order is uploaded. (Para 16 , 17 , 18 , 19 , 20 )
8. Does the filing of a physical copy of an appeal stop the limitation period under the IBC?
No, the limitation period stops running upon the e-filing of an appeal before the NCLAT. The subsequent presentation of a physical copy is not mandatory for the purpose of calculating limitation. (Para 15 , 22 , 23 )
JUDGMENT :
Dhananjaya Y Chandrachud, CJI.
1. Admit.
2. These appeals arise under Section 62 of the Insolvency and Bankruptcy Code 20161[“IBC”] from a judgement dated 14 September 2023 of the National Company Law Appellate Tribunal.2[“NCLAT”] The NCLAT dismissed the appeal against the order of the National Company Law Tribunal, Mumbai3[“NCLT”] on the ground of limitation.
3. At the outset, it is clarified that the findings in this judgement are limited to a determination of the question of limitation. The detailed facts and averments on the merits of the larger dispute between the parties are not analysed in the judgment.
4. Briefly, respondent 1, Vistra ITCL (India) Limited filed an application under Section 7 of the IBC seeking the initiation of the Corporate Insolvency Resolution Process4[“CIRP”] against Evirant Developers Private Limited, the Corporate Debtor. The appellant is a former director of the Corporate Debtor, who alleges that the Section 7 application filed by respondent 1 is based on collusion with the various respondents, including respondent 2 and respondent 3, who are former directors of the Corporate Debtor. The appellant filed an interlocutory application before the NCLT alleging inter alia that the reply to the Section 7 application on behalf of the Corporate Debtor was filed by respondent 2 without authorization of the Board of Directors or intimation to the appellant.
5. On 17 May 2023, the NCLT heard the application filed by the appellant. From the submissions and on a specific query of the Court, it appears that it is not in dispute between the counsel for the appellant and the respondent that on 17 May 2023, the order of the NCLT was not pronounced and no substantive order was passed. The order was uploaded by the Registry of the NCLT on 30 May 2023 though the order carries the date of 17 May 2023. By the order, the NCLT dismissed the appellant’s application on the grounds that the application was filed without authorization from the Board of Directors of the Corporate Debtor and was prima facie frivolous, to delay the proceedings in the Section 7 application. The appellant applied for a certified copy on 30 May 2023, which was received on 1 June 2023. The appeal against the order was e-filed before the NCLAT on 10 July 2023.
6. The appellant filed an application for condonation of delay along with the appeal. The appellant contended that (i) the appellant became aware of the contents of the order only on 30 May 2023 and the limitation period should run from this date; (ii) the NCLAT was closed for summer vacations between 05 June 2023 and 02 July 2023 and this period should be excluded from the calculation of limitation.
7. In the background of the above events, the issue before the NCLAT was whether the appeal was instituted within limitation. In its impugned order, the NCLAT concluded that the appeal was barred by limitation on the ground that it was instituted beyond the outer limit of 45 days permissible under Section 61 of the IBC. The NCLAT relied on this Court’s decision in V Nagarajan v. SKS Ispat, (2022) 2 SCC 244 and rejected the appellant’s contention that the time should begin to run from 30 May 2023 – the date of upload. As the limitation period was found to have begun on 17 May 2023, the filing of the appeal on 10 July 2023 was held to be beyond the outer limit of 45 days prescribed under the IBC. Further, the NCLAT rejected the contention that the annual summer vacations from 05 June 2023 to 02 July 2023 should be excluded as the NCLAT had issued a notification stating that the registry would remain open and filing of appeals was permissible during the vacation. Accordingly, the appeal was dismissed as barred by limitation.
8. Separately, it may be noted that on 19 May 2023, the NCLT allowed respondent 1’s Section 7 application and initiated CIRP against the Corporate Debtor. The appellant’s appeal against the order has been dismissed by the NCLAT on 05 October 2023.
9. The table below indicates
