NCLAT Clarifies: Free Certified Copy Doesn't Excuse Late Appeal Filing Under IBC

The National Company Law Appellate Tribunal (NCLAT) has issued a significant ruling clarifying the implications of receiving a free certified copy under the National Company Law Tribunal (NCLT) Rules regarding the condonation of delay in filing appeals under the Insolvency and Bankruptcy Code, 2016 (IBC). The judgment, delivered on July 9, 2024, addresses a conflict between two NCLAT members and settles a key procedural issue.

Case Background

The appeal involved the State Bank of India (SBI), which filed an application under Section 7 of the IBC against a respondent. The NCLT at Hyderabad dismissed the petition, prompting SBI to file an appeal before the NCLAT, Chennai. The appeal was filed three days late, exceeding the 30-day limit prescribed in Section 61(2) of the IBC. SBI sought condonation of this delay.

Divergent Views and the Third Member's Decision

A split decision emerged within the NCLAT on May 1, 2024. The Judicial Member held that the free certified copy provided under Rule 50 of the NCLT Rules couldn't be considered sufficient to condone the delay, as it wasn't obtained through a formal application. The Technical Member disagreed, arguing that a distinction shouldn't be made between paid and free certified copies. The matter proceeded to a third member, who ultimately agreed with the Judicial Member.

The core issue hinged on the interpretation of Rule 50 of the NCLT Rules and Rule 22(2) of the NCLAT Rules. Rule 50 states that the Registry will provide a certified copy of the final order free of cost to parties concerned. Rule 22(2) requires every appeal to be accompanied by a certified copy of the impugned order. The NCLAT's ruling clarified that the free copy provided under Rule 50 is not equivalent to the "certified copy" mandated by Rule 22(2) for appeal purposes.

Arguments Presented

SBI's counsel argued that Rule 50 treats free and paid certified copies equally, and since the free copy was received on November 14, 2023, the appeal filed on December 2, 2023, fell within the 15-day condonable period permitted by Section 61(2) of the IBC.

The respondent's counsel, however, cited the Supreme Court's decision in V. Nagarajan vs. SKS Ispat and Power Limited , which emphasized that litigants cannot use the availability of a free copy to avoid applying for a certified copy and subsequently circumvent limitation periods.

The Court's Decision and its Implications

The NCLAT, relying on the V. Nagarajan decision, affirmed that the free copy under Rule 50 does not fulfill the requirement of a certified copy under Rule 22(2) of the NCLAT Rules. Although the appeal was only three days late, and thus potentially within the condonable period, the NCLAT ultimately dismissed the appeal due to the lack of a formally obtained certified copy accompanying the initial filing. The appeal was subsequently dismissed.

However, this judgment highlights the importance of understanding the nuance in interpreting rules regarding certified copies within the insolvency and bankruptcy context. While a free certified copy may seem adequate, the NCLAT's decision underscores the necessity of obtaining a certified copy in accordance with Rule 22(2) to ensure the timely and successful filing of appeals under the IBC. This ruling provides crucial guidance for legal practitioners handling insolvency cases.