NCLT Hyderabad Invokes Rule 153; Permits Filing Of Rejoinder Post Closure Of Opportunity

Background Facts

State Bank of India (“Financial Creditor”) filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”), seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against India Power Corporation Limited (“Corporate Debtor”).

After the Corporate Debtor filed its reply on 22.11.2021, the Adjudicating Authority on 03.12.2021 granted two weeks’ time to Financial Creditor for filing its Rejoinder, or otherwise the right would stand closed. The Financial Creditor filed its rejoinder on 13.06.2022.

The Corporate Debtor objected to the Rejoinder being taken on record while contending that no application for condonation of delay was filed along the Rejoinder. The Financial Creditor filed an application under Rule 11 of NCLT Rules, 2016 before Adjudicating Authority, seeking condonation of delay in filing of Rejoinder. The Corporate Debtor opposed the application while submitting that such application would be in nature of ‘review’ of the order dated 03.12.2021 and the Adjudicating Authority is not empowered to review.

Issue

Whether the application to condone the delay and to receive the Rejoinder filed post closure of opportunity is in the nature of Review Application and as such not maintainable? If not, whether the application can be considered under any other applicable provision of law or rules?

NCLT Verdict

The Bench held that the application for condonation of delay, after the right to file rejoinder stood closed, is not in the nature of Review of the earlier orders of the Tribunal.

The Bench relied on Rule 153 of the NCLT Rules 2016 and observed that the rule empowers the NCLT to extend the period in its discretion, in cases where the period fixed under Rules or granted by NCLT for an act or filing any document/representation may have expired.

“Further, we would like to point out herein that, we are not dealing with a case where time for doing an act has been prescribed under the provisions of the Limitation Act, which cannot be extended either under Rule11 or Rule 153 of NCLT Rules. We are dealing with a case where the time is fixed or granted by this Tribunal for performance of an act, namely, filing of Rejoinder by the Applicant, under I&B Code and the NCLT Rules.”

The Bench decided to treat the application as an application for condonation of delay. It was opined that under Section 5 of Limitation Act the onus is on the Applicant to satisfy the court on there being sufficient cause for condonation of the delay. Whereas under Rule 153 of NCLT Rules enjoins a duty on the Tribunal alone, to examine whether in the interest of justice time extension should be given for doing an act, the fixed time for which has expired.

The Bench held that the Application can be allowed by enlarging the time that has expired for filing the Rejoinder. The Application was allowed and Financial Creditor has been granted 7 days’ time to file its brief additional pleadings. Upon failure of which, the liberty shall stand revoked automatically. Nonetheless, the facts that were not pleaded in the main petition but form a part of the Rejoinder will not be considered.

Case Title: State Bank of India & Ors. v India Power Corporation Limited

Case No.: CP (IB) NO. 205/7/HDB/2021

Counsel For Applicant: Shri Vivek Reddy, Senior Counsel, Shri D.Narendar Naik, Shri Vikram C Puttapaga, Shri Srinivas Gowd, and Shri Vishal Porandla, Counsels.

Counsel for Respondent: Shri Deepak Khosla, Shri Anirban Bhattacharya, and Shri I. V. Siddhivardhana, counsels.

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