IBC | When Matter Heard But No Order Pronounced On The Same Day, Limitation To Commence From The Date When Order Gets Uploaded: Supreme Court

The Supreme Court has held that when the National Company Law Tribunal (“NCLT”) hears a matter on a particular date but does not pronounce the order on the same date, then the limitation for filing an appeal from such order before the National Company Law Appellate Tribunal (“NCLAT”) under Section 61 of the Insolvency and Bankruptcy Code, 2016 (“IBC”), would commence from the date when the Order of NCLT gets uploaded.

However, in cases where matter was heard and order was pronounced on the same day by the NCLT, limitation would commence from the date of pronouncement of order and not its upload.

The NCLT heard a matter on 17.05.2023 but no order was pronounced or passed. The order was uploaded on 30.05.2023. The Appellant filed an appeal against the NCLT order. before NCLAT The issue was whether limitation under Section 61(2) of IBC would commence from 17.05.2023 or 30.05.2023.

The bench comprising Chief Justice of India Dr Dhananjaya Y Chandrachud, Justice J B Pardiwala and Justice Manoj Misra, while differentiating between 'hearing' of a case and 'pronouncement' of order in view of NCLT Rules 2016, and has held that the time for filing an appeal would commence only when the order appealed from was uploaded, since prior to that date no order was pronounced.

BACKGROUND FACTS

Vistra ITCL (India) Limited (“Respondent”) filed a petition under Section 7 of IBC, seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against Evirant Developers Pvt. Ltd. (“Corporate Debtor”).

The Appellant is the erstwhile Director of Corporate Debtor. An interlocutory application was filed by the Appellant before NCLT, alleging that reply to Section 7 petition on behalf of the Corporate Debtor was filed by Respondent No. 2 without authorization of the Board of Directors or intimation to the Appellant.

On 17.05.2023, the NCLT heard the submissions of the parties but neither pronounced the order nor passed any substantive order. The order was uploaded by the NCLT Registry 30.05.2023, though the order carries the date of 17.05.2023. By the order, the NCLT dismissed the Appellant's application.

Section 61 of IBC provides the right to file an appeal against the order of the NCLT before the NCLAT. Section 61(2) of IBC prescribes the period of 30 days to file such an appeal. However, in case the period of 30 days expires and the appeal is not filed, proviso to Section 61(2) further opens a window of 15 days for such an appellant to file the appeal, but by seeking condonation of delay after assigning 'sufficient cause' for causing such delay. Therefore, 45 days is the outer limit within which an appeal from an order of NCLT may be filed before NCLAT.

The Appellant applied for a certified copy of the order on 30.05.2023, which was received on 01.06.2023. The 30 days period to file appeal ended on 29.06.2023. The Appellant e-filed an appeal before the NCLAT on 10.07.2023 against the NCLT order, alongwith an application for condonation of delay.

The Appellant contended that limitation should run from 30.05.2023 since it became aware of the contents of NCLT order on the said date.

On 14.09.2023, the NCLAT dismissed the appeal for being barred by limitation while holding that the limitation has to be computed from 17.05.2023.

The NCLAT placed reliance on the Supreme Court judgment in V Nagarajan v. SKS Ispat, (2022) 2 SCC 244, wherein it was held that limitation commences from the date of pronouncement and not the date of upload of the order or receipt of a certified copy. However, the time taken to procure certified copy will be excluded from period of limitation, provided the Appellant applies within the prescribed period of limitation under Section 61(2) of the IBC.

SUPREME COURT VERDICT

The Bench observed that the limitation runs from the date of pronouncement of order. The issue was as to when an order is deemed to be pronounced.

Rule 89(1) of the NCLT Rules indicates that when NCLT registry publishes its cause list, a distinction is drawn between cases listed for pronouncement of orders and other cases. Accordingly, as per the NCLT Rules, pronouncement of order is necessary and cannot be dispensed with.

“The above provisions of the NCLT Rules, 2016 make a clear distinction between the 'hearing' of an appeal and the 'pronouncement' of the order. Rule 150(1) provides that after hearing the parties, the order may be pronounced either at once or soon thereafter, as may be practicable, but not later than thirty days from the final hearing. Further, Rule 151 indicates that a member of the bench may pronounce the order for and on behalf of the Bench. When the order is pronounced, the court master shall make a note in the order sheet to that effect. The language of the above rules indicates that the pronouncement of the order is necessary and cannot be dispensed with.”

It was observed that as per the cause list of 17.05.2023, the case was listed for admission and not for pronouncement. The Parties have not disputed the fact that no substantive order was passed on 17.05.2023 by the NCLT.

The Bench held that the limitation would not run from 17.05.2023, which was the date on which hearings concluded. Since no order was passed before 30.05.2023, there was no occasion for the Appellant to file an application for a certified copy on 17.05.2023. “Time for filing an appeal would commence only when the order appealed from was uploaded since prior to that date no order was pronounced”, the Bench noted.

While taking the view that though the appeal was filed beyond 30 days period but it was within condonable period of 15 days, the Bench restored the appeal to NCLAT for reconsidering whether the Appellant has shown sufficient cause for condoning the delay beyond 30 days.

The NCLAT order has been set aside.

Case Title: Sanjay Pandurang Kalate v Vistra ITCL (India) Limited and Others

Case No.: Civil Appeal Nos 7467-7468 of 2023

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