Limitation Period For Appeals Under IBC Starts From Date Of Order Pronouncement; Intervenors Can't Claim Ignorance To Justify Delay: NCLAT Principal Bench
Rajesh Kumar
14 Sep 2024 2:30 PM GMT
The National Company Law Appellate Tribunal Principal Bench, New Delhi bench of Justice Rakesh Kumar Jain (Judicial Member) and Indevar Pandey (Technical Member) has held that under the Insolvency and Bankruptcy Code (IBC), the limitation period for filing an appeal must be calculated from the date of pronouncement of the order.
The bench held that a party involved in the proceedings, particularly as an intervenor, is presumed to have knowledge of the case and the order passed. Therefore, such a party cannot claim ignorance of the order as a reason for delay in filing an appeal.
Brief Facts:
The matter pertained to an appeal which was directed against an order passed by the National Company Law Tribunal (NCLT), Mumbai Bench wherein Canara Bank filed a company petition under Section 7 of the Insolvency and Bankruptcy Code (IBC) for the initiation of the Corporate Insolvency Resolution Process (CIRP) against M/s Vas Infrastructure Ltd. (Respondent) for a default amounting to Rs. 301,06,84,507.23/-. The NCLT admitted the petition and appointed Ashok Kumar Golechha as the Interim Resolution Professional. Brijesh Haridas Nagar Co-op. Hsg Soc. Ltd. (Appellant), a society, filed the appeal under Section 61 of the IBC alleging that the corporate debtor had mortgaged the land on which residential flats, owned by the society, had been constructed. Along with the appeal, the Appellant also filed an application seeking condonation of a 51-day delay in filing the appeal before the NCLAT.
The Appellant argued that it became aware of the CIRP order only on 10.05.2024 when the public announcement (Form G) was published and therefore, the appeal filed on 31.05.2024, should be considered within time. If the limitation were to be counted from 10.05.2024, there would be no delay. However, if it is counted from the date of the order, 11.03.2024, a delay of 51 days would result. The Appellant also claimed that since it was not a party before the NCLT and its intervention application had not been considered, the order had not been communicated to them.
On the other hand, the Respondent contended that the limitation period should be counted from the date of the order, not from the date of knowledge. It argued that the Appellant, having filed an intervention application, could not plead ignorance of the order. Further, the Appellant had approached the court beyond the period allowed for condonation, which is limited to 15 days beyond the statutory 30-day period. The Respondent also pointed out that a public announcement about the CIRP had been made on 13.03.2024 providing deemed knowledge to the Appellant.
Observations by the NCLAT:
The appeal before the NCLAT was filed under Section 61 of the Insolvency and Bankruptcy Code (IBC), which allows any person aggrieved by the order of the Adjudicating Authority (the Tribunal) to prefer an appeal. The NCLAT noted that the statute prescribes a time frame for filing such an appeal requiring that it be submitted within 30 days from the date of the order. However, there is a provision for extending the filing period by an additional 15 days if the appellant can show sufficient cause for the delay. Further, the law does not allow any further extension beyond this 45-day period.
The NCLAT noted that the Appellant sought condonation of a delay of 50 days in filing the appeal. The NCLAT noted that the impugned order was passed on 11.03.2024 and the appeal was filed on 31.05.2024 with a delay of 80 days. The statutory limit for filing an appeal under Section 61 is a maximum of 45 days, including the 30-day filing window and a 15-day extension for sufficient cause. Therefore, the NCLAT held that the delay in this case exceeded the permissible limit, and as a result, it lacked jurisdiction to condone the delay beyond the statutory 45 days.
The Appellant argued that the limitation period should be counted from the date of their knowledge of the order, not from the date of the order's pronouncement. However, the NCLAT referred to the Supreme Court's ruling in V. Nagarajan v. SKS Ispat Power Limited where it was held that under the IBC, the limitation period begins on the date the order is pronounced, not from the date of knowledge. Since the Appellant was an intervenor in the proceedings before the Tribunal, the NCLAT held it had knowledge of the case and could not claim ignorance of the order. Additionally, the order was published in a newspaper on 13.03.2024.
Given that the delay extended beyond the 45-day statutory period and that the Appellant could not provide a sufficient cause to justify this excessive delay, the NCLAT found no merit in the application for condonation of delay. Consequently, the application was dismissed.
Case Title: Brijesh Haridas Nagar Co-op. Hsg Soc. Ltd. vs VAS Infrastructure Ltd. & Anr.
Case Number: Comp. App. (AT) (Ins) No. 1201 of 2024 & I.A. No. 4295, 4296, 4297, 4298 of 2024
Advocate for the Petitioner: Mr. Rajneesh Bansal, Mr. Vandana Sehgal, Adv.
Advocate for the Respondent: Mr. Anuj P. Agarwala, Adv. for RP
Date of Judgment: 09th September, 2024
