Computation Of Limitation Must Be From Date Of E-Filing Of Appeal: NCLAT Principle Bench

Brief Facts:

The matter pertained to an appeal filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) where Innovators Cleantech Pvt. Ltd. (Appellant) sought the initiation of the Corporate Insolvency Resolution Process (CIRP) against Pasari Multi Projects Pvt. Ltd. (Respondent No. 1) alleging an operational debt of Rs. 4,75,70,047. The Adjudicating Authority issued a notice in the application, and the Corporate Debtor appeared before the Authority to oppose the application. After hearing both parties, the Authority dismissed the Section 9 application. Aggrieved by this order, the Appellant e-filed an appeal on 25.09.2023.

The Respondent highlighted several procedural details and delays. A caveat was filed concerning the impugned order on 13.09.2023. The Registry communicated defects in the appeal on 04.10.2023. The Appellant refiled the appeal on 15.12.2023 curing certain defects, but further defects were again communicated on 03.01.2024. On the same day, a copy of the appeal was served on one of the Respondent's directors although it was still defective. Despite filing a caveat, a defect-free copy was not served on the Respondent. The Appellant refiled the appeal again on 08.01.2024 after removing certain defects. The appeal was listed on 25.01.2024 with an application for condonation of refiling delay of 86 days. During this time, three advocates were mistakenly mentioned in the order sheet on behalf of the Respondent though they were not appointed. Notices in the appeal were issued on 06.02.2024, and the Respondent claimed to have learned of the orders on 10.02.2024 after obtaining a copy of the appeal from the Appellant's counsel and filing an application on 26.02.2024.

The Respondent contended that although the appeal was claimed to be e-filed on 25.09.2023, it was not properly filed as neither the impugned order nor the Vakalatnama was included, and the affidavit was not notarized, nor was the appeal in the prescribed format. The 30-day period for filing the appeal expired on 27.09.202, and the defects were communicated on 04.10.2023. The extended period of 15 days also expired on 12.10.2023. An affidavit in support of the appeal and the applications was affirmed for the first time on 15.12.2023. The appeal was still defective, and further defects were pointed out by the Registry on 03.01.2024. The appeal was refiled on 16.01.2024, which the Respondent argued should be treated as the filing date for the purpose of limitation. Since this date was well beyond the 45-day period from the impugned order, the Respondent argued the appeal should be dismissed as time-barred.

Observations by the NCLAT:

The NCLAT referred to Rule 22 of the National Company Law Appellate Tribunal Rules, 2016 which provides for the presentation of an appeal requiring a certified copy of the impugned order and a stipulated fee at the filing counter. Rule 26 addresses the endorsement and scrutiny of petitions or appeals and stipulates that defective documents, after notice to the party, should be returned for compliance. If the defects are not remedied within seven days, the Registrar may decline to register the appeal or document.

Rule 103 permits the filing of appeals through electronic mode. The NCLAT referred to the decision of the Supreme Court in Sanket Kumar Agarwal vs. APG Logistics Pvt. Ltd where it was held that the limitation period is computed from the date of the e-filing. The Supreme Court held that the e-filing SOPs and directions did not contain specific directions on the computation of limitation. Initially, the period of limitation was computed from the presentation date of the appeal as per Rule 22. However, the subsequent order dated December 24, 2022, clarified that limitation would be computed from the date of e-filing with a physical copy to be filed within seven days.

The NCLAT also referred to the Delhi High Court's judgments in Delhi Development Authority vs. Durga Construction Co., Indira Gandhi National Open University vs. M/s Sharat Das & Associates Pvt. Ltd., and IRCON International Ltd. vs. Reacon Engineers (India) (P) Ltd., which held that the initial filing termed as a 'bunch of papers' cannot be treated as a valid filing. The first date of valid filing is considered when the appeal is refiled after rectifying defects.

The NCLAT also noted that the Delhi High Court judgments were delivered in the context of specific rules applicable to the Delhi High Court which emphasize that defects of such a fundamental nature render the initial filing non est.

The NCLAT referred to V.R. Ashok Rao and Ors. vs. TDT Cooper Ltd where it was held that re-presentation beyond seven days does not amount to a fresh filing.

Further, the NCLAT issued an order on 24th December 2022 clarifying the computation of limitation for appeals. This order stated that the limitation should be computed from the date of e-filing with the hard copy to be filed within seven days. This aligns with the Supreme Court's decision in Sanket Kumar Agarwal and Anr. which also mandated computation of limitations from the date of e-filing.

Regarding the necessity of applying for a certified copy of the order before filing an appeal, the Supreme Court's decision in V. Nagarajan vs. SKS Ispat and Power Ltd. and Ors. held that the application for a certified copy is a requirement for the computation of limitation under Section 12 of the Limitation Act. If no application for a certified copy is made, the period cannot be excluded. However, the NCLAT rules allow for flexibility, and appeals can proceed based on downloaded copies from the tribunal's website. The failure to apply for a certified copy is not, by itself, grounds for dismissing an appeal.

Therefore, the NCLAT held that the appeal, e-filed on 25th September 2023, was within the prescribed limitation period. The delay of 86 days in refiling the appeal after curing defects was condoned, and the tribunal found no reason to interfere with the earlier order.

Case Title: Innovators Cleantech Pvt. Ltd. Vs Pasari Multi Projects Pvt. Ltd.

Case Number: Interlocutory Application Nos. 1622 & 1623 of 2024

Advocate for the Appellant: Mr. Anuj Bhandari, Mr. Gaurav Jain

Advocate for the Respondent: Mr. Sanjeev Sen, Mr. Ashok Kumar Jain, Mr. Amit Kasera, Ms. Anjali, Singh and Mr. Pragyan Mishra

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