No Condonation Beyond 45 Days, IBC Overrides Limitation Act : NCLAT Chennai

Background Facts

M/s. Quest Offices Limited (“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 M/s. Platinum Rent A Car (India) Pvt. Ltd. (“Corporate Debtor”). On 08.06.2022 the Adjudicating Authority admitted the Corporate Debtor into CIRP over a default of Rs.10,95,01,185/-. The Corporate Debtor applied for certified copy of the Order dated 08.06.2022 on 21.07.2022, which was provided on 26.07.2022.

Therefore, the Corporate Debtor filed an appeal against Order dated 08.06.2022 before NCLAT on 03.08.2022, i.e. after 55 days of delay in totality. The Corporate Debtor prayed for condonation of delay of 55 days as time was spent in obtaining certified copy of the Order.

Relevant Law

Section 12 of the Limitation Act, 1963

“Section 12. Exclusion of time in legal proceedings.—

(1) In computing the period of limitation for any suit, appeal or application, the day from which such period is to be reckoned, shall be excluded.

(2) In computing the period of limitation for an appeal or an application for leave to appeal or for revision or for review of a judgment, the day on which the judgment complained of was pronounced and the time requisite for obtaining a copy of the decree, sentence or order appealed from or sought to be revised or reviewed shall be excluded.

(3) Where a decree or order is appealed from or sought to be revised or reviewed, or where an application is made for leave to appeal from a decree or order, the time requisite for obtaining a copy of the judgment 1[***] shall also be excluded.

(4) In computing the period of limitation for an application to set aside an award, the time requisite for obtaining a copy of the award shall be excluded. Explanation.—In computing under this section the time requisite for obtaining a copy of a decree or an order, any time taken by the court to prepare the decree or order before an application for a copy thereof is made shall not be excluded.”

NCLAT Verdict

The Bench observed that an appeal can be filed before NCLAT against an order passed by the Adjudicating Authority within 30 days of such order. The permissible delay for filing of an appeal is 15 days under IBC. Therefore, the prescribed time to file a reply can be of maximum 45 days in total. Further, the procedural formalities (including the time limit) given under IBC must be followed in true ‘letter and spirit’, as Speed is essence of IBC.

The Rules of Procedure neither create any right in favour of a person, nor create a Cause of Action. If a Statute requires a certain remedy to be exercised in a particular manner and time, then the same cannot be exercised in any other manner except for the one specified.

The Bench held that NCLAT does not have any power to condone a delay beyond 45 days and cannot extend its Judicial arm of generosity, as IBC is a self-contained and inbuilt legislation.

“Also an invocation of Section 12 of the ‘Limitation Act’, 1963, will be of no assistance to the ‘Petitioner’ / ‘Appellant’ because of the ‘overriding effect’ of the ‘ingredients of Section 238 of the ‘Insolvency & Bankruptcy Code, 2016’.”

The Bench held that Section 12 of the Limitation Act, 1963 cannot be invoked as Section 238 of IBC has an overriding effect. The application for condonation of delay was dismissed. Accordingly, the Bench also dismissed the appeal.

Case Title: M/s. Platinum Rent A Car (India) Pvt. Ltd. v M/s. Quest Offices Limited

Case No.: Comp App (AT) (CH) (Ins) No.448/2022

Counsel For Appellant: Mr. V. Nallasenapathy, Advocate

Counsel For Respondent: Ms. Aishwarya, Advocate For R&P Partners

Click Here To Read/Download the Order