IBC | Date Of Order Pronouncement & Time Taken To Provide Certified Copy Excluded From Limitation Period For Appeal To NCLAT : Supreme Court

The Supreme Court has held that for the purpose of computing limitation for filing of appeal under Section 61(2) of the Insolvency and Bankruptcy Code, 2016, the time taken by Tribunal for providing certified copy of order to be challenged ought to be excluded from computation of limitation.

The Bench comprising Chief Justice of India Dr. Dhananjaya Y Chandrachud and Justice J B Pardiwala, while adjudicating an appeal filed in Sanket Kumar Agarwal & Anr v APG Logistics Private Limited, has held that the date on which the order was pronounced must be excluded while computing limitation for filing of appeal against such order. Accordingly, the Bench has set aside an order passed by the National Company Law Appellate Tribunal (“NCLAT”), wherein NCLAT had erroneously included the date of order pronouncement in limitation period and dismissed the appeal for being barred by limitation.

BACKGROUND FACTS

Mr. Sanket Kumar Agarwal (“Appellant”) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) before the National Company Law Tribunal (“NCLT”), seeking initiation of Corporate Insolvency Resolution Process against APG Logistics Private Limited. On 26.08.2022, the NCLT dismissed the application.

Subsequently, on 02.09.2022 the Appellant filed an application for obtaining a certified copy of the NCLT order which was received by the latter on 05.09.2022. Thereafter, on 15.09.2022 the NCLT Order was uploaded on the NCLAT website and certified copy was provided to the Appellant. Following which, the Appellant e-filed an appeal on 10.10.2022 before the National Company Law Appellate Tribunal (“NCLAT”) against the NCLT order. An application for condonation of delay of five days was filed along the appeal and the physical copy of appeal was filed on 31.10.2022.

On 09.01.2023 the NCLAT dismissed the appeal for being barred by limitation. It was observed that the appeal was filed through the e-portal on 10.10.2022, which was the 46th day after the order of the NCLT. However, the Section 61 of IBC prescribes a 30-day deadline for preferring an appeal against an order of NCLT and the NCLAT can only condone a delay of upto 15 days if sufficient cause is shown. The Section 61 of IBC does not visualize that an aggrieved person has to wait till he is in receipt of a certified copy of the impugned order before preferring an appeal. It was concluded that the appeal is barred by limitation since it was instituted on the 46th day following the order of the NCLT, exceeding the outer limit of 45 days that was permissible under Section 61 of IBC.

The Appellant preferred an appeal before the Supreme Court against the NCLAT order.

PROCEDURE BEFORE NCLAT FOR FILING OF APPEALS

The Section 61(2) of IBC provides a period of 30 days for filing an appeal against the order of NCLT. The Proviso to Section 61(2) of IBC states that NCLAT may allow an appeal beyond 30 days, by a maximum of fifteen days, on the demonstration of sufficient cause for the delay.

Further, Section 238A of IBC states that the Limitation Act, 1963 would be applicable “as far as may be” to appeals before the NCLAT.

The NCLAT notified an SOP on 03.01.2021 requesting litigants to avail the electronic-filing facility through NCLAT e-filing portal. Thereafter, the NCLAT issued a notification on 21.10.2022 (effective from 01.11.2022) notifying that the period of limitation for filing an appeal would be calculated from the date when the appeal in presented on the filing counter. The requirement of e-filing was directed to be continued alongwith mandatory filing of hard copy of the appeal.

On 24.12.2022, a clarification was issued by NCLAT that limitation shall be computed from the date of e-filing of appeal, while the mandatory physical copy would have to be filed within seven days of e-filing. The order clarifies that the requirement of e-filing shall continue together with the mandatory physical filing of appeals in terms of Rule 22 of the NCLAT Rules 2016.

SUPREME COURT VERDICT

NCLAT erred in not excluding date of pronouncement of order while computing limitation

The Bench observed that the NCLT order was pronounced on 26.08.2022. The Rule 3 of the NCLAT Rules 2016 stipulates that the date of the pronouncement of the order would have to be excluded while computing limitation. This is in line with Section 12(1) of the Limitation Act, 1963. If limitation of 45 days, as given under Section 61 of IBC, is calculated by excluding the date on which NCLT pronounced the order i.e. 26.08.2022, then a period of only 45 days elapsed on 10.10.2022 (when the appeal was e-filed). Therefore, the NCLAT had erroneously dismissed the appeal on the basis that the same was lodged on 46th day, whereas the appeal was filed on 45th day. Accordingly, the Bench set aside the NCLAT order.

Time taken by Tribunal to provide certified copy of order ought to be excluded from computation of limitation under Section 61(2)

The Bench observed that in terms of Rule 22(2) of the NCLAT Rules 2016, it is mandatory to file the certified copy of impugned order alongwith the appeal. In view of the same, the Appellant had sent an application for certified copy of order from Delhi to NCLT Chennai on 02.09.2022. NCLT Chennai received the application on 05.09.2022, which was within the period of limitation of 30 days specified in Section 61(2) of IBC. This established that the Appellant had exercised due diligence.

Reliance was placed on Section 12(2) of the Limitation Act 1963, which specifies that the time requisite for obtaining a copy of the order against which appeal has to be filed, has to be excluded while computing the period of limitation. Further, the Explanation to Section 12 of Limitation Act clarifies that the time taken by the court to prepare an order, before an application for obtaining a certified copy thereof is made, shall not be excluded.

Since the certified copy was received by the Appellant on 15.09.2022 from NCLT, the time taken by the Court between 05.09.2022 and 15.09.2022 to provide certified copy ought to have been excluded while computing limitation under Section 61(2) of IBC.

The appeal has been allowed and the NCLAT order has been set aside. The Bench has directed NCLAT to re-consider the matter on merits.

Also from the judgment - 'Judiciary Has To Modernize' : Supreme Court Deprecates NCLAT's Insistence On Physical Filing Of Appeals In Addition To E-Filing

Case Title: Sanket Kumar Agarwal & Anr v APG Logistics Private Limited

Citation: 2023 LiveLaw (SC) 406

Counsel for Appellant: Ms. Mayuri Raghuvanshi, AOR Mr. Vp Singh, Adv. Mr. Akshat Singh, Adv. Ms. Dacchita Shahi, Adv. Mr. Vyom Raghuvanshi, Adv. Mr. Bhanu Gupta, Adv.

Counsel for Respondent: Ms. Rashi Bansal, AOR.

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