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

The Supreme Court has deprecated the practice of NCLAT whereby physical filing of appeals has been made mandatory in addition to e-filing of appeals. While expressing displeasure regarding the said practice, the Court observed as under:

“…If some judges are uncomfortable with e-files, the answer is to provide training to them and not to continue with old and outmoded ways of working. The judiciary has to modernize and adapt to technology. The tribunals can be no exception. This can no longer be a matter of choice……”

The Court observed that if a lawyer or litigant is compelled to file physical copies in addition to e-filed documents, then they will not resort to e-filing.

"This duplication of effort is time consuming. It adds to expense. It leaves behind a carbon footprint which is difficult to efface. The judicial process has traditionally been guzzling paper. This model is not environmentally sustainable", the Court added(Sanket Kumar Agarwal & Anr v APG Logistics Private Limited).

The Bench comprising of the Chief Justice Dr. Dhananjaya Y Chandrachud and Justice J B Pardiwala has directed that a copy of the present judgment shall be forwarded to the Chairperson of the NCLAT and to the Secretaries to the Union Government respectively in the Ministries of (i) Finance; (ii) Corporate Affairs; and (iii) Law and Justice, for ensuring compliance and remedial steps.

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, the Appellant filed an application for obtaining a certified copy of the NCLT order, the same was uploaded on the website and provided to the Appellant on 15.09.2022. 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. 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 for the purpose of calculation of limitation, the date of the pronouncement of the order would have to be excluded. 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 would elapse by 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.

Utterly incomprehensible why NCLAT should insist on physical filing in addition to e-filing

The Bench has reprimanded NCLAT for insisting on physical filing of appeals in addition to e-filing. It was observed that the ‘flip-flops’ on the part of NCLAT in providing administrative guidance on whether limitation would commence from the date of e-filing or from the presentation of the appeal at the filing counter, cannot be ignored.

In view of the technological advances, the country’s judiciary and tribunals must move towards e-filing and the process having already commenced, has become irreversible. It has been suggested that the Union Government may, for encouraging e-filing across tribunals, constitute a Working Group to make a comprehensive assessment of the position across tribunals and suggest regulatory changes.

While deprecating the practice of insisting physical filing in addition to e-filing, the Bench observed as under:

“Moreover, it is utterly incomprehensible why NCLAT should insist on physical filing in addition to efiling. This unnecessarily burdens litigants and the Bar and is a disincentive for e-filing. A lawyer or litigant who is compelled to file physical copies in addition to e-filed documents will have no cogent reason to resort to e-filing. This duplication of effort is time consuming. It adds to expense. It leaves behind a carbon footprint which is difficult to efface. The judicial process has traditionally been guzzling paper. This model is not environmentally sustainable. If some judges are uncomfortable with e-files, the answer is to provide training to them and not to continue with old and outmoded ways of working. The judiciary has to modernize and adapt to technology. The tribunals can be no exception. This can no longer be a matter of choice……Both the Union government in its rule making capacity and the administrative heads of tribunals must ensure a seamless transition to working in the electronic mode.”

The Bench has directed that a copy of the present judgment shall be forwarded to the Chairperson of the NCLAT and to the Secretaries to the Union Government respectively in the Ministries of (i) Finance; (ii) Corporate Affairs; and (iii) Law and Justice, for ensuring compliance and remedial steps.

The appeal has been allowed and the NCLAT order has been set aside.

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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