IBC | When Matter Heard On A Particular Date But Order Pronounced Later, NCLT Not To Affix Date Of Hearing On Order: Supreme Court

The Supreme Court has held that when a matter is heard by the National Company Law Tribunal (“NCLT”) on a particular date but the order is pronounced on another date, then NCLT must refrain from affixing the date of hearing on the order. The requirement of pronouncement of order cannot be dispensed with, since under the NCLT Rules, 2016 there is a distinction between 'hearing' and 'pronouncement'.

The NCLT heard a matter on 17.05.2023 but no order was pronounced. The order was uploaded on 30.05.2023. The Appellant filed an appeal against the NCLT order before National Company Law Appellate Tribunal (“NCLAT”) under Section 61(2) of the Insolvency and Bankruptcy Code, 2016 (“IBC”), The issue was whether limitation under Section 61(2) of IBC would commence from 17.05.2023 or 30.05.2023.

The bench comprising Chief Justice of India Dr Dhananjaya Y Chandrachud, Justice J B Pardiwala and Justice Manoj Misra, observed that,“To avoid situations such as these, in cases where the matter has been heard on a particular day but the order is pronounced on a later date, the NCLT must refrain from affixing the date of hearing on the order. Such an approach would be a violation of the NCLT Rules, which create a distinction between hearing and pronouncement and do not allow the NCLT to dispense with the requirement of pronouncement.”

The Bench has also appreciated the NCLAT Chairperson, Members and Registry for taking pro-active steps towards the observations made in Sanket Kumar Agarwal v. APG Logistics Private Limited, 2023 LiveLaw (SC) 406, wherein it was observed that filing of physical copies is not mandatory when e-filing has been done. “Such proactive action by tribunals is essential to ensure that the move towards a modernized and technology-friendly judiciary trickles down to every judicial forum across the country.”

BACKGROUND FACTS

Vistra ITCL (India) Limited (“Respondent”) filed a petition under Section 7 of IBC, seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against Evirant Developers Pvt. Ltd. (“Corporate Debtor”).

The Appellant is the erstwhile Director of Corporate Debtor. An interlocutory application was filed by the Appellant before NCLT, alleging that reply to Section 7 petition on behalf of the Corporate Debtor was filed by Respondent No. 2 without authorization of the Board of Directors or intimation to the Appellant.

On 17.05.2023, the NCLT heard the submissions of the parties but neither pronounced the order nor passed any substantive order. The order was uploaded by the NCLT Registry 30.05.2023, though the order carries the date of 17.05.2023. By the order, the NCLT dismissed the Appellant's application.

Section 61 of IBC provides the right to file an appeal against the order of the NCLT before the NCLAT. Section 61(2) of IBC prescribes the period of 30 days to file such an appeal. However, in case the period of 30 days expires and the appeal is not filed, proviso to Section 61(2) further opens a window of 15 days for such an appellant to file the appeal, but by seeking condonation of delay after assigning 'sufficient cause' for causing such delay. Therefore, 45 days is the outer limit within which an appeal from an order of NCLT may be filed before NCLAT.

The Appellant applied for a certified copy of the order on 30.05.2023, which was received on 01.06.2023. The 30 days period to file appeal ended on 29.06.2023. The Appellant e-filed an appeal before the NCLAT on 10.07.2023 against the NCLT order, alongwith an application for condonation of delay.

The Appellant contended that limitation should run from 30.05.2023 since it became aware of the contents of NCLT order on the said date.

On 14.09.2023, the NCLAT dismissed the appeal for being barred by limitation while holding that the limitation has to be computed from 17.05.2023.

The NCLAT placed reliance on the Supreme Court judgment in V Nagarajan v. SKS Ispat, (2021), wherein it was held that limitation commences from the date of pronouncement and not the date of upload of the order or receipt of a certified copy. However, the time taken to procure certified copy will be excluded from period of limitation, provided the Appellant applies within the prescribed period of limitation under Section 61(2) of the IBC.

RELEVANT LAW

Rule 89 of NCLT Rules, 2016

“89. Preparation and publication of daily cause list.—

(1) The Registry shall prepare and publish on the notice board of the Registry before the closing of working hours on each working day the cause list for the next working day and subject to the directions of the President, listing of cases in the daily cause list shall be in the following order of priority, unless otherwise ordered by the concerned Bench; namely;-

(a) cases for pronouncement of orders;

(b) cases for clarification;

(c) cases for admission;

(d) cases for orders or directions;

(e) part-heard cases, latest part-heard having precedence; and (f) cases posted as per numerical order or as directed by the Bench;”

SUPREME COURT VERDICT

The Bench opined that the limitation runs from the date of pronouncement of order. The issue was as to when an order is deemed to be pronounced.

Rule 89(1) of the NCLT Rules, 2016 indicates that when NCLT registry publishes its cause list, a distinction is drawn between cases listed for pronouncement of orders, hearing and other cases. Accordingly, as per the Rules, pronouncement of order is necessary and cannot be dispensed with.

It was observed that as per the cause list of 17.05.2023 the case was listed for admission and not for pronouncement. The Parties have not disputed the fact that no substantive order was passed on 17.05.2023 by the NCLT.

The Bench distinguished the case from V Nagarajan v. SKS Ispat, while holding that in the latter there was an unequivocal pronouncement of the order before the upload of the order. Whereas in the Appellant's case the date of upload of order is same as the date of pronouncement.

Further, the Bench has cautioned that when a matter is heard on a particular day but the order is pronounced on a later date, the NCLT must refrain from affixing the date of hearing on the order. Such an approach would be a violation of the NCLT Rules, which create a distinction between hearing and pronouncement and do not allow the NCLT to dispense with the requirement of pronouncement.

The Bench held that the limitation would not run from 17.05.2023, which was the date on which hearings concluded. Since no order was passed before 30.05.2023, there was no occasion for the Appellant to file an application for a certified copy on 17.05.2023. “Time for filing an appeal would commence only when the order appealed from was uploaded since prior to that date no order was pronounced”, the Bench noted.

While taking the view that though the appeal was filed beyond 30 days period but it was within condonable period of 15 days, the Bench restored the appeal to NCLAT for reconsidering whether the Appellant has shown sufficient cause for condoning the delay beyond 30 days.

The NCLAT order has been set aside.

Case Title: Sanjay Pandurang Kalate v Vistra ITCL (India) Limited and Others

Citation.: 2023 LiveLaw (SC) 1060

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