2025 (5) TMI 661 - SC - IBC

Condonation of delay in filing appeal - appeal filed by Respondent No. 1 was within the prescribed limitation period of thirty days along with the additional condonable period of fifteen days as provided under Section 61(2) of the Insolvency and Bankruptcy Code 2016 or not - power of NCLAT to condone the delay beyond the said prescribed and condonable period under the IBC. Whether the appeal filed by Respondent No. 1 was within the prescribed limitation period of 30 days along with the additional condonable period of 15 days as provided under section 61(2) IBC? - HELD THAT - The benefit of exclusion of period during which the court is closed shall be available when the application is filed within prescribed period of limitation and shall not be available in respect of period extendable by court in exercise of its discretion. In V. Nagarajan v. SKS Ispat Power Ltd. 2021 (10) TMI 941 - SUPREME COURT (LB) this Court provided crucial clarifications regarding the computation of limitation periods under the IBC. It was held that under section 61(2) IBC the limitation period for filing an appeal to the NCLAT commences from the date of pronouncement of the order by the NCLT not from the date when the order is received or made available to the aggrieved party. This Court further clarified that while Rule 22(2) of the NCLAT Rules mandates the filing of a certified copy of the impugned order along with the appeal the limitation period is not contingent upon the receipt of such a copy. However if an appellant applies for a certified copy the time taken to obtain it can be excluded from the limitation period under section 12(2) of the Limitation Act. Thus this decision underscores the IBC s objective of ensuring timely resolution of insolvency proceedings and the parties are expected to act diligently and within the prescribed timelines with limited scope for condonation of delay. In the present case Respondent No. 1 was neither a party to the proceedings before the NCLT nor privy to the CoC deliberations and became aware of the order only upon its subsequent disclosure. However it is evident that the Company Secretary of the Corporate Debtor duly informed the listing departments of both NSE and BSE about the NCLT order dated 07.04.2022 within 30 minutes of its pronouncement. Hence the limitation period for filing the appeal commenced on 07.04.2022 and expired on 07.05.2022. Notably 07.05.2022 fell on the first Saturday of the month which is a working day for the Registry of the NCLAT. Even otherwise the benefit of section 4 of the Limitation Act 1963 cannot be granted as Respondent No. 1 filed the appeal beyond not only the prescribed period of 30 days but also the condonable period of 15 days i.e. on 24.05.2022 - Rule 3 of the NCLAT Rules 2016 has also no application to the facts of the present case - applying the principles laid down in the decisions referred to above we arrive at the irresistible conclusion that Respondent No. 1 filed the appeal beyond the statutory maximum period of 45 days prescribed under section 61(2) IBC. Whether the NCLAT has the power to condone the delay beyond the said prescribed and condonable period under the IBC? - HELD THAT - The IBC prescribes strict timelines for filing appeals and taking legal action so as to ensure that insolvency proceedings are not misused to recover time-barred debts. The proviso to Section 61(2) clearly limits the NCLAT s jurisdiction to condone delay only up to 15 days beyond the initial 30-day period. Where a statute expressly limits the period within which delay may be condoned an Appellate Tribunal cannot exceed that limit. In other words the NCLAT being a creature of statute operates strictly within the powers conferred upon it. Unlike a civil suit it lacks inherent jurisdiction to extend time on equitable grounds. Once the prescribed and condonable periods (i.e. 30 15 days) expire the NCLAT has no jurisdiction to entertain appeals regardless of the reason for the delay. In Mobilox Innovations Private Limited v. Kirusa Software Private Limited 2017 (9) TMI 1270 - SUPREME COURT while interpreting Section 9 IBC this Court underscores the IBC s strict procedural discipline i.e. only applications strictly conforming to statutory requirements can be entertained. This principle is also applicable to limitation issues under section 61(2) as it supports the idea that tribunals must operate within the bounds of the Code without adding equitable or discretionary powers not conferred by statute - Thus the NCLAT has no power to condone delay beyond the period stipulated under the statute. Conclusion - The appeal filed by Respondent No. 1 is beyond the maximum permissible period of forty-five days (thirty days limitation plus fifteen days condonable delay) prescribed under Section 61(2) IBC and is therefore barred by limitation. ii) The NCLAT erred in condoning delay beyond the statutory maximum period and thus acted without jurisdiction in allowing the interlocutory application for condonation of delay. Appeal allowed.

Summary

The core legal questions considered by the Court are:

(i) Whether the appeal filed by Respondent No. 1 was within the prescribed limitation period of thirty days, along with the additional condonable period of fifteen days as provided under Section 61(2) of the Insolvency and Bankruptcy Code, 2016 ("IBC"); and

(ii) If not, whether the National Company Law Appellate Tribunal ("NCLAT") has the power to condone the delay beyond the said prescribed and condonable period under the IBC.

Issue 1: Computation of Limitation Period for Filing Appeal under Section 61(2) IBC

The legal framework governing this issue is Section 61(2) IBC, which mandates that every appeal to the NCLAT must be filed within thirty days from the date of the order of the Adjudicating Authority, with a proviso allowing condonation of delay for a further period not exceeding fifteen days upon sufficient cause being shown. Thus, the maximum permissible period to file an appeal is forty-five days.

Section 238A of the IBC incorporates the Limitation Act, 1963 ("Limitation Act") into insolvency proceedings "as far as may be." Relevant provisions of the Limitation Act include Section 2(j), defining "period of limitation" and "prescribed period," and Section 4, which provides that if the prescribed period expires on a day when the court or tribunal is closed, the limitation period extends to the next working day. Rule 3 of the NCLAT Rules, 2016, similarly provides for exclusion of days when the tribunal office is closed in computing limitation.

Precedents clarify the meaning of "prescribed period" and the limited applicability of Section 4 of the Limitation Act. The Supreme Court in Assam Urban Water Supply & Sewerage Board v. M/s. Subash Projects & Mktg. Ltd. held that Section 4 applies only to the "prescribed period" (the strict limitation period) and not to any extended or condonable period granted by the court or tribunal. This principle was reiterated in Sagufa Ahmed v. Upper Assam Plywood Products and Bhimashankar Sahakari Sakkare Karkhane Niyamita v. Walchandnagar Industries Ltd., emphasizing that the benefit of extension due to court closure is not available for condonable periods beyond the prescribed limitation.

In the context of IBC, the Court referred to V. Nagarajan v. SKS Ispat Powers Ltd., which clarified that the limitation period under Section 61(2) IBC commences from the date of pronouncement of the order by the NCLT, not from the date the order is received or made available to the aggrieved party. The Court emphasized that the IBC is a complete code with strict timelines, and litigants must act diligently. The time taken to obtain a certified copy of the order can be excluded under Section 12(2) of the Limitation Act, but the time before applying for the certified copy cannot be excluded. The requirement to file a certified copy with the appeal under Rule 22(2) of the NCLAT Rules is mandatory, though discretionary waivers may be granted in the interest of substantial justice.

Applying these principles to the facts, the appellant's resolution plan was approved by the NCLT on 07.04.2022. The Company Secretary of the Corporate Debtor informed the stock exchanges within 30 minutes of the order on the same date, thereby making the order publicly available. Respondent No. 1 was not a party to the original proceedings but became aware of the order on 07.04.2022 itself. The limitation period of thirty days thus expired on 07.05.2022, which was a Saturday. The Court noted that the first Saturday of the month is a working day for the NCLAT Registry; therefore, Section 4 of the Limitation Act does not extend the limitation period. The additional condonable period of fifteen days expired on 22.05.2022. Respondent No. 1 filed the appeal physically on 24.05.2022, beyond the maximum permissible period of forty-five days.

The Court rejected the Respondent's argument that the limitation period commenced on 08.04.2022, the date of disclosure to the stock exchanges, and that the limitation period was extended due to the last day falling on a Sunday. The Court found that the disclosure was timely made on 07.04.2022 and that the Respondent's right to appeal accrued from that date. The Court also rejected the contention that the Resolution Professional failed to comply with SEBI disclosure obligations, holding that the Company Secretary's letter of 07.04.2022 sufficed to trigger limitation.

Thus, the Court concluded that the appeal was filed beyond the statutory maximum period of forty-five days prescribed under Section 61(2) IBC and was therefore barred by limitation.

Issue 2: Power of NCLAT to Condon Delay Beyond Statutory Limit

The IBC prescribes strict timelines for filing appeals to ensure timely resolution of insolvency proceedings and to prevent misuse of the process for recovery of stale debts. The proviso to Section 61(2) IBC expressly limits the NCLAT's power to condone delay to a maximum of fifteen days beyond the initial thirty-day period. The Court emphasized that the NCLAT is a statutory tribunal and can exercise only those powers conferred by the statute; it lacks inherent jurisdiction to extend time on equitable grounds.

The Court relied on the judgment in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd., which underscored that only applications strictly conforming to statutory requirements can be entertained under the IBC. Similarly, in Kalpraj Dharamshi v. Kotak Investment Advisors Ltd., it was held that the NCLAT cannot condone delay beyond the fifteen-day extension permitted under Section 61(2) IBC.

Accordingly, once the prescribed and condonable periods expire, the NCLAT has no jurisdiction to entertain appeals, regardless of the reasons for delay. The Court held that the impugned order of the NCLAT condoning delay beyond the statutory maximum period was ultra vires and liable to be set aside.

Significant Holdings and Core Principles

"The provisions of the Limitation Act, 1963 shall, as far as may be, apply to the proceedings or appeals before the Adjudicating Authority, the National Company Law Appellate Tribunal..." (Section 238A IBC)

"Section 4 of the Limitation Act applies only to the prescribed period of limitation and not to any condonable or extended period granted by the court or tribunal." (Assam Urban Water Supply & Sewerage Board v. M/s. Subash Projects & Mktg. Ltd.)

"Under Section 61(2) IBC, the limitation period for filing an appeal before the NCLAT commences from the date of pronouncement of the order by the NCLT, not from the date when the order is received or made available to the aggrieved party." (V. Nagarajan v. SKS Ispat Powers Ltd.)

"The NCLAT has no power to condone delay beyond the fifteen days permitted under the proviso to Section 61(2) IBC; any appeal filed beyond this period is barred and not maintainable." (Kalpraj Dharamshi v. Kotak Investment Advisors Ltd.)

"The first Saturday of the month is a working day for the Registry of the NCLAT and therefore, the benefit of Section 4 of the Limitation Act cannot be invoked for extending limitation when the last day falls on such a Saturday."

The Court's final determinations are:

(i) The appeal filed by Respondent No. 1 was beyond the maximum permissible period of forty-five days (thirty days limitation plus fifteen days condonable delay) prescribed under Section 61(2) IBC, and is therefore barred by limitation;

(ii) The NCLAT erred in condoning delay beyond the statutory maximum period and thus acted without jurisdiction in allowing the interlocutory application for condonation of delay;

(iii) The order of the NCLAT dated 14.12.2022 allowing condonation of delay is set aside, and the appeal is dismissed on limitation grounds;

(iv) Strict adherence to the limitation period under Section 61(2) IBC is essential to maintain the efficacy and finality of insolvency proceedings, and no extension beyond the statutory limit can be granted.