TMI Blog2021 (10) TMI 941X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 61(1) of the IBC. An order of the NCLAT is subject to an appeal on a question of law to the Supreme Court under Section 62. The jurisdiction of civil courts has been explicitly ousted by Section 63 of the IBC. The import of Section 12 of the Limitation Act and its explanation is to assign the responsibility of applying for a certified copy of the order on a party. A person wishing to file an appeal is expected to file an application for a certified copy before the expiry of the limitation period, upon which the time requisite for obtaining a copy is to be excluded. However, the time taken by the court to prepare the decree or order before an application for a copy is made cannot be excluded. If no application for a certified copy has been made, no exclusion can ensue - in the absence of an application for a certified copy, the appeal was barred by limitation much prior to the suo motu direction of this court, even after factoring in a permissible fifteen days of condonation under Section 61(2). The Court is not empowered to condone delays beyond statutory prescriptions in special statutes containing a provision for limitation. Section 12(2) of the Limitation Act allows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsolvency and Bankruptcy Code 2016- IBC from the judgement of the National Company Law Appellate Tribunal, Delhi - NCLAT dated 13 July 2020- Company Appeal (AT) (Insolvency) 561 of 2020 . The NCLAT dismissed the appeal as barred by limitation. The appellant had filed an appeal against the National Company Law Tribunal, Chennai s- NCLT order dated 31 December 2019- MA 906 of 2019 in CA/38/IB/2018 (NCLT, Chennai Bench) which had dismissed the appellant s miscellaneous application in a liquidation proceeding, seeking interim relief against the invocation of a bank guarantee by Respondent No. 10 against the Corporate Debtor. 2 Cethar Ltd- Corporate Debtor , a corporate entity which is engaged in engineering and project consultancy, is undergoing liquidation. The appellant was appointed as its interim resolution professional and resolution professional. After an unsuccessful attempt at resolution, the appellant was appointed as its liquidator on 25 April 2018. The appellant instituted proceedings- CA/38/IB/2018 (NCLT, Chennai Bench) under Sections 43 and 45 of the IBC to avoid preferential and undervalued transactions of the Corporate Debtor in favour of Respondent No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period for appeals to be thirty days, extendable by fifteen days, to hold that the appeal filed under Section 61(1) was barred by limitation. It noted that the statutory time limit of thirty days had expired and an application for condonation of delay had not been filed. Rule 22 of the National Company Law Appellate Tribunal Rules- NCLAT Rules provides that every appeal must be accompanied with a certified copy of the impugned order, which had not been annexed in this case. The NCLAT observed that the appellant had not provided any evidence to prove that a certified or free copy had not been issued to him. In any event, the IBC circumscribes the discretion to condone delays up to fifteen days, which had elapsed in this case. Further, it noted that even on merits, there were no grounds for interference since a performance guarantee is explicitly excluded from the ambit of a Security interest which is subject to a moratorium under Section 14 of the IBC. The appellant filed a Civil Appeal against this order of the NCLAT on the question of limitation. B Submissions of Parties B.1 Appellant s submissions 5 Mr. R Subramanian, appearing on behalf of the appellants has u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h a copy of the order is made available to the aggrieved party. Even a delay in applying for a certified copy would not attract the explanation to Section 12 of the Limitation Act when a free copy is statutorily mandated; e) Section 420(3) of the Companies Act and Rule 50 of the NCLT Rules equally apply to proceedings under the IBC and the ratio in Sagufa Ahmed (supra) would squarely apply. The mere absence of the words from the date on which a copy of the order of the Tribunal is made available to the person aggrieved in Section 61(2) of the IBC, in contradistinction to Section 421(3) of the Companies Act, has no material bearing since an appeal cannot be filed without a copy of the order. This Court in B K Educational Services (P) Ltd v. Parag Gupta and Associates - 2019 (11) SCC 633 ( B K Educational Services ) had noted that the provisions of Chapter XXVII of the Companies Act would apply to proceedings under the IBC at the NCLT, as Section 408 of the Companies Act constitutes the NCLT to discharge authority under the Companies Act, and under any other law for the time being in force ; f) Appellants seeking to assail orders of judicial forums that upload copies of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranted as a matter of discretion under Section 61(2); (b) Section 61(2) of the IBC does not state that limitation is to be applicable from the date of the order being made available , as against Section 421(3) of the Companies Act. Special Acts override general enactments. In any event, made available does not imply that parties can indefinitely wait until a free certified copy is provided to them. A timely application for a certified copy has to be filed; (c) It is undisputed that NCLT s order dated 31 December 2019 was dictated and pronounced in open court, where the appellant was present. The NCLAT in Pr. Director General of Income Tax v. Spartek Ceramics India Ltd 2018 SCC OnLine NCLAT 289 has held that the period of thirty days for filing an appeal commences from the date of the knowledge of the order; (d) The appellant s assertion that the NCLT s order was uploaded only on 20 March 2020 is unsubstantiated; (e) Section 12 of the Limitation Act is clear in prescribing that the limitation period can be ascertained only after an application for a certified copy of the judgement or order is filed within the limitation period, in order to not be declared as time ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BC. Therefore, no grounds for interference on merits are established. 7 The rival submissions fall for our consideration. C Analysis 8 At the outset, as clarified by the parties, only submissions on the aspect of limitation have been pressed. The finding of this Court is limited to a determination on whether the appeal before the NCLAT under Section 61(1) of the IBC was barred by limitation. 9 The present dispute arises over the period of limitation applicable for filing an appeal against an order of the NCLT under the IBC. The provisions of the IBC, Companies Act, Limitation Act, NCLT Rules and the NCLAT Rules have been placed before this Court during the hearing. The relevant provisions are extracted below and are referred to, in turn. The IBC is a complete code. It has an overriding effect, as stated in Section 238 : 238. Provisions of this Code to override other laws.-The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. On the specific question of limitation, Section 238-A of the IBC invokes the Limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the other hand, an appeal is a creature of statute and must have the clear authority of law. Garikapati Veeraya v. Subbaiah Chaudhry, AIR 1957 SC 540; Ganga Bai v. Vijay Kumar, (1974) 2 SCC 393; Anant Mills Company Limited v. State of Gujarat, AIR 1975 SC 1234. The IBC envisages a comprehensive dispute resolution process in Chapter VI. The NCLT is the empowered Adjudicating Authority under Section 60 of the IBC with the jurisdiction to entertain any proceeding in relation to insolvency resolution or liquidation proceedings under the IBC. An appeal lies against an order of the Adjudicating Authority to the Appellate Authority, the NCLAT, under Section 61(1) of the IBC. An order of the NCLAT is subject to an appeal on a question of law to the Supreme Court under Section 62. The jurisdiction of civil courts has been explicitly ousted by Section 63 of the IBC. In the present case, the appellant was aggrieved by an order of the NCLT passed under the IBC. His right to file an appeal arose from Section 61 of the IBC which is in the following terms: 61. Appeals and Appellate Authority.-(1) Notwithstanding anything to the contrary contained under the Companies Act, 2013, any per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and replaced the erstwhile Company Law Boards. This reference is also provided in the definition of an Adjudicating Authority under Section 5(1) of the IBC. Chapter XXVII of the Companies Act details the functioning of the newly established NCLT and NCLAT, including the procedural requirements governing their functioning. Section 433 of the Companies Act 2013 similarly invokes the provisions of the Limitation Act for proceedings before the NCLT and the NCLAT. The NCLT Rules and NCLAT Rules have been framed in exercise of the Central Government s powers under Section 469 of the Companies Act to carry out its provisions. Section 420 deals with the orders of the NCLT and creates a right to receive a copy to every party under Section 420(3): 420. Orders of Tribunal.-(1) The Tribunal may, after giving the parties to any proceeding before it, a reasonable opportunity of being heard, pass such orders thereon as it thinks fit. (2) The Tribunal may, at any time within two years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it, and shall make such amendment, if the mistake is brought to its notice by the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson aggrieved. It is also true that under Section 420(3) of the Act read with Rule 50, the appellants were entitled to be furnished with a certified copy of the order free of cost. 13. Therefore if the appellants had chosen not to file a copy application, but to await the receipt of a free copy of the order in terms of Section 420(3) read with Rule 50, they would be perfectly justified in falling back on Section 421(3), for fixing the date from which limitation would start running .. (emphasis supplied) However, the Court clarified that this would no longer apply once an application for a certified copy is made and the order has been received. Irrespective of when the free certified copy is received, the limitation period would then be computed from the date of receipt of the certified copy. 13 .. But the appellants in this case, chose to apply for a certified copy after 27 days of the pronouncement of the order in their presence and they now fall back upon Section 421(3). 14. Despite the above factual position, we do not want to hold against the appellants, the fact that they waited from 25-10-2019 (the date of the order [Sagufa Ahmed v. Upper Assam Plyw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Essar Steel (supra), paras 119-123, 127; Innoventive Industries Ltd v. ICICI Bank, (2018) 1 SCC 407, para 13; Gujarat Urja Vikas Nigam Ltd v. Amit Gupta, (2021) SCC OnLine 194, para 71 . The power to condone delay is tightly circumscribed and conditional upon showing sufficient cause, even within the period of delay which is capable of being condoned. The IBC is a watershed legislation which seeks to overhaul the previous bankruptcy regime which was afflicted by delays and indefinite legal proceedings. The IBC sought to structure and streamline the entire process of insolvency, right from the initiation of insolvency to liquidation, as a one-stop mechanism. Section 12(3) of the IBC prescribes a strict time-line for the completion of the corporate insolvency resolution process of one hundred and eighty days which is extendable by ninety days. The proviso to Section 12(3) imposes an outer-limit of three hundred and thirty days, including time taken in legal proceedings. While a three-judge bench of this Court in Essar Steel India Ltd v. Satish Kumar Gupta (2020) 8 SCC 531 held such a time-limit on court proceedings as violative of Article 14, only the word mandatorily was struck ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debtor is given 10 days from the date of receipt of demand notice or copy of invoice to either point out that a dispute exists between the parties or that he has since repaid the unpaid operational debt. If neither exists, then an application once filed has to be disposed of by the adjudicating authority within 14 days of its receipt, either by admitting it or rejecting it. An appeal can then be filed to the Appellate Tribunal under Section 61 of the Act within 30 days of the order of the adjudicating authority with an extension of 15 further days and no more. 36. Section 64 of the Code mandates that where these timelines are not adhered to, either by the Tribunal or by the Appellate Tribunal, they shall record reasons for not doing so within the period so specified and extend the period so specified for another period not exceeding 10 days. Even in appeals to the Supreme Court from the Appellate Tribunal under Section 62, 45 days' time is given from the date of receipt of the order of the Appellate Tribunal in which an appeal to the Supreme Court is to be made, with a further grace period not exceeding 15 days. The strict adherence of these timelines is of essence to both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n timelines are placed even on legal proceedings, reading in the requirement of an order being made available under a general enactment (Companies Act) would do violence to the special provisions enacted under the IBC where timing is critical for the workability of the mechanism, health of the economy, recovery rate of lenders and valuation of the corporate debtor. The IBC, as a prescriptive mechanism, affecting rights of stakeholders who are not necessarily parties to the proceedings, mandates diligence on the part of applicants who are aggrieved by the outcome of their litigation. An appeal, if considered necessary and expedient by an aggrieved party, is expected to be filed forthwith without awaiting a free copy which may be received at an indefinite stage. Hence, the omission of the words from the date on which the order is made available for the purposes of computation of limitation in Section 61(2) of the IBC, is a consistent signal of the intention of the legislature to nudge the parties to be proactive and facilitate timely resolution. 18 On the question of a certified copy for filing an appeal against an order passed by the NCLT under the IBC, Rule 22(2) of the NCLA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (emphasis supplied) The import of Section 12 of the Limitation Act and its explanation is to assign the responsibility of applying for a certified copy of the order on a party. A person wishing to file an appeal is expected to file an application for a certified copy before the expiry of the limitation period, upon which the time requisite for obtaining a copy is to be excluded. However, the time taken by the court to prepare the decree or order before an application for a copy is made cannot be excluded. If no application for a certified copy has been made, no exclusion can ensue. In fact, the explanation to the provision is a clear indicator of the legal position that the time which is taken by the court to prepare the decree or order cannot be excluded before the application to obtain a copy is made. It cannot be said that the right to receive a free copy under Section 420(3) of the Companies Act obviated the obligation on the appellant to seek a certified copy through an appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limitation commenced once the order was pronounced and the time taken by the Court to provide the appellant with a certified copy would have been excluded, as clarified in Section 12(2) of the Limitation Act, if the appellant had applied for a certified copy within the prescribed period of limitation under Section 61(2) of the IBC. The construction of the law does not import the absurdity the appellant alleges of an impossible act of filing an appeal against an order which was uploaded on 12 March 2020. However, the mandate of the law is to impose an obligation on the appellant to apply for a certified copy once the order was pronounced by the NCLT on 31 December 2019, by virtue of Section 61(2) of the IBC read with Rule 22(2) of the NCLAT Rules. In the event the appellant was correct in his assertion that a correct copy of the order was not available until 20 March 2020, the appellant would not have received a certified copy in spite of the application till such date and accordingly received the benefit of the suo motu order of this Court which came into effect on 15 March 2020. However, in the absence of an application for a certified copy, the appeal was barred by limitation mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal, which continues to bind litigants under the IBC. While it is true that the tribunals, and even this Court, may choose to exempt parties from compliance with this procedural requirement in the interest of substantial justice, as re-iterated in Rule 14 of the NCLAT Rules, the discretionary waiver does not act as an automatic exception where litigants make no efforts to pursue a timely resolution of their grievance. The appellant having failed to apply for a certified copy, rendered the appeal filed before the NCLAT as clearly barred by limitation. 23 The appellant was present before the NCLT on 31 December 2019 when interim relief was denied and the miscellaneous application was dismissed. The appellant has demonstrated no effort on his part to secure a certified copy of the said order and has relied on the date of the uploading of the order (12 March 2020) on the website. The period of limitation for filing an appeal under Section 61(1) against the order of the NCLT dated 31 December 2019, expired on 30 January 2020 in view of the thirty-day period prescribed under Section 61(2). Any scope for a condonation of delay expired on 14 February 2020, in view of the outer limit o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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