Supreme Court clarifies limitation for appeals under IBC: Sanket Kumar Agarwal vs. APG Logistics (2023)

Introduction

Date of the Judgment: 1 May 2023
Citation: 2023 INSC 387
Judges: Dr Dhananjaya Y Chandrachud, CJI and J B Pardiwala, J. (authored by Dr Dhananjaya Y Chandrachud, CJI).
Can a delay in filing an appeal be excused if it’s due to the time taken to obtain a certified copy of the order and the confusion surrounding e-filing procedures? The Supreme Court of India recently addressed this crucial question in a case concerning the Insolvency and Bankruptcy Code, 2016 (IBC). This judgment clarifies the calculation of the limitation period for appeals under the IBC, particularly concerning the exclusion of time for obtaining certified copies and the impact of e-filing. The bench comprised of Chief Justice of India Dr Dhananjaya Y Chandrachud and Justice J B Pardiwala, with the opinion authored by Dr Dhananjaya Y Chandrachud, CJI.

Case Background

The case began with an application filed by the appellant, Sanket Kumar Agarwal, under Section 7 of the IBC in June 2021, seeking to initiate the Corporate Insolvency Resolution Process against the respondent, APG Logistics Private Limited. The National Company Law Tribunal (NCLT) dismissed this application on 26 August 2022. Subsequently, on 2 September 2022, the appellant applied for a certified copy of the NCLT order. This application was received by the NCLT Registry on 5 September 2022. The order was then uploaded on the NCLT website, and a certified copy was provided to the appellant on 15 September 2022. The appellant filed an appeal before the National Company Law Appellate Tribunal (NCLAT) on 10 October 2022, via e-filing, along with an application for condonation of a five-day delay. A physical copy of the appeal was filed on 31 October 2022.

Timeline:

Course of Proceedings

The NCLAT dismissed the appeal, holding that it was filed beyond the permissible limitation period. The NCLAT calculated the limitation period from the date of the NCLT order (26 August 2022) and concluded that the appeal was filed on the 46th day, exceeding the 45-day limit (30 days + 15 days condonable delay) prescribed under Section 61 of the IBC. The NCLAT stated that the appellant could not wait until receipt of the certified copy to file the appeal. It noted that the 30-day period ended on 24 September 2022, and even with a 15-day extension, the appeal was filed late. The NCLAT did not exclude the time taken to obtain the certified copy of the order.

Legal Framework

The core legal provisions relevant to this case include:

• Section 61(2) of the Insolvency and Bankruptcy Code, 2016 (IBC): This section stipulates that an appeal against an order of the Adjudicating Authority must be filed within 30 days, with a provision for a 15-day extension if sufficient cause is shown. It states:
  “Every appeal under sub-section (1) shall be filed within thirty days before the National Company Law Appellate Tribunal: Provided that the National Company Law Appellate Tribunal may allow an appeal to be filed after the expiry of the said period of thirty days if it is satisfied that there was sufficient cause for not filing the appeal but such period shall not exceed fifteen days.”
• Section 238A of the IBC: This section makes the Limitation Act 1963 applicable to proceedings and appeals before the NCLAT. It states: “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, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal, as the case may be.”
• Section 12(1) of the Limitation Act 1963: This section mandates the exclusion of the day from which the limitation period is reckoned. It states: “In computing the period of limitation for any suit, appeal or application, the day from which such period is to be reckoned, shall be excluded.”
• Section 12(2) of the Limitation Act 1963: This section allows for the exclusion of the time required to obtain a certified copy of the order being appealed. It states: “In computing the period of limitation for an appeal or an application for leave to appeal or for revision or for review of a judgment, the day on which the judgment complained of was pronounced and the time requisite for obtaining a copy of the decree, sentence or order appealed from or sought to be revised or reviewed shall be excluded.”
• Rule 3 of the National Company Law Appellate Tribunal Rules, 2016 (NCLAT Rules 2016): This rule specifies that the day from which a time period is reckoned should be excluded. It states: “Where a period is prescribed by the Act and these rules or under any other law or is fixed by the Appellate Tribunal for doing any act, in computing the time, the day from which the said period is to be reckoned shall be excluded, and if the last day expires on a day when the office of the Appellate Tribunal is closed, that day and any succeeding day on which the Appellate Tribunal remains closed shall also be excluded.”
• Rule 22 of the NCLAT Rules 2016: This rule states that an appeal must be presented at the filing counter with a certified copy of the order. It states: “(1) Every appeal shall be presented in Form NCLAT-1 in triplicate by the appellant or petitioner or applicant or respondent, as the case may be, in person or by his duly authorised representative duly appointed in this behalf in the prescribed form with stipulated fee at the filing counter and non-compliance of this may constitute a valid ground to refuse to entertain the same. (2) Every appeal shall be accompanied by a certified copy of the impugned order.”
• Rule 103 of the NCLAT Rules 2016: This rule allows for filing through electronic media. It states: “The Appellate Tribunal may allow filing of appeal or proceedings through electronic mode such as online filing and provide for rectification of defects by e-mail or internet and in such filing, these rules shall be adopted as nearly as possible on and form a date to be notified separately and the Central Government may issue instructions in this behalf from time to time.”

Arguments

Appellant’s Submissions:

• The NCLAT should have excluded the period from 5 September 2022 to 15 September 2022, the time taken to obtain the certified copy, when calculating the limitation period.
• The NCLAT erred by not excluding the date of the NCLT order (26 August 2022) as per Section 12(1) of the Limitation Act 1963 and Rule 3 of the NCLAT Rules 2016.
• The NCLAT disregarded precedents, including the Supreme Court’s judgment in V Nagarajan v. SKS Ispat and Power Limited & Ors [(2022) 2 SCC 244], which discusses the exclusion of time for obtaining certified copies.
• It was impossible to draft the appeal before 15 September 2022, as the appellant needed the certified copy to understand the grounds for dismissal.

Respondent’s Submissions:

• The appeal was initially filed electronically on 10 October 2022.
• As per the NCLAT’s circular of 3 January 2021, physical copies were required along with the e-filing receipt.
• A subsequent order on 21 October 2022 clarified that the limitation period would be computed from the date of physical presentation of the appeal.
• The order of 21 October 2022 was later withdrawn on 24 December 2022, which then stated that the limitation shall be computed from the date of e-filing.
• Even with e-filing on 10 October 2022, limitation would not stop running until a hard copy was filed.

Issues Framed by the Supreme Court

The Supreme Court considered the following key issues:

1. Whether the NCLAT was correct in dismissing the appeal on the ground of limitation?
2. Whether the time taken to obtain a certified copy of the order should be excluded while computing the limitation period?
3. Whether the date of the order should be excluded while computing the limitation period?
4. Whether limitation should be computed from the date of e-filing or from the presentation of the appeal at the filing counter?

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each authority was viewed by the Court:

• V Nagarajan v. SKS Ispat and Power Limited & Ors [(2022) 2 SCC 244]: The Supreme Court reiterated the principle laid down in this case, emphasizing that the time taken to obtain a certified copy of the order should be excluded from the limitation period, provided the application for the certified copy was made within the initial limitation period.
• Section 61(2) of the IBC: The Court acknowledged the 30-day limitation period for appeals, with a provision for a 15-day extension.
• Section 238A of the IBC: The court noted that this section makes the Limitation Act 1963 applicable to proceedings before the NCLAT.
• Section 12(1) of the Limitation Act 1963: The Court applied this provision to exclude the date of the NCLT order from the calculation of the limitation period.
• Section 12(2) of the Limitation Act 1963: The Court used this provision to justify the exclusion of the time taken to obtain a certified copy of the order.
• Rule 3 of the NCLAT Rules 2016: The Court relied on this rule to support the exclusion of the date of the order while calculating the limitation period.
• Rule 22 of the NCLAT Rules 2016: The Court acknowledged the requirement of filing the appeal with a certified copy of the order.
• Rule 103 of the NCLAT Rules 2016: The court took note of this rule which allows for filing of appeal through electronic mode.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to ensure that the limitation period for filing appeals is calculated fairly, taking into account the practical difficulties faced by litigants in obtaining certified copies of orders and the inconsistencies in NCLAT’s administrative guidance on e-filing. The court emphasized the importance of adhering to the principles of natural justice and ensuring that litigants are not prejudiced by procedural complexities. The court also highlighted the need for the judiciary and tribunals to modernize and adapt to technology, promoting e-filing and reducing the burden on litigants.

Fact:Law Ratio:

Logical Reasoning:

The court’s reasoning was based on a combined interpretation of the IBC, the Limitation Act, and the NCLAT Rules. The court held that the NCLAT had erred in calculating the limitation period by failing to exclude the date of the order and the time taken to obtain a certified copy. The court also noted the inconsistencies in NCLAT’s administrative guidance on e-filing, emphasizing the need for a seamless transition to working in the electronic mode. The court also considered the 5 days delay in filing the appeal and held that the same should have been condoned by the NCLAT.

The court rejected the argument that the limitation period should be calculated from the date of physical filing, emphasizing that with technological advances, the country’s judiciary and tribunals must move towards e-filing. The court also noted that the physical filing is a duplication of effort and is time consuming.

The Supreme Court highlighted the importance of e-filing, stating, “With technological advances, the country’s judiciary and tribunals must move towards e-filing. This process has already commenced and is irreversible.” The court further noted, “The judicial process has traditionally been guzzling paper. This model is not environmentally sustainable.” The court also observed, “It is utterly incomprehensible why NCLAT should insist on physical filing in addition to e-filing. This unnecessarily burdens litigants and the Bar and is a disincentive for e-filing.”

Key Takeaways

• The limitation period for filing appeals under the IBC is to be calculated by excluding the date of the order and the time taken to obtain a certified copy, provided the application for the certified copy was made within the initial limitation period.
• Tribunals must move towards e-filing to reduce the burden on litigants and promote efficiency.
• The Supreme Court has emphasized the need for a seamless transition to working in the electronic mode.
• The NCLAT must provide clear and consistent administrative guidance on e-filing procedures.
• The Union Government must have a fresh look at the rules to encourage e-filing across tribunals.

Directions

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

Development of Law

The ratio decidendi of this case is that the limitation period for filing appeals under the IBC must be calculated by excluding the date of the order and the time taken to obtain a certified copy, provided the application for the certified copy was made within the initial limitation period. The Court also held that limitation shall be computed from the date of e-filing. This judgment clarifies the correct interpretation of Section 61(2) of the IBC, Section 12 of the Limitation Act 1963, and the relevant rules of the NCLAT, ensuring a more consistent and fair application of the law.

Conclusion

The Supreme Court allowed the appeal, setting aside the NCLAT’s order. The court clarified that the limitation period for appeals under the IBC must be calculated by excluding the date of the order and the time taken to obtain a certified copy. The court also emphasized the importance of e-filing and directed the relevant authorities to take steps to ensure a seamless transition to electronic mode. This judgment ensures a more consistent and fair application of the law, reducing the burden on litigants and promoting efficiency in the judicial process.