Supreme Court Clarifies Limitation for IBC Appeals: Sanket Kumar Agarwal vs. APG Logistics (2023)

Introduction

Date of the Judgment: May 1, 2023

Citation: 2023 INSC 727

Judges: Dr Dhananjaya Y Chandrachud, CJI and J B Pardiwala, J.

When does the clock start ticking for filing an appeal against an order under the Insolvency and Bankruptcy Code (IBC)? The Supreme Court recently addressed this crucial question regarding the calculation of the limitation period for appeals under the IBC. This case, Sanket Kumar Agarwal & Anr vs. APG Logistics Private Limited, clarifies how to compute the time limit for filing appeals before the National Company Law Appellate Tribunal (NCLAT), especially concerning the exclusion of time for obtaining certified copies of orders. The judgment was authored by Chief Justice Dr. Dhananjaya Y Chandrachud, with Justice J.B. Pardiwala concurring.

Case Background

The case involves an appeal by Sanket Kumar Agarwal and another party against an order of the National Company Law Tribunal (NCLT). The appellants had filed an application under Section 7 of the IBC in June 2021, seeking to initiate the Corporate Insolvency Resolution Process against APG Logistics Private Limited. The NCLT dismissed this application on August 26, 2022. Subsequently, the appellants applied for a certified copy of the order on September 2, 2022, which was received by the NCLT Registry on September 5, 2022. The certified copy was provided to the appellants on September 15, 2022, the same day the order was uploaded on the NCLT website. The appellants then filed an appeal before the NCLAT on October 10, 2022, along with an application to condone a delay of five days. The NCLAT dismissed the appeal as time-barred, leading to the current appeal before the Supreme Court.

Timeline:

Course of Proceedings

The NCLT dismissed the appellant’s application under Section 7 of the IBC on August 26, 2022. The appellants then appealed to the NCLAT, which dismissed the appeal, holding that it was filed beyond the prescribed limitation period. The NCLAT calculated the limitation period from the date of the NCLT order (August 26, 2022) and concluded that the appeal, filed on October 10, 2022, was filed on the 46th day, exceeding the 45-day limit (30 days + 15 days condonable delay) under Section 61 of the IBC. The NCLAT also held that the appellant could not wait for the certified copy of the order to file an appeal. The NCLAT did not exclude the time taken to obtain the certified copy of the order.

Legal Framework

The case revolves around the interpretation of several key legal provisions:

• Section 61 of the Insolvency and Bankruptcy Code, 2016: This section deals with appeals to the NCLAT. Sub-section (2) specifies that appeals must be filed within 30 days, with a provision for condoning a delay of up to 15 days if sufficient cause is shown. The relevant part of the provision states:

  “61. Appeals and Appellate Authority—(2) 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 Insolvency and Bankruptcy Code, 2016: This section makes the Limitation Act, 1963 applicable to proceedings or appeals before the NCLAT. The provision states:

  “238A. Limitation — 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 of the Limitation Act, 1963: This section deals with the exclusion of time in legal proceedings. Sub-section (1) states that the day from which the limitation period is reckoned shall be excluded. Sub-section (2) allows for the exclusion of time required to obtain a copy of the order appealed from. The relevant parts of the provision states:

  “12. Exclusion of time in legal proceedings — (1) 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. (2) 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: This rule stipulates that when calculating a time period, the day from which the period is to be reckoned shall be excluded. The provision states:

  “3. Computation of time period —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 National Company Law Appellate Tribunal Rules, 2016: This rule specifies that an appeal must be presented at the filing counter of the Appellate Tribunal and must be accompanied by a certified copy of the order under challenge. The provision states:

  “22. Presentation of appeal — (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 National Company Law Appellate Tribunal Rules, 2016: This rule allows the filing of appeals through electronic mode. The provision states:

  “103. Filling through electronic media — 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 September 5, 2022, when the application for a certified copy was filed, until September 15, 2022, when the copy was received, while computing the limitation period.
• The NCLAT incorrectly calculated the limitation period by not excluding the date of the order (August 26, 2022) as per Section 12(2) of the Limitation Act, 1963 and Rule 3 of the NCLAT Rules, 2016.
• The NCLAT disregarded judicial precedents, including the Supreme Court’s judgment in V Nagarajan v. SKS Ispat and Power Limited & Ors [ (2022) 2 SCC 244 ], which held that the time taken to obtain a certified copy should be excluded.
• It was impossible to draft an appeal before September 15, 2022, as the order was uploaded on the website and the certified copy was made available on that date.

Respondent’s Submissions:

• The appeal was filed on October 10, 2022, in electronic mode.
• A circular issued by the NCLAT on January 3, 2021, mandated that physical copies of appeals must be filed as per the NCLAT Rules, 2016, along with the e-filing receipt.
• An order issued by the Registrar of NCLAT on October 21, 2022, clarified that the limitation period would be computed from the date of presentation of the physical copy of the appeal as per Rule 22 of the NCLAT Rules, 2016.
• An order of December 24, 2022, withdrew the earlier order of October 21, 2022, and notified that limitation would be computed from the date of e-filing.
• Even with e-filing on October 10, 2022, the limitation period would not stop running until the physical copy was filed.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court considered the following 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 the limitation period should be computed from the date of e-filing or physical filing.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

✓ The Supreme Court followed its own judgment in V Nagarajan v. SKS Ispat and Power Limited & Ors [(2022) 2 SCC 244]* and reiterated that the time taken to obtain a certified copy of the order should be excluded from the computation of the limitation period.

✓ The Court applied Section 61(2) of the Insolvency and Bankruptcy Code, 2016* to ascertain the limitation period of 30 days for filing appeals before the NCLAT, with a condonable delay of 15 days.

✓ The Court applied Section 238A of the Insolvency and Bankruptcy Code, 2016* to make the provisions of the Limitation Act, 1963 applicable to appeals before the NCLAT.

✓ The Court applied Section 12 of the Limitation Act, 1963* to exclude the date of the order and the time taken to obtain the certified copy while computing the limitation period.

✓ The Court applied Rule 3 of the National Company Law Appellate Tribunal Rules, 2016* to exclude the date of the order while calculating the limitation period.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• The need to adhere to the statutory provisions of the Limitation Act, 1963 and the NCLAT Rules, 2016, which mandate the exclusion of the date of the order and the time taken to obtain a certified copy.
• The Court emphasized the importance of ensuring that litigants are not penalized for delays in obtaining certified copies of orders, which are often beyond their control.
• The Court highlighted the need for tribunals to adapt to technological advancements and promote e-filing.
• The Court expressed concern over the flip-flops by the NCLAT regarding the computation of limitation period and the need for clarity in such matters.

Sentiment Analysis of Supreme Court’s Reasoning

Fact:Law Ratio

Logical Reasoning:

The Supreme Court rejected the NCLAT’s interpretation that the appeal was time-barred. The Court reasoned that the NCLAT failed to correctly apply Section 12 of the Limitation Act, 1963, and Rule 3 of the NCLAT Rules, 2016, which mandates the exclusion of the date of the order and the time taken to obtain a certified copy. The Court also emphasized that the NCLAT should have considered the fact that the appellants had applied for a certified copy within the initial limitation period. The Court also noted that the NCLAT had flip-flopped on whether the limitation period should be computed from the date of e-filing or physical filing. The Court held that the limitation period should be computed from the date of e-filing.

The Court also observed that the NCLAT should move towards e-filing and that the insistence on physical filing was unnecessary and burdensome. The Court noted that the Union Government should have a fresh look at the rules to encourage e-filing across tribunals.

“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.”

“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.”

“With technological advances, the country’s judiciary and tribunals must move towards e-filing. This process has already commenced and is irreversible.”

Key Takeaways

• The limitation period for filing appeals before the NCLAT under the IBC is to be computed by excluding the date of the order and the time taken to obtain a certified copy, provided the application for the certified copy is filed within the initial limitation period.
• The limitation period should be computed from the date of e-filing and not the date of physical filing.
• Tribunals should move towards e-filing and reduce the burden on litigants by eliminating the requirement of physical filing.
• The judgment provides clarity on the computation of limitation period for appeals under the IBC and ensures that litigants are not penalized for delays that are not attributable to them.
• The Union Government should have a fresh look at the rules to encourage e-filing across tribunals.

Directions

The Supreme Court directed that a copy of the judgment should 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.

Specific Amendments Analysis

Not applicable as there is no specific amendment discussed in the judgment.

Development of Law

The ratio decidendi of this case is that the limitation period for filing appeals before the NCLAT under the IBC must be computed by excluding the date of the order and the time taken to obtain a certified copy of the order, provided the application for the certified copy is filed within the initial limitation period. Furthermore, the limitation period should be calculated from the date of e-filing. This clarifies the position of law regarding the computation of limitation period for appeals under the IBC, ensuring that litigants are not unfairly penalized for delays in obtaining certified copies or for relying on e-filing.

Conclusion

The Supreme Court allowed the appeal, setting aside the NCLAT’s order. The Court clarified that the limitation period for filing appeals under the IBC should be computed 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 NCLAT to move towards a more technology-friendly approach. This decision provides much-needed clarity on the computation of limitation periods and ensures that litigants are not unfairly penalized for delays in obtaining certified copies or for relying on e-filing.