Supreme Court Clarifies Limitation for NCLT Appeals: Sanjay Pandurang Kalate vs. Vistra ITCL (India) Limited (2023) INSC 1063 (4 December 2023)

Date of the Judgment: 4 December 2023

Citation: 2023 INSC 1063

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

Can the clock for calculating the limitation period for appeals against orders of the National Company Law Tribunal (NCLT) start from the date of the order or the date when the order is uploaded? The Supreme Court of India recently addressed this critical question in a case concerning the Insolvency and Bankruptcy Code, 2016 (IBC). The court clarified that the limitation period for filing an appeal before the National Company Law Appellate Tribunal (NCLAT) begins from the date of pronouncement of the order, not the date of its upload. This judgment has significant implications for litigants involved in insolvency proceedings. The judgment was authored by Dr Dhananjaya Y Chandrachud, CJI, with J B Pardiwala, J, and Manoj Misra, J, concurring.

Case Background

The case revolves around an appeal filed by Sanjay Pandurang Kalate, a former director of Evirant Developers Private Limited (the Corporate Debtor). Vistra ITCL (India) Limited (Respondent 1) had initiated Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The appellant alleged that this application was based on collusion with other respondents, who were former directors of the Corporate Debtor. The appellant filed an interlocutory application before the NCLT, arguing that the reply to the Section 7 application was filed without proper authorization. The NCLT dismissed this application, leading to the present appeal.

Timeline:

Course of Proceedings

The NCLT heard the appellant’s interlocutory application on 17 May 2023, but did not pronounce any order on that date. The order was uploaded on 30 May 2023, although it was dated 17 May 2023. The NCLT dismissed the appellant’s application, stating it was filed without authorization and was frivolous. The appellant applied for a certified copy on 30 May 2023, receiving it on 1 June 2023. The appeal was e-filed before the NCLAT on 10 July 2023. The NCLAT dismissed the appeal, concluding it was barred by limitation, as it was filed beyond the 45-day limit prescribed under Section 61 of the IBC. The NCLAT relied on the Supreme Court’s decision in V Nagarajan v. SKS Ispat [(2022) 2 SCC 244], holding that the limitation period starts from the date of pronouncement of the order, not the date of upload. The NCLAT also rejected the appellant’s argument to exclude the summer vacation period, as the registry remained open for filing appeals.

Legal Framework

The primary legal provision in question is Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC), which governs appeals to the NCLAT. Section 61(1) states that any person aggrieved by an order of the Adjudicating Authority (NCLT) may appeal to the NCLAT. Section 61(2) specifies that the appeal must be filed within thirty days. The proviso to Section 61(2) allows the NCLAT to accept an appeal after the thirty-day period if sufficient cause is shown, but this extension cannot exceed fifteen days. Thus, the outer limit for filing an appeal is 45 days.

Section 61 of the IBC states:

“61. Appeals and appellate authority – (1) Notwithstanding anything to the contrary contained under the Companies Act 2013, any person aggrieved by the order of the Adjudicating Authority under this part may prefer an appeal to the National Company Law Appellate Tribunal.

(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.”

Arguments

Appellant’s Arguments:

• The appellant contended that the limitation period should commence from 30 May 2023, the date the order was uploaded, as they became aware of the order only on that date.
• The appellant argued that the NCLAT was closed for summer vacations from 5 June 2023 to 2 July 2023, and this period should be excluded from the calculation of limitation.
• The appellant distinguished the case from V Nagarajan v. SKS Ispat [(2022) 2 SCC 244], relying on the decision in Sanket Kumar Agarwal v. APG Logistics Private Limited [2023 SCC OnLine SC 976].

Respondent’s Arguments:

• The respondent argued that the limitation period should commence from 17 May 2023, the date mentioned on the order, as per the decision in V Nagarajan v. SKS Ispat [(2022) 2 SCC 244].
• The respondent contended that the summer vacation period should not be excluded, as the NCLAT had issued a notification stating that the registry would remain open and filing of appeals was permissible during the vacation.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue:

1. When does the limitation period commence for filing an appeal against an order of the NCLT before the NCLAT under Section 61 of the IBC?

Treatment of the Issue by the Court

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

Authorities

Cases:

• V Nagarajan v. SKS Ispat [(2022) 2 SCC 244] – The Supreme Court held that limitation commences from the date of pronouncement and not the date of upload of the order or receipt of a certified copy. The court clarified that the time taken to procure the certified copy will be excluded from the calculation of the period of limitation, provided the appellant applies within the prescribed period of limitation under Section 61(2) of the IBC.
• Sanket Kumar Agarwal v. APG Logistics Private Limited [2023 SCC OnLine SC 976] – The Supreme Court clarified that (i) the limitation stops running on the e-filing of an appeal before the NCLAT and not on presentation of a physical copy; (ii) the date on which the order is pronounced is to be excluded from the calculation of limitation, and (iii) the time taken by the NCLT to provide the appellant with the certified copy would be excluded from the calculation of limitation, provided the appellant applies within the prescribed period of limitation under Section 61(2) of the IBC.

Legal Provisions:

• Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC) – Deals with appeals and appellate authority. It specifies the limitation period for filing appeals before the NCLAT.
• Rule 89(1) of the National Company Law Tribunal Rules, 2016 (NCLT Rules) – Indicates that when NCLAT registry publishes its cause list, a distinction is drawn between cases listed for pronouncement of orders and other cases.
• Rule 150(1) of the National Company Law Tribunal Rules, 2016 (NCLT Rules) – Provides that after hearing the parties, the order may be pronounced either at once or soon thereafter, as may be practicable, but not later than thirty days from the final hearing.
• Rule 151 of the National Company Law Tribunal Rules, 2016 (NCLT Rules) – Indicates that a member of the bench may pronounce the order for and on behalf of the Bench.

Judgment

• V Nagarajan v. SKS Ispat [(2022) 2 SCC 244]*: The Supreme Court distinguished this case on facts, noting that in V Nagarajan, there was an unequivocal pronouncement of the order before the upload, whereas in the present case, no order was pronounced on the date of hearing.
• Sanket Kumar Agarwal v. APG Logistics Private Limited [2023 SCC OnLine SC 976]*: The Supreme Court followed this case, reiterating that the date of e-filing of the appeal stops the limitation from running and that the time taken to provide the certified copy should be excluded.

What weighed in the mind of the Court?

The Court’s decision was primarily influenced by the need to adhere to the procedural rules of the NCLT and the IBC, while also ensuring that litigants are not unduly prejudiced by administrative delays. The emphasis on the date of pronouncement aligns with the principles of natural justice, ensuring that the aggrieved party has a clear starting point for calculating the limitation period. The Court also considered the need to promote e-filing and reduce the burden on litigants.

The court’s reasoning was as follows:

The Court considered the argument that the limitation should begin from the date of the order (17 May 2023) but rejected it because no order was pronounced on that date. The Court also considered the earlier judgment in V Nagarajan but distinguished it on the facts, stating that in the present case, there was no pronouncement on the date of hearing. The Court emphasized that the NCLT must follow its rules, which require a pronouncement of the order.

The Supreme Court stated, “In the present case, the cause list for 17 May 2023 placed on record by the appellant indicates that the case was listed for admission and not for pronouncement. Further, on a specific query of the Court, it is not in dispute between counsel for the appellant and the respondent, that no substantive order was passed on 17 May 2023 by the NCLT.”

The Court further noted, “In the facts of the present case, the date of upload of the order is the same as the date of pronouncement.”

The Court also observed, “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.”

The majority opinion was delivered by Dr Dhananjaya Y Chandrachud, CJI, with J B Pardiwala, J, and Manoj Misra, J, concurring.

Key Takeaways

• The limitation period for filing an appeal against an order of the NCLT before the NCLAT begins from the date of pronouncement of the order, which may be different from the date of hearing or the date mentioned on the order.
• In cases where the order is not pronounced on the date of hearing, the date of upload of the order may be considered the date of pronouncement.
• The NCLT must follow its rules, which require a pronouncement of the order, and should refrain from affixing the date of hearing on the order when it is pronounced on a later date.
• The time taken by the NCLT to provide a certified copy of the order will be excluded from the calculation of the limitation period, provided the appellant applies within the prescribed period of limitation under Section 61(2) of the IBC.
• The date of e-filing of the appeal stops the limitation from running, not the filing of the physical copy.

Directions

The Supreme Court directed the NCLAT to restore the appeal to its file and reconsider whether the appellant has shown sufficient cause for condoning the delay beyond thirty days. The NCLAT was also directed to dispose of the appeal at the earliest. The Court did not stay the CIRP at this stage.

Development of Law

The ratio decidendi of the case is that the limitation period for filing an appeal against an order of the NCLT before the NCLAT begins from the date of pronouncement of the order, and the date of pronouncement is not necessarily the date of hearing or the date mentioned on the order. This clarifies the position of law laid down in V Nagarajan v. SKS Ispat [(2022) 2 SCC 244] and reiterates the principles laid down in Sanket Kumar Agarwal v. APG Logistics Private Limited [2023 SCC OnLine SC 976]. The judgment emphasizes the importance of adhering to procedural rules and ensuring fairness to litigants.

Conclusion

In conclusion, the Supreme Court clarified that the limitation period for filing appeals against NCLT orders begins from the date of pronouncement, which may be different from the date of hearing or the date mentioned on the order. The Court emphasized the need for the NCLT to follow its rules and ensure that litigants are not prejudiced by administrative delays. The judgment also promotes e-filing and reduces the burden on litigants, reinforcing the need for a modernized and technology-friendly judiciary.