2020 (8) TMI 349 - AT - Insolvency and Bankruptcy

Invocation of performance guarantee given about another contact - refusal to grant interim relief to the Corporate Debtor - time limitation for filing reply before Appellate Tribunal - HELD THAT - Appellant has filed this Appeal on 08th June 2019 against the Order dated 31st December 2019 passed by the Adjudicating Authority/NCLT, Chennai Bench, Chennai - As per Section 61 of the Insolvency and Bankruptcy Code, 2016, the Appeal filed before this Appellate Tribunal against Order of the Adjudicating Authority can be filed within 30 days. The proviso to Section 61 of the Insolvency and Bankruptcy Code provides that the Appellate Tribunal may allow an Appeal to be filed after the expiry of the statutory period of 30 days. Still, in no circumstances, such extended period shall exceed 15 days. The language of the proviso to Section 61(1)of the I B Code makes it clear that this Tribunal does not have the power to extend the time limit beyond 15 days, in addition to the statutory time limit of 30 days. It is also clear that this extension of 15 days depends upon the satisfaction of the Appellate Tribunal, on being shown the sufficient cause for not filing the Appeal within the time limit. The moratorium order passed under sub-section (1) to Sec 14 of the I B Code does not apply to the surety in a contract of guarantee to a Corporate Debtor. Therefore, in the circumstances, the Adjudicating Authority passed the Order that the performance guarantee given by the bankers on behalf of the Corporate Debtor, whereby simply to set off the money in the event of an order was passed in favour of the Corporate Debtor, cannot be interfered with the performance guarantee with regard to another contract - the Adjudicating Authority has rightly refused to grant an interim relief about the invocation of bank guarantee given by bankers on behalf of the Corporate Debtor. Appeal dismissed.

Summary

Issues:
1. Timeliness of filing the Appeal

Analysis:
The Appeal in question arose from an Order issued by the Adjudicating Authority/National Company Law Tribunal, Chennai, declining to interfere with the invocation of a performance guarantee given for another contract, thus denying interim relief to the Corporate Debtor. The Appellant filed the Appeal against this Order on 08th June 2020, challenging the objection raised by the Registry regarding the limitation period. The Appellant argued that the certified copy of the Order was not issued, and only an unsigned copy was uploaded on the website on 12th March 2020, leading to the belief that the Appeal was within the time limit of 30 days from the Order's issuance.

Upon examination, the Tribunal noted that the statutory time limit for filing an Appeal under Section 61 of the Insolvency and Bankruptcy Code is 30 days, extendable by an additional 15 days only if sufficient cause is shown. The Supreme Court's decision in Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd. emphasized the importance of adhering to timelines in insolvency resolution processes, allowing a maximum extension of 15 days beyond the initial 30-day period. The Tribunal reiterated this stance in the case of Pr. Director General of Income Tax v. Spartek Ceramics India Ltd., emphasizing that no Appeal can be entertained after 45 days from the knowledge of the Adjudicating Authority's order.

Despite the Appellant's argument regarding the delay caused by the non-issuance of a certified copy, the Tribunal highlighted the absence of an application for Condonation of Delay and the lack of evidence supporting the claim of non-receipt of the Order. The Tribunal's limited jurisdiction to extend the time limit without sufficient cause was underscored, leading to the conclusion that the Appeal was not maintainable and was time-barred.

Furthermore, the Tribunal delved into the substantive issue of the Appeal concerning the invocation of the performance bank guarantee by the bankers on behalf of the Corporate Debtor. The Tribunal clarified that a performance guarantee does not fall under the definition of security interest as per the Insolvency and Bankruptcy Code. The Adjudicating Authority's decision not to grant interim relief regarding the invocation of the bank guarantee for another contract was upheld, emphasizing that the moratorium order does not apply to a surety in a contract of guarantee to a Corporate Debtor.

Ultimately, the Tribunal found no grounds for interference with the Adjudicating Authority's Order and dismissed the Appeal, with no order as to costs.