2023 (5) TMI 901 - SC - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - time limitation - delay of 5 days in filing the appeal - appellant submitted that the inadvertent delay of 5 days in filing the appeal had been caused due to the additional time needed to obtain legal advice, collate documents and connect with counsel during the festive season. Whether the appeal was instituted within limitation? HELD THAT - In its impugned order, NCLAT observed that the appeal was lodged through the e-portal on 10 October 2022, which was the 46th day after the order of the NCLT. It observed that while Section 61(2) of the IBC prescribes a 30-day deadline for preferring an appeal against an order of the adjudicating authority, the appellate tribunal can condone a delay of upto 15 days, if sufficient cause is shown. Furthermore, it held that the ingredients of Section 61 of the IBC do not visualize that an aggrieved person has to wait till he is in receipt of a certified copy of the impugned order before preferring an appeal. The NCLAT held that even according to the version of the appellants, the period of 30 days would end on 4 October 2022 while the appeal was filed on 10 October 2022. It noted that 10 days (from 26 August 2022 to 4 September 2022) were spent prior to the application for a certified copy and between 15 September 2022 and 4 October 2022 another period of 20 days elapsed - the NCLAT concluded that the appeal was barred by limitation on the ground that it was instituted on the 46th day following the order of the NCLT, exceeding the outer limit of 45 days that was permissible under Section 61 of the IBC. The dispute in the appeal arises over the period of limitation applicable for filing an appeal against an order of the NCLT under the IBC. The IBC is a complete code. Section 238 of the IBC provides that the 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. Relevant provisions of the IBC, Limitation Act 1963, NCLAT Rules 2016 and administrative orders are extracted below and are referred to, in turn. It is evident that on the one hand, Rule 22 of the NCLAT Rules 2016 requires the presentation of an appeal at the filing counter in the prescribed mode, but on the other, NCLAT also envisages e-filing of appeals. This is made evident in the SOP dated 3 January 2021 which mandates the filing of a physical copy of an appeal as per the procedure prescribed in the NCLAT Rules 2016, while referring to the procedure for the hearing of cases through the virtual mode, using the e-filing portal. The subsequent order dated 21 October 2022 acknowledges that there was an absence of clarity in regard to the period with reference to which limitation would commence - The power of condoning a delay of up to 15 days beyond the original period of 30 days lies within the discretionary power of the NCLAT. The appeal was instituted within the outer limit of 45 days. In the present case, the application for a certified copy was sent from Delhi to Chennai on 2 September 2022, which was received on 5 September 2022, within the period of limitation of 30 days specified in Section 61(2) - In the present case, the appellant exercised due diligence and applied for a certified copy upon pronouncement of the order in terms of Rule 22(2) of the NCLT Rules 2016. The certified copy was provided to the appellant on 15 September 2022. Hence, the period of 10 days between 5 September 2022 and 15 September 2022 taken by the court to provide a certified copy of the order ought to be excluded when determining the period of limitation under Section 61(2) of the IBC. Thus, the NCLAT was in error in dismissing the appeal on the ground of limitation. The explanation which was advanced by the appellant for condoning the period of 5 days (beyond the period of 30 days stipulated for the filing of an appeal) was sufficient and the delay should have been condoned within the four corners of the statute. Appeal allowed.

Summary

Issues Involved:
1. Limitation period for filing an appeal under Section 62 of the Insolvency and Bankruptcy Code 2016 (IBC).
2. Exclusion of time for obtaining a certified copy of the order in computing the limitation period.
3. Administrative orders and rules regarding e-filing and physical filing of appeals.

Summary:

Issue 1: Limitation Period for Filing an Appeal under IBC
The appeal arises under Section 62 of the IBC from a judgment of the NCLAT, which dismissed the appeal against the NCLT order on the ground of limitation. The appellant argued that the appeal was filed within the prescribed period of limitation, considering the exclusion of time taken to obtain a certified copy of the order. The NCLAT held that the appeal was lodged on the 46th day after the NCLT order, exceeding the permissible limit of 45 days under Section 61 of the IBC. The Supreme Court found that the appeal was actually lodged on the 45th day, thus within the outer limit.

Issue 2: Exclusion of Time for Obtaining a Certified Copy
The appellant contended that the period from 5 September 2022 (when the application for a certified copy was filed) to 15 September 2022 (when the copy was received) should be excluded. The Supreme Court agreed, referencing Section 12(2) of the Limitation Act 1963, which allows the exclusion of time requisite for obtaining a copy of the order. The Court noted that the appellant had exercised due diligence by applying for a certified copy within the prescribed period.

Issue 3: Administrative Orders and Rules on E-filing and Physical Filing
The Supreme Court examined the administrative orders and rules regarding the computation of limitation for e-filing and physical filing. It noted the lack of clarity and the flip-flops in NCLAT's administrative guidance on whether limitation would commence from the date of e-filing or from the presentation of the appeal at the filing counter. The Court emphasized the need for the judiciary and tribunals to modernize and adapt to technology, encouraging e-filing to reduce duplication of effort and environmental impact.

Conclusion:
The Supreme Court concluded that the NCLAT erred in dismissing the appeal on the ground of limitation. The explanation for condoning the delay of 5 days was sufficient. The appeal was allowed, and the NCLAT's order was set aside. The appeal was restored to the file of the NCLAT for disposal on merits. The Court also suggested that the Union Government should re-evaluate rules to encourage e-filing across tribunals.