Date of Judgement:
22nd October 2021
Bench:
Justices DY Chandrachud, Vikram Nath and BV Nagarathna
Parties:
Appellant : V Nagarajan
Respondent: SKS Ispat and Power Ltd.& Ors.
Subject
This case dealt with whether an appeal can be granted against the order of NCLT after the expiry of limitation period of 30 days.
Legal Provisions
Section 61(2) of Insolvency and Bankruptcy Code (IBC) states that any person aggrieved by the order of the Adjudicating Authority may prefer an appeal to the National Company Law Appellate Tribunal within 30 days of such order. The IBC shall have overriding effect over the Companies Act or any other law for the time being in force.
Overview
- The counsel for the appellant contended that copy of order was not uploaded on the website and owing to COVID-19, the NCLAT was shut for hearings. Further, the counsel for the appellant contended that an appeal was filed based on the order dated 15th March 2020 seeking extension of limitation period due to lack of receipt of a free certified copy.
- The appellant contended that the limitation period of 30 days would not apply owing to the pandemic and therefore the appeal filed should be considered as rightfully filed within 30 days.
- The appellant contended that Rule 22 of NCLAT Rules makes it obligatory to file a certified copy of the order for filing an appeal. Rule 14 of the NCLAT Rules also permits exemption from complying with any of the rules on just grounds.
- It was further contended by the appellant that Section 420(3) of the Companies Act read with Rule 50 of the NCLT Rules directs that a free copy to be issued to every party and therefore it eliminates any requirement to obtain a certified copy of the order. Therefore, it was contended that the limitation would apply on the date the certified free copy of the resolution is issued to the party.
- The respondent contended that Section 61 of the IBC mandates that an appeal against the order should be made before the expiry of 30 days which is extendable to a maximum period of 15 days and that the said period had expired.
- It was further contended that Section 61 (2) of the IBC does not contain any provision which states that limitation period shall commence from the ‘date of order being made available’. Further, the respondent referring to IBC stated that the provisions mention that the Special Acts shall have an overriding effect over general enactments.
- The counsel for the respondent further contended Section 12 of Limitation Act prescribes that the limitation period can be ascertained from the date of order or date of filing an application for a certified copy and in absence of compliance with either, it is deemed to be barred by limitation.
- The counsel for the respondent further contended that Rule 22 of NCLAT Rules prescribes that an appeal should be annexed with a certified copy of the order. The appellant had failed to comply with the provisions by filing online copy of the NCLT order without seeking exemption from filing a certified copy.
Issues
- Isdelay in uploading the certified copy a valid ground for claiming relief after expiry of limitation period under the IBC?
- Is annexing of certified copy of order obligatory for an appeal against the order of IBC?
Judgement Analysis
- The Supreme Court after hearing both the parties at length observed that in case of confusion over the limitation period applicable on the appellant, Section 238 of the IBC shall have an overriding effect over any other law in force. Further, the court citing Section 29(2) ofthe Limitation Act, stated that the special laws shall apply in a suit for limitation.
- Further, the Hon’ble Court relying on the judgement of Dharamshi v. Kotak Investment Advisors Ltd.,held that the IBC shall have an overriding effect on the Limitation Act.
- The court observed that the IBC is a complete code and therefore any reference to other laws is not required. The provisions of IBC do not mention any statement such as the period of limitation shall commence from the ‘date on which a free certified copy is issued’ and such a deliberate omission hastens the bankruptcy proceedings without any undue delay.
- Further, the court stated that a certified copy of the order shall be annexed for filing an appeal against the order of the NCLT under the IBC, Rule 22(2) of the NCLAT Rules. The court stated that the parties cannot automatically dispense with their obligation to apply for certified copies.
- The court held that exemption from submitting certified copies cannot be granted as certified copy is an important indicator of due diligence exercised by the aggrieved party.
- The court clarifying on when the period of limitation would commence, stated that the order under Article 142 extending period of limitation shall be applicable only in case of decree and orders. Citing the provisions Section 61 (2) and Section 61(1), it is evident that the limitation proceedings would commence from the date of pronouncement of order.
- The Supreme Court observed that the appellant had taken no steps to obtain certified copy of the order dated 31st December,2019 and therefore the period of limitation for filing an appeal had expired on 30th January, 2020.
Conclusion
The Hon’ble Supreme Court held that the period of limitation under the IBC shall operate as soon as order is pronounced and not on the date the order is uploaded. The IBC shall have an overriding effect over the Companies Act and any other laws in force.
Click here to download the original copy of the judgement
Questions:
1. Which Section of IBC deals with the limitation period?
2. What is the time period of limitation specified by IBC?
