A Rajendra Vs Gonugunta Madhusudhan Rao & Ors (Supreme Court of India)
The Supreme Court of India has upheld an order by the National Company Law Appellate Tribunal (NCLAT), dismissing appeals filed by A Rajendra, a shareholder and suspended Managing Director of Dharti Dredging and Infrastructure Limited (Corporate Debtor). The NCLAT had dismissed the appeals due to the appellant’s failure to file them within the stipulated period under the Insolvency and Bankruptcy Code, 2016 (IBC), and the subsequent dismissal of applications for condonation of delay.
The case originated from two orders passed by the National Company Law Tribunal (NCLT) on July 20, 2023. One order dismissed an application by A Rajendra seeking to place his resolution plans before the Committee of Creditors (CoC) and stay the voting results on another resolution plan. The second order allowed an application by the Resolution Professional (RP) for the approval of a resolution plan submitted by a consortium (Respondent No. 5). A Rajendra then filed two appeals before the NCLAT without initially including applications for condonation of the delay, falsely claiming in one appeal that it was filed within the IBC’s limitation period.
Upon receiving notice, the respondents raised objections regarding the appeals being time-barred. Subsequently, A Rajendra filed applications for condonation of delay in both appeals. In one application, he argued that the limitation period should be counted from August 1, 2023, when the free certified copy of the NCLT order became available. In the other appeal, he claimed the limitation began from August 7, 2023, when the RP provided him with the order’s contents. However, the NCLAT noted inconsistencies in his claims, particularly the admission that he had never actually applied for certified copies of the NCLT orders.
The NCLAT dismissed the applications for condonation of delay, citing the appellant’s suppression of facts and incorrect averments in the grounds of appeal. The appellate tribunal found that A Rajendra had falsely stated that the appeals were within the statutory time limit and that he had applied for certified copies. This led to the dismissal of the appeals themselves. Before the Supreme Court, the senior counsel for the appellant did not dispute the factual findings of the NCLAT but argued that the appeals were filed within a permissible period where the delay could have been condoned under Section 12(3) of the Limitation Act and the proviso to Section 61(2) of the IBC, which allows an additional 15 days beyond the initial 30-day appeal period.
The appellant’s counsel contended that the limitation should be counted from the date of knowledge of the order’s contents, arguing that an effective appeal could not be filed without this knowledge. He also submitted that the ten-day delay, even if calculated from the date of the NCLT order’s pronouncement, was condonable. Furthermore, he argued that the absence of a condonation of delay application with the initial appeal was a curable defect and that the time taken for legal opinion and appeal preparation should have been considered sufficient cause for the delay. Reliance was placed on the Supreme Court’s judgment in Sesh Nath Singh & Anr. V. Baidyabati Sheoraphuli Co-operative Bank Ltd and Anr. to argue that a condonation of delay application is not always mandatory.
However, the respondents’ counsel supported the NCLAT’s order, emphasizing that the appellant had not approached the court with clean hands and had suppressed facts. They pointed out the false claims regarding the application for and receipt of certified copies. The respondents argued that the application for condonation of delay was filed much beyond the permissible period and contained a new stand inconsistent with the grounds of appeal. They asserted that since no certified copy was ever applied for, the reasons given by the NCLAT for dismissing the appeals were sound.
The Supreme Court, after considering the submissions and the relevant legal provisions, upheld the NCLAT’s decision. The court noted that under Section 61(2) of the IBC, an appeal must be filed within 30 days, with a proviso allowing an additional 15 days if the NCLAT is satisfied with the sufficient cause for the delay. The court emphasized that this extension is not a matter of right and requires a strict interpretation, reflecting the legislative intent for a time-bound insolvency resolution process.
Referring to Rule 22(2) of the NCLAT Rules, which mandates that an appeal be accompanied by a certified copy of the impugned order, the Supreme Court cited its earlier judgment in V. Nagarajan v. SKS Ispat and Power Limited. In that case, the court held that the limitation period under Section 61(2) of the IBC begins from the date of pronouncement of the order, not from the date the certified copy is made available, distinguishing it from the provisions of the Companies Act, 2013. The court reiterated that litigants cannot await the receipt of certified copies, as it would undermine the IBC’s time-bound framework.
The Supreme Court also referred to Cethar Limited (Resolution Professional) Vs. SKS Ispat & Power Ltd., where it was held that the absence of any effort to secure a certified copy within the limitation period negated the grounds for condonation of delay. Similarly, in National Spot Exchange Limited v. Anil Kohli, Resolution Professional for Dunar Foods Limited, the court reaffirmed that delays exceeding 15 days beyond the initial 30-day period cannot be condoned under Section 61(2) of the IBC, even under the extraordinary powers of Article 142 of the Constitution.
In the present case, the Supreme Court found that since A Rajendra had admittedly not applied for certified copies of the NCLT orders, the limitation period commenced the day after the pronouncement of the orders. The court held that the benefit of Section 12(2) of the Limitation Act, which allows exclusion of the time taken to obtain a certified copy, is only available if an application for the certified copy has been filed. As no such application was made, the appeals were clearly filed beyond the limitation period.
Regarding the first appeal, which was filed with a free certified copy provided by the NCLT, the Supreme Court ruled that even the ten-day period sought to be excluded for the preparation of the copy could not be credited to the appellant’s benefit because the limitation starts from the date of pronouncement, and the exclusion under Section 12(2) requires an application by the party. The court also noted that the application for condonation of delay in the first appeal did not disclose any justifiable reasons for the delay.
Therefore, the Supreme Court concluded that the NCLAT was justified in dismissing the applications for condonation of delay and consequently the appeals, as they were barred by limitation. The apex court upheld the NCLAT’s order and dismissed the appeals, with no orders on costs.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
