Sanket Kumar Agarwal & Anr Vs APG Logistics Private Limited (Supreme Court of India)
Limitation period for appeal to NCLAT excludes date on which order pronounced & time taken to provide certified copy
Supreme Court held that for calculating limitation period for filing an appeal to NCLAT, the date on which order was pronounced and the time taken to provide certified copy is to be excluded.
Facts- This appeal arose u/s. 62 of the Insolvency and Bankruptcy Code 2016 from a judgement of the National Company Law Appellate Tribunal. The NCLAT dismissed the appeal against the order of the National Company Law Tribunal (NCLT) on the ground of limitation.
The appellant instituted an application under Section 7 of the IBC in June 2021 seeking the initiation of the Corporate Insolvency Resolution Process against the respondent. The application was dismissed by the NCLT by an order dated 26 August 2022. On 2 September 2022, the appellant filed an application for obtaining a certified copy of the order which was pronounced by the NCLT. The application was received by the Registry of NCLT on 5 September 2022. On 15 September 2022, the order was uploaded on the website of the NCLT and a certified copy was provided to the appellant on the same day. The appellant lodged an appeal before the NCLAT on 10 October 2022 in the e-filing mode along with an Interlocutory Application seeking condonation of delay of five days.
Conclusion- In the present case, the order was pronounced by the NCLT on 26 August 2022. Rule 3 of the NCLAT Rules 2016 stipulates that the date from which the period of limitation has to be reckoned (i.e., the date of the pronouncement of the order) would have to be excluded. Hence, the date on which the order was pronounced by the NCLT, namely 26 August 2022 would have to be excluded from the computation of limitation.
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.
With technological advances, the country’s judiciary and tribunals must move towards efiling. This process has already commenced and is irreversible. The Union Government must have a fresh look at the rules to encourage e-filing across tribunals. Perhaps one way forward would be to constitute a Working Group to make a comprehensive assessment of the position across tribunals and suggest regulatory changes.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Admit.
2. This appeal arises under Section 62 of the Insolvency and Bankruptcy Code 20161 from a judgment dated 9 January 2023 of the National Company Law Appellate Tribunal.2 The NCLAT dismissed the appeal against the order of the National Company Law Tribunal3 on the ground of limitation.
3. The appellant instituted an application under Section 7 of the IBC in June 2021 seeking the initiation of the Corporate Insolvency Resolution Process against the respondent. The application was dismissed by the NCLT by an order dated 26 August On 2 September 2022, the appellant filed an application for obtaining a certified copy of the order which was pronounced by the NCLT. The application was received by the Registry of NCLT on 5 September 2022. On 15 September 2022, the order was uploaded on the website of the NCLT and a certified copy was provided to the appellant on the same day. The appellant lodged an appeal before the NCLAT on 10 October 2022 in the e-filing mode along with an Interlocutory Application4 seeking condonation of delay of five days. A physical copy of the appeal was filed on 31 October 2022.
4. The appellant submitted that the appeal had been filed within the period of limitation from the date the order was made available in the public domaine., 15 September 2022. However, as a matter of abundant precaution, the appellant had considered 26 August 2022 to be the date from which limitation would commence. The appellant stated that the prescribed time period of 30 days for filing the appeal ended on 5 October 2022, after accounting for the exclusion of 10 days (from 5 September 2022 to 15 September 2022 on account of the time taken to provide a certified copy). The 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.
5. In the background of the above sequence of events, the issue before NCLAT was whether the appeal was instituted within limitation. 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 tribunal held:
“31. It cannot be gainsaid, that the `Expiry of 30 days’, after the `Pronouncement of the impugned order’, dated 26.08.2022, was on 24.09.2022. The 30 days period in preferring the `Appeal’, by any `Person Aggrieved’, in respect of an `Order’, passed by the `Adjudicating Authority’, is the `deadline’ prescribed as per Section 61 (2) of the Insolvency and Bankruptcy Code, 2016. If an `Appellate Tribunal’ (`NCLA T’), is satisfied on `sufficient cause’, being shown to its `subjective satisfaction’, in regard to the preferring of an `Appeal’ (after the `Expiry of 30 days period’), then, `such period, shall not exceed 15 days’, as per Section 61 (2) of the Code. Admittedly, the `completion of 45 days’ (30 + 15 days), was on 09.10.2022. In effect, the maximum 45 days being the outer limit (30 + 15 = 45 days), beyond which, the `Appellate Tribunal’ (`NCLAT), is `bereft’ of any power, to `condone the delay’, in the teeth of the mandate, prescribed under the I & B Code, 2016, as opined by this `Tribunal’.”
(emphasis supplied)
6. 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.
7. 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.
8. The appellant questions the order of the NCLAT on limitation.
9. The following submissions have been urged by Mr Bhanu Gupta, counsel appearing on behalf of the appellant:
i. The NCLAT ought to have excluded the period from 5 September 2022, when an application for obtaining a certified copy was filed till 15 September 2022, when the certified copy was received, while computing the period of limitation;
ii. The NCLAT has erroneously taken the entire period between 26 August 2022 and 10 October 2022 by failing to exclude the date on which the order was pronounced, namely, 26 August 2022 in terms of Section 12(2) of the Limitation Act 1963 and Rule 3 of the National Company Law Appellate Tribunal Rules 20165;
iii. The NCLAT has disregarded judicial precedents including the judgment of this Court in V Nagarajan v. SKS Ispat and Power Limited & Ors6; and
iv. Since the order of the NCLT was uploaded on the website on 15 September 2022 on which day the certified copy was also made available, it was impossible for the appellant to draft an appeal prior to 15 September 2022 based merely on the pronouncement of the order without knowledge of the grounds for dismissal.
10. On the other hand, Ms Rashi Bansal, counsel appearing on behalf of the respondent urged that:
i. The appeal was filed on 10 October 2022 in the electronic mode;
ii. On 3 January 2021, a circular was issued by the NCLAT notifying a Standard Operating Procedure7 for e-filing in terms of which physical copies were required to be filed as per the procedure prescribed under the NCLAT Rules 2016 along with the e-filing receipt;
iii. On 21 October 2022, a further order was issued by the Registrar of NCLAT clarifying that the period of limitation shall be computed from the date of the presentation of the appeal as per Rule 22 of the NCLAT Rules 2016, the effect of which was that the period of limitation would cease to run only after a physical copy was presented;
iv. By an order of 24 December 2022, notified by the Registrar of the NCLAT, the earlier order dated 21 October 2022 was withdrawn and it was notified for the first time that limitation shall be computed with reference to the date of e-filing; and
v. Even the e-filing of the appeal on 10 October 2022 would not result in limitation ceasing to operate and it was only when a hard copy was filed that limitation would stop running.
11. 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.
12. Section 61(1) of the IBC stipulates that notwithstanding anything to the contrary contained in the Companies Act 2013, any person aggrieved by the order of the adjudicating authority “under this Part” may prefer an appeal to NCLAT. Sub-Section (2) of Section 61 provides for a period of limitation in the following terms:
“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. […]”
Sub-Section (2) of Section 61 provides for a limitation period of thirty days. The proviso to Section 61(2) provides that NLCAT may allow an appeal to be filed beyond a period of thirty days by a maximum of fifteen days on the demonstration of sufficient cause for the delay.
13. Section 238A, inserted in the IBC by the Insolvency and Bankruptcy Code (Second Amendment) Act 2018,8 contains a specific provision in regard to the Limitation Act 1963. Section 238A provides that the Limitation Act would inter alia apply “as far as may be” to appeals before the NCLAT:
“238A. Limitation — The provisions of the Limitation Act 1963, shall, as far as may be, apply to the proceedings or appeals before the Adjudicating Authority, the National Company Law Appellate Tribunal, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal, as the case may be.”
14. The Central Government, in exercise of the powers conferred by Section 469 of the Companies Act 2013, has formulated the NCLAT Rules 2016. Rule 3 of the NCLAT Rules 2016 stipulates that for computation of a time period as provided, the day from which the said period is to be reckoned shall be excluded. Rule 3 provides as follows:
“3. Computation of time period—Where a period is prescribed by the Act and these rules or under any other law or is fixed by the Appellate Tribunal for doing any act, in computing the time, the day from which the said period is to be reckoned shall be excluded, and if the last day expires on a day when the office of the Appellate Tribunal is closed, that day and any succeeding day on which the Appellate Tribunal remains closed shall also be excluded.”
15. Part III of the NCLAT Rules 2016 deals with the procedure for the institution of appeals. Rule 22 provides that an appeal has to be presented at the filing counter of the Appellate Tribunal, and should be accompanied by a certified copy of the order under challenge. Rule 22 provides that:
“22. Presentation of appeal—
(1) Every appeal shall be presented in Form NCLAT-1 in triplicate by the appellant or petitioner or applicant or respondent, as the case may be, in person or by his duly authorised representative duly appointed in this behalf in the prescribed form with stipulated fee at the filing counter and non-compliance of this may constitute a valid ground to refuse to entertain the same.
(2) Every appeal shall be accompanied by a certified copy of the impugned order.
(3) All documents filed in the Appellate Tribunal shall be accompanied by an index in triplicate containing their details and the amount of fee paid thereon.
(4) Sufficient number of copies of the appeal or petition or application shall also be filed for service on the opposite party as prescribed.
(5) In the pending matters, all other applications shall be presented after serving copies thereof in advance on the opposite side or his advocate or authorised representative.
(6) The processing fee prescribed by the rules, with required number of envelopes of sufficient size and notice forms as prescribed shall be filled along with memorandum of appeal.”
16. In terms of Rule 103, the Appellate Tribunal may allow the filing of an appeal or proceedings through electronic mode. Rule 103 provides that:
“103. Filling through electronic media— The Appellate Tribunal may allow filing of appeal or proceedings through electronic mode such as online filing and provide for rectification of defects by e-mail or internet and in such filing, these rules shall be adopted as nearly as possible on and form a date to be notified separately and the Central Government may issue instructions in this behalf from time to time.”
17. On 3 January 2021, NCLAT notified a Revised SOP for the hearing of cases through the virtual mode, using its e-filing portal. The SOP notices that an e-filing facility was available for filing of appeals and related documents, and exhorts “all concerned” to “avail the same through NCLAT e-filing portal”. The circular provides as follows:
“It may be noted that it is mandatory that Ld. Advocates/ Authorised Representatives/ Parties-in-Person shall file the Appeal/Interlocutory Application/Reply/ Rejoinder etc. in hard copy also as per the procedure prescribed in NCLAT Rules, 2016 along with the e-filing receipt. The online filing & hard copies must match with proper pagination. The Court Fee shall be paid through Bharat Kosh (https://bharatkosh.gov.in) and the payment receipt should be attached.”
18. Subsequently, on 21 October 2022, the Registrar of NCLAT issued another order9 with regard to computing limitation for the purpose of filing an appeal before the Appellate Tribunal. The order notices that while Rule 22 of the NCLAT Rules 2016 provides for the presentation of an appeal at the filing counter of the NCLAT, Rule 103 permits the filing of appeals or proceedings through the electronic mode. After adverting to the SOP dated 3 January 2021, the order indicates as follows:
“The SOPs and directions issued by the Appellate Tribunal do not contain any direction with regard to computation of limitation as to whether limitation is to be computed from the date of e-filing of the Appeals or from the date when Appeals are presented before the Appellate Tribunal as per Rule 22 of the NCLAT Rules, 2016. The Competent Authority has, therefore, decided to issue directions in exercise of power conferred by Rule 104 of the NCLAT Rules, 2016 with regard to computation of limitation for the purposes of filing an Appeal in the Appellate Tribunal.
Hence, with regard to computation of limitation in Appeals, following directions are hereby issued by the Competent Authority: –
(1) The period of limitation shall be computed from the date of presentation of Appeal as per Rule 22 of the NCLAT Rules, 2016.
(2) The requirement of filing Appeals by electronic mode shall continue along with mandatory filing of the Appeals as per Rule 22 of the NCLAT Rules, 2016.
(3) This order will be effective with effect from 1st November, 2022.”
All concerned shall ensure that Appeals are presented as per Rule 22 of the NCLAT Rules, 2016 within the period of limitation at the filing counter.”
19. The above order dated 21 October 2022 indicates that the SOPs and directions which were issued by the NCLAT did not contain any provision for the computation of limitation, more specifically on whether limitation has to be computed with reference to the date of e-filing or from the date on which the appeal is presented before the NCLAT, in terms of Rule 22. Hence, in exercise of the power conferred by Rule 104, it was notified that the period of limitation would be computed with reference to the date of the presentation of the appeal in terms of Rule 22. Moreover, the requirement of filing appeals by the electronic mode was directed to continue together with the mandatory filing of appeals under Rule 22. The order dated 21 October 2022 was to be effective from 1 November 2022.
20. Eventually, on 24 December 2022, another order was issued by the Registrar of NCLAT in the following terms:
“It is seen that appeals are e-filed from different parts of the country where the appellant in some cases is located in far away places and time is taken to file physical copy. It is further seen that physical copy is filed within seven days of e-filing.
Hence, with regard to computation of limitation in Appeals, following directions are hereby issued by the Competent Authority: –
(1) The order F.No.10/37/2018-NCLAT dated 21.10.2022 is hereby withdrawn and superseded by this order.
(2) Limitation shall be computed from the date of e-filing. The hard copy has to be filed within 7 days of e-filing. However, the competent authority is at liberty to notify to extend the period of filing hard copy in case of any unforeseen exigency. In a case where hard copy is filed after 7 days, the appeal will be placed before the Tribunal for appropriate order.
(3) The requirement of filing Appeals by electronic mode shall continue along with mandatory filing of the Appeals as per Rule 22 of the NCLAT Rules, 2016.
(4) This order will be effective with immediate effect.
All concerned shall ensure that Appeals are presented as per Rule 22 of the NCLAT Rules, 2016 within the period of limitation at the filing counter.”
21. Hence, by the order dated 24 December 2022, it was clarified that limitation shall be computed with reference to the date of e-filing while the physical copy would have to be filed within seven days of e-filing. The order clarifies that the requirement of filing appeals by the electronic mode shall continue together with the mandatory filing of appeals in terms of Rule 22 of the NCLAT Rules 2016.
22. Having regard to the above sequence of Rules and administrative orders, 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. Hence, the order purported to state that the period of limitation shall be computed from the date of the presentation of an appeal under Rule 22. Significantly, the above order was to be effective from 1 November 2022. In the present case, admittedly, the appeal was e-filed on 10 October 2022 and even a physical copy was lodged on 31 October 2022 prior to the date on which the order of the Registrar dated 21 October 2022 was to come into effect. The order dated 21 October 2022 was subsequently withdrawn on 24 December 2022. The order dated 24 December 2022 now clarifies that limitation would be computed with effect from the date of e-filing but a physical copy would have to be filed within seven days of e-filing.
23. In the present case, the order was pronounced by the NCLT on 26 August 2022. Rule 3 of the NCLAT Rules 2016 stipulates that the date from which the period of limitation has to be reckoned (i.e., the date of the pronouncement of the order) would have to be excluded. Hence, the date on which the order was pronounced by the NCLT, namely 26 August 2022 would have to be excluded from the computation of limitation. This is in line with Section 12(1) of the Limitation Act 1963. As noted earlier, the provisions of the Limitation Act 1963 are made applicable, inter alia, to appeals before the NCLAT by virtue of Section 238A of the IBC. Section 12(1) of the Limitation Act 1963 provides as follows:
“12. Exclusion of time in legal proceedings—
(1) In computing the period of limitation for any suit, appeal or application, the day from which such period is to be reckoned, shall be excluded.
[…]”
24. Between 26 August 2022, when the order was pronounced by the NCLT, and 10 October 2022, when the appeal was e-filed, a period of 45 days elapsed after excluding the date on which the order was pronounced. The NCLAT has erroneously proceeded on the basis that the appeal was lodged on the 46th day whereas correctly computed, the appeal was lodged on the 45th day. This is evident from the following table:
