INTRODUCTION
Numerous appeals under the Insolvency & Bankruptcy Code, 2016, (hereinafter IBC) get rejected by the National Company Law Appellate Tribunal (NCLAT) on the grounds of them being time-barred. The NCLAT articulates that it lacks the power to allow appeals filed after 45 days from the ‘date of the order’ of the Adjudicating Authority (hereinafter AA). Affected parties must therefore file an appeal with NCLAT within this timeframe. Section 61 of IBC states that any “person aggrieved” by the Order of the AA may appeal it to the NCLAT within 30 days and the NCLAT shall allow an appeal filed within 15 days from the expiry of the 30 days. Section 62 of the IBC clearly states that anyone who is unhappy with an order from the NCLAT may appeal on a legal issue related to that order to the Supreme Court within 45 days from receiving that order.
The Limitation Act of 1963 was created with public policy issues in mind, including the necessity for certainty and finality. The law must be applied rigorously following the statute of limitations. There is an unambiguous prescription regarding the commencement of limitation period in the Schedule to the Limitation Act, 1963.
Unless it is expressly made applicable by the law establishing the tribunal, the Limitation Act, 1963 only applies to court proceedings. Section 238A of the IBC was added via the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018 and it made the Limitation Act’s provisions applicable to proceedings under the IBC.
REJECTION OF CONDONATION OF DELAY
A delay in filing an appeal or an application can be excused by the court if there is a good reason for the same. This is known as condonation of delay. The extension of the Prescribed Period in a particular case is addressed in Section 5 of the Limitation Act, 1963. It specifies that an application or appeal would be accepted after the stipulated term if the appellant or applicant convinces the court that he had a good reason for not filing the appeal or making the application within that time.
The Supreme Court in the case of V. Nagarajan vs Sks Ispat And Power Limited, Civil Appeal No. 3327 of 2020 heard an appeal from a liquidator whose application under Section 43 of the IBC was dismissed by the AA. The Order was administered in the NCLT (National Company Law Tribunal) with the Liquidator present at the hearing. The Liquidator did not request a certified copy of the Order; instead, he relied on the National Company Law Tribunal Rules and the Companies Act of 2013 to claim the right to a free copy of the Order.
After comparing the provisions of IBC and the Companies Act 2013, the Supreme Court came to the conclusion that the Liquidator’s appeal was filed after the expiry of the condonable period of 15 days. The Court noticed that the Liquidator did not apply for a certified copy of the Order and instead waited to receive a free copy. On this basis, the court dismissed the appeal for being time-barred. Consequently, several conclusions can be made about IBC’s goal and its time-bound structure.
WHY IN NEWS
While ruling on an appeal filed in M/s. Platinum Rent A Car (India) Pvt. Ltd. v. M/s. Quest Offices Limited, IA-1138/2022 the NCLAT, Chennai Bench held that it lacks the authority to condone a delay after 45 days (permissible limit set forth in IBC). To put it simply, Section 238 of the IBC overrides Section 12 of the Limitation Act, 1963.
Section 12 of the Limitation Act, 1963 talks about the exclusion of time in legal proceedings. It says that while computing the period of limitation for an appeal or for revision/review of a judgment, one must exclude the day on which the judgment complained of was pronounced and exclusion must also be made to the time requisite for receiving a copy of the decree or order appealed from or sought to be revised/reviewed. Under Section 12(2) of the Limitation Act, 1963, a provision has also been made to deter someone from excluding the time taken by the court to prepare the decree or order before an application for a copy thereof is made. It has been observed that this Section places a responsibility of applying for a certified copy of the disputed order. Anyone wishing to file an appeal is required to do so before the expiration of the limitation period because then the “time requisite” for obtaining a copy will be excluded.
The Bench in the case of M/s. Platinum Rent A Car (India) Pvt Ltd. v. M/s. Quest Offices Limited, determined that Section 238 of the IBC has an effect that supersedes Section 12 of the Limitation Act of 1963. As a result, the Bench refused to pardon the 55 day delay in bringing the appeal and the request for condonation of delay was dismissed. This delay was caused due to the time taken to obtain a certified copy of the order. It was further declared that Rules of Procedure do not grant anyone any rights or cause of action. If a statute stipulates the use of a particular remedy in a specific way and at a specified time, then that remedy cannot be used in a distinct manner.
In this case, M/s. Quest Offices Limited filed a petition under Section 7 of the IBC seeking initiation of Corporate Insolvency Resolution Process (CIRP) against M/s. Platinum Rent A Car (India) Pvt Ltd (Corporate Debtor). The AA accepted the Corporate Debtor into CIRP on June 8, 2022. On July 21, 2022, the Corporate Debtor requested a certified copy of the Order of June 8, 2022, and thereafter on July 26, 2022, the request was fulfilled. After a total of 55 days, it then filed an appeal against the Order dated June 8, 2022 before the NCLAT on August 3, 2022. The Corporate Debtor asked for condonation of the 55 day delay since that time was required to receive a certified copy of the Order.
In the NCLAT Verdict, the Bench noted that an appeal may be brought against a decision made by the AA within 30 days of the decision and the IBC permits an appeal filed within 15 days from the expiry of the 30 day period. Therefore, the total number of days that pass before filing a reply cannot exceed 45. Additionally, the procedural requirements (including the time restriction) outlined in the IBC must be followed in true “letter and spirit”.
CONCLUSION
The question of limitation for filing appeals would have to be answered by construing the provisions of IBC and the Limitation Act, with the former legislation holding an overriding effect. When the free certified order is received after an application for the same has been made, then no matter when the certified copy is received, the limitation period will be computed from the date of receipt of the certified copy.
In the absence of a special law, the general rule for the computation of limitation for filing an appeal against an order of NCLT is governed by the statutory mandate of Section 420(3) of the Companies Act read with Rule 50 of the NCLT Rules. These provisions enable a party to compute limitation from the date of receipt of the free certified copy without actually filing an application for the same. This was decided in the case of B.K. Educational Services Pvt. Ltd. v. Parag Gupta & Associates. The mandate of a free copy, however, does not mean that litigants can have the cake and eat it too by computing limitation from the time of receiving the certified copy either on the litigant’s application or from the Registry – whichever occurs later.
IBC is a comprehensive code superseding any contradictions that might emerge in the implementation of other laws. Due to the precise language of Sections 61(1) and 61(2) of IBC, it is clear that the limitation starts to operate once an order is made. If the appellant had applied for a certified copy within the assigned time period under Section 61(2) of the IBC, then the time taken by the court to provide it will be excluded, as specified in Section 12(2) of the Limitation Act.
Given the fact that IBC has overriding effect, the answer to the question of when the clock will start ticking on the limitation period for proceedings under IBC must be based on a harmonic interpretation of the prevailing legal regime. In situations where there is a chance that two legal provisions might conflict, it is desirable that the laws are interpreted in a manner that would make all provisions tenable.
Author Bio
sir, We are having MSME company named Jejani pulp and paper mills pv ltd, Nagpur fCing liquidation order from 18.10.2019
Facing liquidation from 42 months ( 3 -& half years).
In Limitations act 1963 , Whether ex MSME pramoter shall file IA with NCLT for maintain status co due to 2 years delay in liquidation process by liquidator after getting COVID relaxing for 160 days.
we. need professional help and services for filing IA and getting order I’m CD favour.
.