IBC removal-of-difficulties power cannot expand appellate jurisdiction or extend statutory limitation; demerger plans must comply with law.

A removal-of-difficulties power under the Insolvency and Bankruptcy Code cannot be used to alter the Code's substantive scheme, create appellate jurisdiction, or extend the statutory appeal period beyond the limit fixed by the Code. The text also notes that a demerger scheme, even if treated as a resolution plan, must comply with the statutory approval process and must not contravene applicable law. On that basis, the scheme was described as illegal, but it was not disturbed because the appeals were treated as barred by limitation and otherwise not maintainable.

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Issues: (i) whether the Central Government could, by a removal-of-difficulties order under the Insolvency and Bankruptcy Code, 2016, confer appellate jurisdiction on the National Company Law Appellate Tribunal and enlarge the time for appeal beyond the period fixed by the Code; (ii) whether the scheme of demerger could be sustained as a lawful resolution plan.

Issue (i): whether the Central Government could, by a removal-of-difficulties order under the Insolvency and Bankruptcy Code, 2016, confer appellate jurisdiction on the National Company Law Appellate Tribunal and enlarge the time for appeal beyond the period fixed by the Code.

Analysis: The power under section 242 is limited to removing difficulties in giving effect to the Code and permits only such provisions as are not inconsistent with the Code. A notification issued on the stated ground of difficulty in the repealed sick-company regime could not be used to alter the substantive scheme of the Code, create a right of appeal in a manner inconsistent with the statute, or extend limitation beyond the ceiling fixed by section 61(2). The Tribunal held that the notification was in conflict with the amended statutory scheme and could not confer jurisdiction to entertain appeals beyond the statutory period.

Conclusion: The notification could not validly enlarge appellate jurisdiction or extend limitation beyond section 61(2) of the Insolvency and Bankruptcy Code, 2016.

Issue (ii): whether the scheme of demerger could be sustained as a lawful resolution plan.

Analysis: Assuming the scheme was to be treated as a resolution plan, it had not been approved through the statutory process contemplated by sections 30 and 31 of the Code. The scheme was found to be contrary to existing law and not in conformity with the requirement that a resolution plan must not contravene applicable law. However, because the appeals were held to be barred by limitation and otherwise not maintainable, the Tribunal did not disturb the scheme.

Conclusion: The scheme was held to be illegal, but it was not set aside in the absence of jurisdiction to grant relief.

Final Conclusion: The appeals failed on maintainability and limitation, and although the impugned scheme was found illegal, it was left undisturbed.

Ratio Decidendi: A removal-of-difficulties power cannot be used to amend the substantive operation of the parent statute or extend a statutory limitation period beyond what the statute itself permits.

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