2024 (10) TMI 883 - SC - Companies Law

Supreme Court sets aside NCLAT order, rules free and paid certified copies equal for appeals under Rule 50

The SC allowed the appeal and set aside the NCLAT order dated 7 May 2024 that rejected a petition on maintainability grounds. The Court interpreted Rule ... Interpretation of Rule 50 of the NCLT Rules and Rule 22 of the NCLAT Rules regarding the filing of appeals under the IBC - Rejection of petition on the ground of maintainability by an order - HELD THAT:- Rule 22(2) of the NCLAT Rules requires that every appeal shall be accompanied by a certified copy of the impugned order. Rule 50 of the NCLT Rules prescribes that the Registry shall send a certified copy of the final order free of cost and certified copies may be made available on payment of costs in terms of the Schedule of Fees in all other cases. Both the certified copy which is made available free of cost as well as the certified copy which is made available on the payment of costs, are treated as certified copies for the purpose of Rule 50. A litigant who does not apply for a certified copy cannot then fall back and claim that he was awaiting the grant of a free copy to obviate the bar of limitation. A Schedule of Fees is prescribed by the NCLT Rules. Entry 31 of the Schedule stipulates that the fee for obtaining true certified copies of final orders passed to parties other than the concerned parties under Rule 50 shall be Rupees five per page. The stipulation of Rupees five per page in Entry 31 excludes “the concerned parties under Rule 50” - The provisions of Rule 50 of the NCLT Rules place both the free certified copy as well as the certified copy which is applied for on payment of fees on the same footing. The appeal in the present case was filed within the condonable period of 15 days, which should have been condoned. The impugned judgment and order of the NCLAT dated 7 May 2024 is set aside - appeal allowed. Issues:Interpretation of Rule 50 of the NCLT Rules and Rule 22 of the NCLAT Rules regarding the filing of appeals under the IBC.Analysis:The judgment by the Supreme Court dealt with a disagreement within the National Company Law Appellate Tribunal (NCLAT) regarding the condonation of delay in an appeal under the Insolvency and Bankruptcy Code 2016 (IBC). The appellant, State Bank of India, filed an appeal with the NCLAT in Chennai after the National Company Law Tribunal (NCLT) at Hyderabad rejected their petition. The appeal was filed with a delay of three days beyond the prescribed 30-day period. The disagreement arose between the Judicial Member and the Technical Member of the NCLAT on whether a free certified copy provided under Rule 50 of the NCLT Rules could be considered as a certified copy for condonation of delay. The third Member of the NCLAT ruled that the free copy cannot be treated as a certified copy under Rule 22 of the NCLAT Rules.The key issue revolved around the interpretation of Rule 50 of the NCLT Rules and Rule 22 of the NCLAT Rules. Rule 50 mandates the Registry to send a certified copy of the final order to the parties concerned free of cost, with the option to obtain certified copies on payment of costs. On the other hand, Rule 22 of the NCLAT Rules requires every appeal to be accompanied by a certified copy of the impugned order. The appellant argued that both the free certified copy and the copy obtained on payment should be treated equally, as they are considered certified copies under Rule 50.The respondent, relying on a previous judgment, argued that parties cannot automatically dispense with the obligation to apply for and obtain a certified copy for filing an appeal. The judgment cited highlighted that the free copy provision does not allow litigants to choose between waiting for a free copy or applying for one, whichever is later. The Court distinguished the present case from the previous judgment, emphasizing that the appeal was filed within the condonable period of 15 days after the free copy was made available, just three days beyond the statutory period.Ultimately, the Supreme Court allowed the appeal, setting aside the NCLAT's decision, and condoned the three-day delay in filing the appeal. The Court appreciated the appellant's counsel for their preparation and submissions. The judgment clarified the distinction between free certified copies and copies obtained on payment, emphasizing that both are considered certified copies under Rule 50.