2025 (4) TMI 319 - SC - IBC

Appeals dismissed for failing to meet strict 30-day deadline under Section 61 IBC despite condonation applications

A RAJENDRA Versus GONUGUNTA MADHUSUDHAN RAO & ORS

The SC dismissed appeals after rejecting condonation of delay applications under Section 61 of the IBC. The first appeal was filed with a certified copy ... Dismissal of appeal as a consequence of dismissal of the applications of condonation of delay on the even date - Section 61 of the IBC - HELD THAT:- The facts are not in dispute and therefore are not being repeated. As is apparent, first appeal was preferred along with the free certified copy which was made ready and available after the pronouncement of the Order of 20th July 2023 on 01.08.2023. It is an admitted position on facts that in the second appeal, no certified copy was appended. Rather, an application for exemption from filing of the certified copy was filed with an assertion that the certified copy had been applied for. In the absence of any certified copy having been applied for, the period of limitation would start from the very next day of pronouncement of the order i.e., 21.07.2023 as the date of pronouncement of the Order stands excluded as per Section 61 of the IBC. Statutory time limit of 30 days within which an appeal can be preferred has been provided for in sub-section (2) of Section 61 of IBC. Proviso thereto allows an additional period of 15 days to file an appeal only on the satisfaction of NCLAT that there was sufficient cause for not filing the appeal earlier within the initial period of 30 days. The restrictions with regard to allowing extension in the provisions stipulated is cloaked in such a manner that the provisions have to be strictly followed. The first aspect is that the period is extendable by 15 days and not beyond that - The cumulative reading of the proviso would therefore entail that the extension of period so provided for has to be strictly construed and has not to be exercised in a liberal manner which highlights the legislative intent which has to be given effect to. The litigant has to file its appeal under Section 61(2) within 30 days which can be extended up to a period of 15 days, and no more, upon showing sufficient cause. A slate of interpretation of procedural rules cannot be used to defeat the substantive objective of legislation which is prescribed in a time frame. As a result, thereof, the period of limitation for filing the appeal having been laid down and proviso thereto limiting the exercise up to a distance for condoning the delay mandatorily has to be adhered to. The application of condonation of delay in the first appeal, disclosing no reasons whatsoever in filing the appeal, the Appellate Tribunal was justified in dismissing the application for condonation of delay. The satisfaction has to be of the Appellate Tribunal and that too on justifiable grounds, which, as is apparent, from the perusal of the application there is none pleaded which can be said to be projecting sufficient cause for not approaching the Appellate Tribunal within the time stipulated under Section 61(2) of the IBC - The other reasons as has been assigned by the Appellate Tribunal for rejecting the application for condonation is clearly borne out from the pleading and the facts which do not call for any interference in the present appeals. Conclusion - The denial of the applications for condonation of delay affirmed, due to the absence of sufficient cause and procedural compliance. Appeal dismissed. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment are:1. Whether the appeals filed before the NCLAT were within the permissible period of limitation as specified under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC).2. Whether the NCLAT was justified in dismissing the applications for condonation of delay in filing the appeals.3. The applicability of the Limitation Act, 1963, specifically Section 12, in the context of filing appeals under the IBC.4. Interpretation and application of Rule 22 of the NCLAT Rules regarding the requirement of filing a certified copy of the order with the appeal.ISSUE-WISE DETAILED ANALYSIS1. Limitation Period for Filing Appeals under IBCRelevant Legal Framework and Precedents: Section 61(2) of the IBC mandates that an appeal against an order of the NCLT must be filed within 30 days, with a possible extension of 15 days if sufficient cause is shown. The Court referred to precedents such as V Nagarajan Vs. SKS Ispat and Power Limited and National Spot Exchange Limited vs. Anil Kohli, which emphasize the strict adherence to this time frame.Court's Interpretation and Reasoning: The Court emphasized the legislative intent for a time-bound resolution process under the IBC, which requires strict adherence to the prescribed limitation periods. The Court noted that the period of limitation begins from the date of pronouncement of the order, not from when the order is made available to the parties.Key Evidence and Findings: The appellant did not apply for a certified copy of the order, which is critical for invoking Section 12(2) of the Limitation Act to exclude the time taken to obtain such a copy from the limitation period.Application of Law to Facts: The appeals were filed beyond the 30-day period, and no certified copy was applied for by the appellant. As such, the appeals were deemed to be barred by limitation.Treatment of Competing Arguments: The appellant argued that the limitation period should start from the date of knowledge of the order's contents. However, the Court rejected this argument, citing the absence of any statutory provision in the IBC that allows for such an interpretation.Conclusions: The Court concluded that the appeals were filed beyond the permissible period, and the NCLAT was correct in dismissing the applications for condonation of delay.2. Condonation of DelayRelevant Legal Framework and Precedents: Section 61(2) of the IBC allows for a 15-day extension beyond the initial 30 days for filing an appeal, contingent on showing sufficient cause. The Court referenced Cethar Limited (Resolution Professional) Vs. SKS Ispat & Power Ltd., which underscores the non-extendable nature of this period.Court's Interpretation and Reasoning: The Court highlighted that the discretion to condone delay is limited and must be exercised within the statutory framework. The reasons for delay must be compelling and justifiable.Key Evidence and Findings: The appellant failed to provide sufficient cause for the delay. The application for condonation of delay lacked substantive reasons and was inconsistent with the grounds of appeal.Application of Law to Facts: The appellant's failure to apply for a certified copy and the absence of a valid reason for the delay led to the dismissal of the condonation application.Treatment of Competing Arguments: The appellant's reliance on the time taken for legal opinion and preparation of the appeal was not considered sufficient cause for condonation.Conclusions: The Court upheld the NCLAT's decision to dismiss the condonation application, affirming that the delay was not justifiable.3. Requirement of Certified Copy under NCLAT RulesRelevant Legal Framework and Precedents: Rule 22 of the NCLAT Rules mandates that an appeal must be accompanied by a certified copy of the impugned order. The Court referred to Sanjay Pandurang Kalate Vs. Vistra ITCL India Pvt. Ltd., which clarifies the necessity of compliance with procedural requirements.Court's Interpretation and Reasoning: The Court emphasized the mandatory nature of Rule 22 and the obligation of litigants to apply for and obtain a certified copy of the order.Key Evidence and Findings: The appellant did not apply for a certified copy, and the second appeal was filed without one, contravening Rule 22.Application of Law to Facts: The absence of a certified copy rendered the appeals procedurally defective and contributed to their dismissal.Treatment of Competing Arguments: The appellant's argument for exemption from filing a certified copy was dismissed, as it cannot be claimed as a right under the statutory framework.Conclusions: The Court concluded that the failure to comply with Rule 22 was a significant procedural lapse, justifying the dismissal of the appeals.SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning: 'The limitation thus, starts from the date of pronouncement of the Order and not from the date the Order is made available to the parties.'Core Principles Established: The judgment reinforces the strict adherence to the limitation period under Section 61 of the IBC and the necessity of complying with procedural requirements, such as filing a certified copy of the order.Final Determinations on Each Issue: The Court upheld the NCLAT's decision to dismiss the appeals as barred by limitation and affirmed the denial of the applications for condonation of delay due to the absence of sufficient cause and procedural compliance.