2025 (8) TMI 812 - SC - IBC

Appeal Dismissed for Delay and Missing Certified Copy Under NCLAT Rules 22(2) and 14 in IBC Cases

The SC held that the appeal filed by respondent No. 1 was defective due to delay and failure to file a certified copy of the impugned order without ... Time limitation for filing appeal - sufficient cause for delay or not - power of the NCLAT to grant exemption from complying with the requirements of the rules - HELD THAT:- The fact remains that the e-filing of respondent No.1’s appeal on 25.07.2023 was defective inasmuch as there was, admittedly, a delay in its filing but no application was filed for condonation of such delay and, secondly, the appeal was filed without a certified copy of the impugned order but no application was filed seeking exemption from filing such certified copy or seeking extension of time to do so. The consequences of such defective filing are what we have to consider presently. Significantly, in V. Nagarajan v. SKS Ispat & Power Ltd. and others [2021 (10) TMI 941 - SUPREME COURT (LB)], a three-Judge Bench of this Court considered these very issues. It was noted that the IBC is a complete code in itself and overwrites any inconsistencies that may arise in the application of other laws. The argument that Rule 14 of the NCLAT Rules empowers the National Company Law Appellate Tribunal to exempt parties from compliance with the requirement of any of the rules, in the interest of substantial justice, was also considered and the Bench noted that though it may well be true that waiver on filing an appeal without a certified copy is often granted for the purpose of judicial determination, it does not confer an automatic right on an applicant to dispense with compliance so as to render Rule 22(2) of the NCLAT Rules nugatory. It was held that the act of filing an application for a certified copy is not just a technical requirement for computation of limitation but also an indication of the diligence of the aggrieved party pursuing the litigation in a timely fashion - As regards the power of the NCLAT to grant exemption from complying with the requirements of the rules, it was observed that Rule 22(2) of the NCLAT Rules mandates the certified copy being annexed to an appeal, which continues to bind litigants under the IBC and though it may be true that Tribunals and Courts may choose to exempt parties from compliance with this procedural requirement in the interest of substantial justice, as reiterated in Rule 14 of the NCLAT Rules, such discretionary waiver does not act as an automatic exception where litigants make no efforts to pursue a timely resolution of their grievance. On facts, the Bench held that, as the appellant had failed to apply for a certified copy, it rendered the appeal filed by him clearly barred by limitation. The fact that respondent No. 1 casually e-filed an appeal on 25.07.2023, with neither an application for condonation of delay nor an application seeking exemption from filing a certified copy of the impugned order, rendered its appeal defective. Admittedly, it was only on 25.08.2023 that respondent No. 1 filed an application seeking permission to file the appeal and an application for condonation of delay was filed much later, on 22.09.2023. Presumably, it was at this time that a certified copy of the impugned order was filed without even seeking exemption or extension of time to do so. These aspects ought to have been considered by the NCLAT as the statute peremptorily requires proper institution of an appeal in conformity with all the prescribed norms and it was incumbent upon the NCLAT to examine and verify as to whether respondent No. 1’s appeal was in due compliance with all such norms. More so, when the appellant herein had specifically raised the issue that such appeal was barred by limitation. The NCLAT erred in completely brushing aside this crucial aspect which went to the very root of its appellate jurisdiction. The impugned order is set aside - appeal allowed. 1. Issues Presented and Considered Whether an appeal filed under Section 62 of the Insolvency and Bankruptcy Code, 2016 (IBC) without a certified copy of the impugned order complies with Rule 22(2) of the National Company Law Appellate Tribunal Rules, 2016 (NCLAT Rules). Whether an appeal filed beyond the prescribed 30-day period under Section 61(2) IBC without condonation of delay application is maintainable. The effect of failure to file an appeal with a certified copy of the impugned order on limitation and the jurisdiction of the NCLAT. The interplay between limitation provisions under the IBC and the requirement of filing a certified copy of the order impugned. The scope and limits of the NCLAT's discretionary powers under Rules 14 and 15 of the NCLAT Rules to grant exemption or extend time regarding procedural requirements. The date from which limitation period under Section 61(2) IBC commences - whether from pronouncement of the order or its uploading on the website. The obligation of an appellant to exercise due diligence in filing appeals under the IBC framework. 2. Issue-wise Detailed Analysis Issue 1: Compliance with Rule 22(2) NCLAT Rules - Filing Appeal with Certified Copy of Impugned Order Legal Framework and Precedents: Rule 22(2) NCLAT Rules mandates that every appeal must be accompanied by a certified copy of the impugned order. The Supreme Court in V. Nagarajan v. SKS Ispat & Power Ltd. emphasized that this requirement is not a mere technicality but a substantive condition for filing an appeal under IBC. The Court clarified that parties cannot automatically dispense with this obligation, and delay in obtaining the certified copy, once an application is filed, is excluded for limitation purposes. Court's Interpretation and Reasoning: The Court held that filing an appeal without a certified copy, without seeking exemption under Rule 14, is defective. While the NCLAT has discretionary power to exempt compliance in the interest of substantial justice, this power does not confer an automatic right to dispense with the requirement. The act of applying for a certified copy evidences diligence in pursuing litigation timely. Application of Law to Facts: The respondent filed the appeal without a certified copy and without any application for exemption or condonation of delay. The certified copy was sought only after the appeal was filed and condonation of delay was applied for much later. This failure rendered the appeal defective and barred by limitation. Conclusion: The appeal filed without a certified copy and without timely application for exemption or condonation is non-compliant with Rule 22(2) and liable to be dismissed on that ground. Issue 2: Limitation Period under Section 61(2) IBC and Condonation of Delay Legal Framework and Precedents: Section 61(2) IBC prescribes a 30-day limitation period for filing appeals against NCLT orders, with a maximum extension of 15 days upon showing sufficient cause. The Supreme Court in V. Nagarajan and A Rajendra v. Gonugunta Madhusudhan Rao clarified that limitation starts from the date of pronouncement of the order, not from the date of uploading on the website. The power to condone delay is strictly circumscribed and conditional on sufficient cause. Court's Interpretation and Reasoning: The Court emphasized that the limitation period begins from the pronouncement of the order in open court, not from the date of uploading. The appellant must file the appeal promptly and, if delayed, must apply for condonation within the maximum 15-day extended period. The Court rejected the contention that uploading the order triggers limitation, underscoring the legislature's intent to ensure timely resolution under IBC. Application of Law to Facts: The appeal was e-filed 32 days after pronouncement (23.06.2023 to 25.07.2023), beyond the 30-day period, without any condonation application at the time of filing. The condonation application was filed much later (22.09.2023), beyond the permissible 15-day extended period. Hence, the appeal was barred by limitation. Treatment of Competing Arguments: Reference to a NCLAT judgment allowing exemption or delayed filing was rejected as inconsistent with Supreme Court precedent. The NCLAT's failure to consider limitation was held to be an error. Conclusion: The appeal was barred by limitation as it was filed beyond the prescribed period without timely condonation application. Issue 3: Effect of Filing Defective Appeal on NCLAT's Jurisdiction Legal Framework and Precedents: The IBC is a complete code with strict timelines to prevent delays in insolvency resolution. The Supreme Court has held that non-compliance with procedural requirements such as filing a certified copy and adhering to limitation periods affects the maintainability of appeals and the jurisdiction of the NCLAT. Court's Interpretation and Reasoning: The Court noted that the NCLAT erred in not considering the limitation objection raised by the appellant and in entertaining the appeal despite defective filing. The failure to comply with mandatory procedural requirements and limitation renders the appeal invalid and deprives the NCLAT of jurisdiction. Application of Law to Facts: The NCLAT's common judgment did not address limitation or the absence of a certified copy at the time of filing. This oversight was fatal to the appellate jurisdiction in the present case. Conclusion: The appeal was not properly instituted; therefore, the NCLAT lacked jurisdiction to decide the appeal on merits. Issue 4: Date of Commencement of Limitation Period under IBC Legal Framework and Precedents: The Supreme Court in A Rajendra and V. Nagarajan held that the limitation period under Section 61(2) IBC commences from the date of pronouncement of the order in open court. Uploading of the order on the website is not the triggering event for limitation. Court's Interpretation and Reasoning: The Court emphasized that the legislature deliberately omitted any reference to availability of the order for limitation computation, signaling the need for prompt action by aggrieved parties. Application of Law to Facts: The order was pronounced on 23.06.2023, and limitation commenced on that date. The respondent's reliance on the uploading date (26.06.2023) to compute limitation was rejected. Conclusion: Limitation runs from pronouncement date, not from date of uploading. Issue 5: Scope of NCLAT's Discretion under Rules 14 and 15 NCLAT Rules Legal Framework and Precedents: Rules 14 and 15 of the NCLAT Rules empower the Tribunal to exempt parties from compliance with procedural rules and to extend time, respectively, in the interest of substantial justice. Court's Interpretation and Reasoning: The Court held that these powers are discretionary and cannot be exercised to nullify mandatory provisions such as Rule 22(2) requiring a certified copy with the appeal. Exemption or extension cannot be used to dispense with filing a certified copy altogether or to condone delay beyond statutory limits. Application of Law to Facts: The respondent did not seek exemption or extension at the time of filing the appeal, and the NCLAT did not exercise these powers properly. The invocation of these powers cannot cure the fundamental defects in filing. Conclusion: NCLAT's discretionary powers cannot override mandatory procedural requirements or statutory limitation. Issue 6: Obligation of Diligence by Appellants under IBC Legal Framework and Precedents: IBC aims to ensure time-bound resolution of insolvency to protect the economy and stakeholders. The Supreme Court has repeatedly underscored the need for diligence and promptness by parties in pursuing remedies. Court's Interpretation and Reasoning: The Court stressed that filing an appeal under IBC requires proactive steps, including immediately applying for a certified copy upon pronouncement of the order. Delay or casual filing without compliance undermines the legislative intent. Application of Law to Facts: The respondent's delayed application for a certified copy and condonation of delay reflected lack of diligence, which is impermissible under the IBC regime. Conclusion: Aggrieved parties must exercise due diligence and comply with procedural requirements promptly to maintain appeals under IBC.