FILING OF APPEAL BEFORE SUPREME COURT UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016

Hierarchy

The hierarchy of the legal system under the Insolvency and bankruptcy Code, 2016 (‘Code’ for short) is as detailed below-

• National Company Law Tribunal – Adjudicating Authority;
• National Company Law Appellate Tribunal – Appellate Authority;
• Supreme Court – II and Final Appellate Authority.

Appeal to Supreme Court

Section 62 (1) of the Code provides that any person aggrieved by an order of the National Company Law Appellate Tribunal may file an appeal to the Supreme Court on a question of law arising out of such order under this Code within forty-five days from the date of receipt of such order.  Section 62(2) provides that the Supreme Court may, if it is satisfied that a person was prevented by sufficient cause from filing an appeal within 45 days, allow the appeal to be filed within a further period not exceeding 15 days.

The delay cannot be condoned beyond the above said 15 days.

In SAGUFA AHMED & ORS. Versus UPPER ASSAM PLYWOOD PRODUCTS PVT. LTD. & ORS. - 2020 (9) TMI 713 - Supreme Court, the Supreme Court laid down that the law assists only those who are vigilant about their rights, not those who sleep on them.  The expression ‘prescribed period’ in the Limitation Act, 1963 is synonymous with the statutory ‘period of limitation’ computed in accordance with the Act. Any discretionary window beyond the prescribed period, i.e., during which an Appellate Tribunal or court may condone delay on sufficient cause, cannot be treated as part of the prescribed period.

In The Assistant Commissioner Of Central Tax, CGST Division Versus Sreenivasa Rao Ravinuthala And Another. - 2026 (10) TMI 981 - Supreme Court, the appellant filed the present appeal against the order of the National Company Law Appellate Tribunal, Chennai, dated 02.08.2023.  The second respondent filed preliminary objections on limitation. 

Samyu Glass Priave Limited, corporate debtor, is manufacturing glass container and an Export-Oriented Unit.  The Central Excise and Service Tax Departments initiated recovery proceedings against the corporate debtor during the periods between 2013 and 2017.  Against this the appellant filed an appeal before the Central Excise, Service Tax Appellate Tribunal (‘CESTAT’ for short).  The Corporate Debtor also stopped its manufacturing products during the end of 2016.

The Union Bank of India (erstwhile ‘Andhra Bank’), a financial creditor to the appellant initiated corporate insolvency resolution process against the corporate debtor under section 7 of the Code.  The Adjudicating Authority admitted the Section 7 Application and appointed the Respondent No.1 as the Interim Resolution Professional under the Code.

In the meanwhile, the Department attached the machineries of the appellant and convened a Joint Pricing Committee meeting on 04.11.2019 to fix the reserve price for auctioning the attached machinery.  The Interim Resolution Professional informed the Department that a moratorium had been imposed prohibiting third-party Authorities from disposing of any of the Corporate Debtor's assets.  On the basis of the above said communication, on 27.11.2019, the Deputy Commissioner of Central Tax submitted a proof of claim (Form F) for Rs. 22,60,32,948/-.  The Resolution Professional (‘RP’ for short) approached the Department to settle the arrears under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.  The RP presented a scheme before the Department for Rs.4.33 crores for the final settlement.

In the meanwhile, the corporate insolvency resolution process developed and the resolution plan was approved by the Adjudicating Authority.  The Department was granted Rs.1.35 crores to the Department towards the final settlement in respect of the corporate debtor.  The Department, being aggrieved against the order of the Adjudicating Authority, filed an appeal before the National Company Law Appellate Tribunal (‘NCLAT’ for short) which uphold the order of Adjudicating Authority approving the resolution plan on 02.08.2023.

Being aggrieved against the order of the Appellate Authority, the Department filed the present civil appeal before the Supreme Court on 21.11.2023.  The respondent No. 2 submitted the following before the Supreme Court in support of the preliminary objections raised by it-

• The IBC is a complete Code providing for statutory remedies to aggrieved persons against the Orders made under the Code.
• The Code sets a limitation period for filing an appeal and allows for a condonable period if the Appeal is not filed within that time.
• The limitation period, including the condonable period, in the case on hand starts on 03.08.2023 and ends on 01.10.2023, i.e., the 60th day.
• The Appeal was filed on 21.11.2023, i.e., the 111th day. Therefore, the appeal is barred by the period of limitation of forty-five days and the condonable period of a further 15 days.
• The date of receipt of the impugned Order is not an indefinite or fluctuating period.

• The appellant, on 06.09.2023, applied for a copy of the Order dated 02.08.2023; received the certified copy of the order on 11.10.2023.

• Even if the period between 06.09.2023 and 11.10.2023 is excluded for the purpose of limitation, the appeal ought to have been filed by 05.11.2023.  Therefore, on both counts, the appeal dated 21.11.2023 is barred by limitation.

The appellant submitted the following before the Supreme Court-

• The period of limitation and condonable period of limitation calculated by Respondent No.2 does not take note of the word ‘notwithstanding’ in Section 61, and the expression ‘within forty-five days from the date of receipt of such order’ in Section 62(1), read with corresponding Sections 421 and 423 of the Companies Act, 2013.
• The period of limitation and the condonable period of limitation ought to be reckoned, in the case on hand, from 11.10.2023, and the filing of the Appeal on 21.11.2023 is within 41 days and falls within the period of limitation.
• The decisive starting point is the receipt of the Order, not the date of the Order under Section 62 of the Code.

The Supreme Court heard the submissions of the parties to the appeal.  The Supreme Court observed that the provisions of the Code prevail over any other inconsistencies with other statutes by virtue of non obstante clause in Section 238 of the Code.  Where a special statute provides a distinct period of limitation, that period governs to the exclusion of general provisions, and the Code, being a special law, would have an overriding effect. Section 61(1) of the Code starts with a non-obstante clause. Consequently, the appellate mechanisms under the Companies Act cannot control or relax the statutory architecture of the Code.

The limitation scheme under the Code is strict and time-bound, making condonation of delay outside the statutory framework impermissible. Under Section 62 of the Code the absolute outer limit for filing an appeal is 60 days, i.e., the standard 45-day period plus a 15-day grace period upon showing sufficient cause. Beyond this period, the Court loses jurisdiction to condone any delay.

The Supreme Court further observed that the right to appeal is permanently extinguished once the 60-day maximum window under the Code closes and the 28-day window under the Supreme Court Rules, 2013 for curing defects lapses.  The Supreme Court Rules are subordinate legislation and cannot override the express provisions of the Code. Therefore, Supreme Court Rules cannot grant an extended window for re-filing if doing so would contravene the legislative intent behind the strict timelines of the Code.

The phrase ‘from the date of receipt of the order’ in Section 62(1) cannot be read as the date on which a party chooses to apply for and collect a certified copy. If the limitation clock remained suspended until physical collection at the litigant’s leisure, the limitation period would then become fluctuating and indefinite. Furthermore, Section 12(2) of the Act, 1963 would be rendered wholly redundant. There would be no reason for Parliament to make the exclusion of ‘time requisite for obtaining a copy’ applicable via Section 238A of the Code if limitation did not already commence upon pronouncement.

The Supreme Court noted the events that taken place in filing appeal before the Supreme Court-

• The NCLAT pronounced the impugned Judgment on 02.08.2023.
• The appellant applied for a certified copy on 06.09.2023 (the 35th day). The 35 days of inaction before filing the application cannot be excluded and count directly against the initial 45-day statutory window.
• The application remained pending with the Registry from 06.09.2023 until delivery on 11.10.2023 (35 days). This period constitutes ‘time requisite’ under Section 12(2) of the Act, 1963, and is therefore excluded.
• Upon receipt of the certified copy on 11.10.2023, the limitation clock resumed. Having already consumed 35 days of the initial 45-day window, the appellant had 10 days remaining to file within the statutory period (expiring on 21.10.2023) and a further 15 discretionary days under Section 62(2) (expiring on 05.11.2023).

•  The appellant did not file the Appeal until 21.11.2023, consuming another 41 days after receipt of the copy.

If the appellant's argument that the limitation period begins on the day the copy of the Order is received is accepted, it would nullify both the limitation period and the condonable period, and make the right of appeal subject to an indefinite and fluctuating period of limitation.

In view of the above, the Supreme Court dismissed the appeal by the Department.