Read Time: 12 minutes

Synopsis

The Supreme Court has said that the period of limitation for filing an appeal against the order of the National Company Law Tribunal is to run from the date of pronouncement of the order and not the date of hearing.

A bench of Chief Justice of India DY Chandrachud and Justices J B Pardiwala and Manoj Misra said that in cases where the matter has been heard on a particular day but the order is pronounced on a later date, the NCLT must refrain from affixing the date of hearing on the order. Such an approach would be a violation of the NCLT Rules, which create a distinction between hearing and pronouncement and do not allow the NCLT to dispense with the requirement of pronouncement, the court said.

The bench noted that the right to file an appeal against an order of the NCLT before the NCLAT arises from Section 61 of the Insolvency and Bankruptcy Code.

The bench also pointed out that Section 61(2) provides for a limitation period of thirty days. However, the proviso to the section provides that the NCLAT may allow the appeal to be filed after the expiry of the thirty-day period if it is satisfied that there was sufficient cause for not filing the appeal, but such period shall not exceed fifteen days. Therefore, 45 days is the outer limit within which an appeal from an order of the NCLT may be filed before the NCLAT, it said.

The court was dealing with an appeal filed by one Sanjay Pangurang Kalate against an order by the NCLAT which dismissed his plea against the NCLT decision on the ground of limitation.

The NCLAT had concluded that the appeal was barred by limitation on the ground that it was instituted beyond the outer limit of 45 days permissible under Section 61 of the IBC. It had relied on the Supreme Court’s decision in 'V Nagarajan v SKS Ispat' (2022) and rejected the appellant’s contention that the time should begin to run from 30 May 2023 – the date of upload. 

The apex court had then held that limitation commences from the date of pronouncement and not the date of upload of the order or receipt of a certified copy. However, the court had then expressly clarified that the time taken to procure the certified copy will be excluded from the calculation of the period of limitation, provided the appellant applies within the prescribed period of limitation under Section 61(2) of the IBC. 

The bench in the present matter said, "It is clear that the date on which the limitation begins to run is intrinsically linked to the date of pronouncement. The question that arises in the facts of the present case, therefore, is when is an order deemed to be pronounced."

It also said that the National Company Law Tribunal Rules, 20167 provide guidance in this regard. Rule 89(1) of the NCLT Rules indicates that when NCLAT registry publishes its cause list, a distinction is drawn between cases listed for pronouncement of orders and other cases. 

"The provisions of the NCLT Rules, 2016 make a clear distinction between the ‘hearing’ of an appeal and the ‘pronouncement’ of the order. Rule 150(1) provides that after hearing the parties, the order may be pronounced either at once or soon thereafter, as may be practicable, but not later than thirty days from the final hearing. Further, Rule 151 indicates that a member of the bench may pronounce the order for and on behalf of the Bench. When the order is pronounced, the court master shall make a note in the order sheet to that effect. The language of the above rules indicates that the pronouncement of the order is necessary and cannot be dispensed with," the bench said.

The court noted that in the present matter, the cause list for May 17, 2023 placed on record by the appellant indicated that the case was listed for admission and not for pronouncement. The counsel for both the parties also admitted that no substantive order was passed on May 17, 2023 by the NCLT. 

"In these circumstances, limitation would not begin to run on 17 May 2023 which was the date on which hearings concluded. As no order was passed before 30 May 2023, there was no occasion for the appellant to lodge an application for a certified copy on 17 May 2023. Time for filing an appeal would commence only when the order appealed from was uploaded since prior to that date no order was pronounced," the bench said.

In V Nagarajan case, there was an unequivocal pronouncement of the order before the upload of the order and thus, the decision is not applicable to the facts of the case, the court declared. 

"In the facts of the present case, the date of upload of the order is the same as the date of pronouncement," the bench said.

The court restored the appeal to the NCLAT for reconsidering whether the appellant has shown sufficient cause for condoning the delay beyond thirty days. It set aside the NCLAT order declining to condone the delay.

"We are not inclined to stay the CIRP (Corporate Insolvency Resolution Process) at this stage. However, the NCLAT is directed to dispose of the appeal at the earliest," the bench said.

The court also appreciated the proactive action taken by the NCLAT by issuing a notification after SC's decision in Sanket Agarwal case that “filing of hard copies of Appeals/ Interlocutory Applications/ Reply / Rejoinder etc. shall not be mandatory with immediate effect.” 

"Such proactive action by tribunals is essential to ensure that the move towards a modernised and technology-friendly judiciary trickles down to every judicial forum across the country," the bench said.

Case Title: Sanjay Pandurang Kalate Vs Vistra ITCL (India) Limited and Others