The Supreme Court on May 7 held that the National Company Law Appellate Tribunal (NCLAT) has no jurisdiction to condone delay beyond the statutorily prescribed period of 45 days for filing an appeal under Section 61(2) of the Insolvency and Bankruptcy Code, 2016 (IBC).
A Bench of Justices JB Pardiwala and R Mahadevan explained that the NCLAT does not have any inherent jurisdiction to condone delays in filings beyond what is expressly provided for in the IBC.
"The proviso to Section 61(2) clearly limits the NCLAT’s jurisdiction to condone delay only up to 15 days beyond the initial 30-day period. Where a statute expressly limits the period within which delay may be condoned, an Appellate Tribunal cannot exceed that limit. In other words, the NCLAT being a creature of statute, operates strictly within the powers conferred upon it. Unlike a civil suit, it lacks inherent jurisdiction to extend time on equitable grounds," it held.
The Court, therefore, set aside a December 14, 2022, order passed by the NCLAT that had allowed an appeal filed with a delay by a former shareholder of Rohit Ferro-Tech Ltd against the approval of a resolution plan submitted by Tata Steel Ltd.
“Even a delay of a single day is fatal if the statute does not provide for its condonation … Allowing condonation in such cases would defeat the legislative intent and open the floodgates to belated and potentially frivolous petitions,” the Court held.
The case before the Court was tied to insolvency resolution proceedings initiated against Rohit Ferro-Tech Ltd (corporate debtor).
Tata Steel, the successful resolution applicant, had challenged the NCLAT’s decision to condone a delay in filing an appeal under Section 61(2) IBC.
The appeal before the NCLAT had been filed by Raj Kumar Banerjee, an erstwhile minority shareholder of the corporate debtor, seeking the scrutiny of the approved resolution plan.
Under the IBC, an appeal before NCLAT against an order of a National Company Law Tribunal (NCLT) must be filed within 30 days from the date of the order, with a maximum condonable period of 15 additional days (45 days, in total).
In this case, the NCLT's order approving the resolution plan was passed on April 7, 2022.
The respondent e-filed the appeal on May 23, 2022 and physically filed it on May 24, 2022—47 days after the NCLT order.
However, the NCLAT treated May 9, 2022, as the deadline for the initial 30-day period, since May 7 fell on a Saturday and May 8 was a Sunday. It concluded that the additional 15-day period expired on May 24 (the date of the physical filing in this case), making the appeal timely.
The Supreme Court, however, rejected the NCLAT’s reasoning. It emphasized that the limitation under Section 61(2) begins from the date of pronouncement of the NCLT’s order, regardless of when the party becomes aware of it.
“It is evident that the Company Secretary of the Corporate Debtor duly informed the listing departments of both NSE and BSE about the NCLT order within 30 minutes of its pronouncement. Hence, the limitation period for filing the appeal commenced on 07.04.2022 and expired on 07.05.2022,” the judgment stated.
Further, the Court held that since May 7, 2022, was a working Saturday for the NCLAT Registry, the respondent was not entitled to invoke Section 4 of the Limitation Act (which allows court holidays to be excluded while calculating the period of limitation) for an extension.
Therefore, the 15-day condonable period ended on May 22, 2022, the top court held.
“Respondent No. 1 filed the appeal beyond not only the prescribed period of 30 days but also the condonable period of 15 days, i.e., on 24.05.2022,” the Court concluded.
The Court reiterated that the NCLAT, being a statutory tribunal, has no inherent jurisdiction to extend limitation beyond what is explicitly permitted by the statute. The proviso to Section 61(2) IBC allows a maximum delay of 15 days to be condoned, provided that there is sufficient cause.
“The appellate mechanism under IBC is strictly time-bound by design to preserve the speed and certainty of the insolvency resolution process,” the Court added.
It also referred to V. Nagarajan v. SKS Ispat & Power Ltd, where the apex court held that appeals under IBC must be filed diligently and without awaiting a free copy of the NCLT order.
Tata Steel was represented by Senior Advocate Ramji Srinivasan instructed by Argus Partners. The Argus team comprised of Udit Mendiratta, Arka Majumdar, Pooja Chakrabarti (Partners), Kiran Sharma (Principal Associate - Designate), Shivkrit Rai (Senior Associate) and Apeksha Singh (Associate)
The respondents were represented by Advocates Brijesh Singh Bhaduriya, Aviral Kapoor, Sonal Alagh, Divyanshu Jha, Vedant Singh,Shagufa Salim, Ekta Choudhary, Anand Krishna, and Ayush Kumar.
[Read Judgment]