V Nagarajan vs Sks Ispat and Power Ltd.& Ors.

Insolvency and Bankruptcy Code, 2016 – s.61(2) – Companies Act 2013 – s.420(3) – National Company Law Tribunal Rules, 2016 – r.50 – Held: s.420(3), Companies Act r/w r.50, NCLT Rules enables a party to compute limitation from the date of receipt of the statutorily mandated free certified copy, without having to file its own application – However, Sagufa Ahmed v. Upper Assam Plywood Products Pvt Ltd clarified that the statutory mandate of a free copy is not to enable litigants to take two bites at the apple where they could compute limitation from either when the certified copy is received on the litigant’s application or received as a free copy from the registry- whichever is later.

Insolvency and Bankruptcy Code, 2016 – National Company Law Appellate Tribunal Rules – rr.14, 22 – Order passed under IBC – Appeal to NCLAT – Annexation of certified copy, if mandatory – Held: r.22(2) of the NCLAT Rules mandates the certified copy being annexed to an appeal, which continues to bind litigants under the IBC – While it is true that the tribunals, and even Supreme Court, may choose to exempt parties from compliance with this procedural requirement in the interest of substantial justice, as re-iterated in r.14 of the NCLAT Rules, the discretionary waiver does not act as an automatic exception where litigants make no efforts to pursue a timely resolution of their grievance – Companies Act, 2013 – s.420(3). Insolvency and Bankruptcy Code, 2016 – ss.61(1), (2) – Companies Act 2013 – s.421(3) – Held: ss.61(1) and (2) of the IBC consciously omit the requirement of limitation being computed from when the “order is made available to the aggrieved party”, in contradistinction to s.421(3) of the Companies Act. Code of Civil Procedure, 1908 – s.9 – Right to file suit and the right to file appeal – Distinction between – Discussed – Insolvency and Bankruptcy Code, 2016 – ss.60, 61(1), (2), 62 and

63. Insolvency and Bankruptcy Code, 2016 – s.61(2) – Limitation Act, 1963 – s.12 – Held: s.12 provides guidance on reckoning the period of limitation and excludes the time taken by a party for obtaining a certified copy of the order it seeks to appeal – However, the explanation clarifies that the time taken by the court in preparing the order before an application for a copy is filed by the aggrieved party, is not excluded from the computation of limitation. National Company Law Appellate Tribunal Rules – rr.14, 22 – Held: It may well be true that waivers on filing an appeal with a certified copy are often granted for the purposes of judicial determination, they do not confer an automatic right on an applicant to dispense with compliance and render r.22(2), NCLAT Rules nugatory.

Words & Phrases – “from the date on which a copy of the order of the Tribunal is made available to the person aggrieved” – Absence of – Insolvency and Bankruptcy Code, 2016 – s.61(1) – Companies Act 2013 – ss.420(3), 421(3) – Held: Difference between s.421(3), Companies Act and s.61(2), IBC is in the absence of the aforesaid words in the latter – Absence of these words cannot be construed as a mere omission which can be supplemented with a right to a free copy u/s.420(3)r/w r.50 of the NCLT Rules for the purposes of reckoning limitation.

Dismissing the appeal, the Court

HELD: 1.1 The IBC is a complete code. It has an overriding effect, as stated in Section 238. On the specific question of limitation, Section 238-A of the IBC invokes the Limitation Act to the extent it is applicable. The aforesaid sections of IBC have to be read in juxtaposition with Section 29(2), of the Limitation Act. The salient aspects of Section 29(2) of the Limitation Act are three fold- (i) prescription of a period of limitation under any special law or local law may differ from the period prescribed by the Schedule under the Limitation Act; (ii) in such a case, the period of limitation prescribed under the special or local law shall be deemed to be period prescribed for the purpose of Section 3 of the Limitation Act; and (iii) Section 3 of the Limitation Act shall apply accordingly. [Para 9][752-F; 753-E-F]

1.2 An appeal is a creature of statute, hence there is a fundamental distinction between the right to file a suit and the right to file an appeal. In terms of Section 9 of the Code of Civil Procedure, 1908, there is an inherent right to bring a suit of a civil nature, unless the suit is barred by statute. On the other hand, an appeal is a creature of statute and must have the clear authority of law. The IBC envisages a comprehensive dispute resolution process in Chapter VI. The NCLT is the empowered ‘Adjudicating Authority’ under Section 60 of the IBC with the jurisdiction to entertain any proceeding in relation to insolvency resolution or liquidation proceedings under the IBC. An appeal lies against an order of the Adjudicating Authority to the Appellate Authority, the NCLAT, under Section 61(1) of the IBC. An order of the NCLAT is subject to an appeal on a question of law to the Supreme Court under Section 62. The jurisdiction of civil courts has been explicitly ousted by Section 63 of the IBC. Section 61(2) specifically provides for a limitation period of thirty days, which can be extended by a maximum of fifteen days on the demonstration of sufficient cause for the delay. Section 420 of the Companies Act deals with the orders of the NCLT and creates a right to receive a copy to every party under Section 420(3). Section 421(3) of the Companies Act prescribes the period of limitation for filing an appeal to the NCLAT and specifies that the computation shall be made from the date when a copy is “made available to the person aggrieved”. Rule 50 of the NCLT Rules operationalises Section 421(3) of the Companies Act by mandating the Registry of the NCLT to share a free certified copy of the order to the parties. [Paras 11, 13][754-A-D; 755-F-H; 756-G]

B K Educational Services (P) Ltd v. Parag Gupta and Associates 2019 (11) SCC 633 : [2018] 12 SCR 794 – relied on.

1.3 In a field which is not covered by a special law which invests the NCLT with jurisdiction, the general principle for the computation of limitation for filing an appeal against an order of the NCLT is governed by the statutory mandate of Section 420(3) of the Companies Act read with Rule 50 of the NCLT Rules, which enables a party to compute limitation from the date of receipt of the statutorily mandated free certified copy, without having to file its own application. However, the decision of this Court in Sagufa Ahmed clarifies that the statutory mandate of a free copy is not to enable litigants to take two bites at the apple where they could compute limitation from either when the certified copy is received on the litigant’s application or received as a free copy from the registry - whichever is later. [Para 14] [758-B-D]

Sagufa Ahmed v. Upper Assam Plywood Products Pvt Ltd 2021 (2) SCC 317 : [2020] 9 JT 429 – relied on.

1.4 The IBC is a complete code in itself and over-rides any inconsistencies that may arise in the application of other laws. Section 61 of the IBC, begins with a non-obstante provision “notwithstanding anything to the contrary contained under the Companies Act, 2013” when prescribing the right of an aggrieved party to file an appeal before the NCLAT along within the stipulated period of limitation. The notable difference between Section 421(3) of the Companies Act and Section 61(2) of the IBC is in the absence of the words “from the date on which a copy of the order of the Tribunal is made available to the person aggrieved” in the latter. The absence of these words cannot be construed as a mere omission which can be supplemented with a right to a free copy under Section 420(3) of the Companies Act read with Rule 50 of the NCLT Rules for the purposes of reckoning limitation. This would ignore the context of the IBC’s provisions and the purpose of the legislation. When timelines are placed even on legal proceedings, reading in the requirement of an “order being made available” under a general enactment (Companies Act) would do violence to the special provisions enacted under the IBC where timing is critical for the workability of the mechanism, health of the economy, recovery rate of lenders and valuation of the corporate debtor. The IBC, as a prescriptive mechanism, affecting rights of stakeholders who are not necessarily parties to the proceedings, mandates diligence on the part of applicants who are aggrieved by the outcome of their litigation. An appeal, if considered necessary and expedient by an aggrieved party, is expected to be filed forthwith without awaiting a free copy which may be received at an indefinite stage. Hence, the omission of the words “from the date on which the order is made available” for the purposes of computation of limitation in Section 61(2) of the IBC, is a consistent signal of the intention of the legislature to nudge the parties to be proactive and facilitate timely resolution. [Paras 15, 17][758-E-G; 761-F-H; 762-A-B]

1.5 On the question of a certified copy for filing an appeal against an order passed by the NCLT under the IBC, Rule 22(2) of the NCLAT Rules mandates that an appeal has to be filed with a certified copy of the ‘impugned order’. Therefore, it cannot be said that the parties can automatically dispense with their obligation to apply for and obtain a certified copy for filing an appeal. Any delay in receipt of a certified copy, once an application has been filed, have been envisaged by the legislature and duly excluded to not cause any prejudice to a litigant’s right to appeal. Section 12 of the Limitation Act provides guidance on reckoning the period of limitation and excludes the time taken by a party for obtaining a certified copy of the order it seeks to appeal. However, the explanation clarifies that the time taken by the court in preparing the order before an application for a copy is filed by the aggrieved party, is not excluded from the computation of limitation. The import of Section 12 of the Limitation Act and its explanation is to assign the responsibility of applying for a certified copy of the order on a party. A person wishing to file an appeal is expected to file an application for a certified copy before the expiry of the limitation period, upon which the “time requisite” for obtaining a copy is to be excluded. However, the time taken by the court to prepare the decree or order before an application for a copy is made cannot be excluded. If no application for a certified copy has been made, no exclusion can ensue. In fact, the explanation to the provision is a clear indicator of the legal position that the time which is taken by the court to prepare the decree or order cannot be excluded before the application to obtain a copy is made. It cannot be said that the right to receive a free copy under Section 420(3) of the Companies Act obviated the obligation on the appellant to seek a certified copy through an application. The appellant has urged that Rule 14 of the NCLAT Rules empowers the NCLAT to exempt parties from compliance with the requirement of any of the rules in the interests of substantial justice, which has been typically exercised in favour of allowing a downloaded copy in lieu of a certified copy. While it may well be true that waivers on filing an appeal with a certified copy are often granted for the purposes of judicial determination, they do not confer an automatic right on an applicant to dispense with compliance and render Rule 22(2) of the NCLAT Rules nugatory. 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 in pursuing the litigation in a timely fashion. [Paras 18, 19][762-B, E-F; 763-B-D; 764-A-B]

1.6 The appellant submitted that the suo motu order of this Court dated 23 March 2020, taking retrospective effect from 15 March 2020, made under Article 142 of the Constitution, extended the limitation until further orders, which renders the appeal filed on 8 June 2020 within limitation. This Court had only extended the period of limitation applicable in the proceedings, only in cases where such period had not ended before 15 March 2020. In this case, owing to the specific language of Section 61(1) and 61(2), it is evident that limitation commenced once the order was pronounced and the time taken by the Court to provide the appellant with a certified copy would have been excluded, as clarified in Section 12(2) of the Limitation Act, if the appellant had applied for a certified copy within the prescribed period of limitation under Section 61(2) of the IBC. The construction of the law does not import the absurdity the appellant alleges of an impossible act of filing an appeal against an order which was uploaded on 12 March 2020. However, the mandate of the law is to impose an obligation on the appellant to apply for a certified copy once the order was pronounced by the NCLT on 31 December 2019, by virtue of Section 61(2) of the IBC read with Rule 22(2) of the NCLAT Rules. The Court is not empowered to condone delays beyond statutory prescriptions in special statutes containing a provision for limitation. [Para 20][764-C-G; 765-A-B]

1.7 The answer to the two issues - (i) when will the clock for calculating the limitation period run for proceedings under the IBC; and (ii) is the annexation of a certified copy mandatory for an appeal to the NCLAT against an order passed under the IBC – must be based on a harmonious interpretation of the applicable legal regime, given that the IBC is a Code in itself and has overriding effect. Sections 61(1) and (2) of the IBC consciously omit the requirement of limitation being computed from when the “order is made available to the aggrieved party”, in contradistinction to Section 421(3) of the Companies Act. Owing to the special nature of the IBC, the aggrieved party is expected to exercise due diligence and apply for a certified copy upon pronouncement of the order it seeks to assail, in consonance with the requirements of Rule 22(2) of the NCLAT Rules. Section 12(2) of the Limitation Act allows for an exclusion of the time requisite for obtaining a copy of the decree or order appealed against. It is not open to a person aggrieved by an order under the IBC to await the receipt of a free certified copy under Section 420(3) of the Companies Act 2013 read with Rule 50 of the NCLT and prevent limitation from running. Accepting such a construction will upset the timely framework of the IBC. The litigant has to file its appeal within thirty days, which can be extended up to a period of fifteen days, and no more, upon showing sufficient cause. A sleight of interpretation of procedural rules cannot be used to defeat the substantive objective of a legislation that has an impact on the economic health of a nation. On the second question, Rule 22(2) of the NCLAT Rules mandates the certified copy being annexed to an appeal, which continues to bind litigants under the IBC. While it is true that the tribunals, and even this Court, may choose to exempt parties from compliance with this procedural requirement in the interest of substantial justice, as re-iterated in Rule 14 of the NCLAT Rules, the discretionary waiver does not act as an automatic exception where litigants make no efforts to pursue a timely resolution of their grievance. The appellant having failed to apply for a certified copy, rendered the appeal filed before the NCLAT as clearly barred by limitation. [Paras 21, 22][765-C-G; 766-A-C]

Ebix Singapore Private Ltd v. Committee of Creditors of Educomp Solutions Ltd. 2021 SCCOnLine SC 707; Mobilox Innovations Private Ltd v. Kirusa Software Private Ltd (2018) 1 SCC 353 : [2017] 10 SCR 1006; Kalpraj Dharamshi v. Kotak Investment Advisors Ltd 2021 SCC OnLine SC 204 – relied on.

In re: Cognizance for Extension of Limitation (2020)

19 SCC 10; Essar Steel India Ltd v. Satish Kumar Gupta (2020) 8 SCC 531 : [2019] 16 SCR 275; Pr. Director General of Income Tax v. Spartek Ceramics India Ltd 2018 SCC OnLine NCLAT 289; Garikapati Veeraya

v. Subbaiah Chaudhry, AIR 1957 SC 540; Ganga Bai v. Vijay Kumar, (1974) 2 SCC 393; Anant Mills

Company Limited v. State of Gujarat, AIR 1975 SC 1234; Innoventive Industries Ltd v. ICICI Bank, (2018)

1 SCC 407; Gujarat Urja Vikas Nigam Ltd v. Amit Gupta, (2021) SCC OnLine 194; Prowess International Pvt Ltd v. Action Ispat & Power Pvt Ltd, Company Appeal (AT) (Insolvency) 223 of 2017 (NCLAT, 26 March 2018); Union of India v. Popular Construction Co., (2001) 8 SCC 470 : [2001] 3 Suppl. SCR 619; Singh Enterprises v. Commissioner of Central Excise, Jamshedpur, (2008) 3 SCC 70 : [2007] 13 SCR 952; Chhattisgarh State Electricity Board v. Central Electricity Regulatory Commission, (2010) 5 SCC 23 : [2010] 4 SCR 680; Bengal Chemists and Druggists Association v. Kalyan Chowdhury, (2018) 3 SCC 41 : [2018] 2 SCR 1099 – referred to.