The Supreme Court of India, in a significant ruling on procedural requirements under the Insolvency and Bankruptcy Code, 2016 (IBC), has held that an appeal filed before the National Company Law Appellate Tribunal (NCLAT) without a certified copy of the impugned order and without an application for condonation of delay is defective. A bench of Justice Sanjay Kumar and Justice Satish Chandra Sharma set aside an NCLAT judgment on the ground that it was decided on merits without first addressing the fatal issue of the appeal being improperly filed and barred by limitation.
The court allowed an appeal filed by Ashdan Properties Pvt. Ltd. against a judgment of the NCLAT, stating that the appellate tribunal had erred in brushing aside the “crucial aspect which went to the very root of its appellate jurisdiction.”
Background of the Case
The matter originated from an order dated June 23, 2023, by the National Company Law Tribunal (NCLT), Mumbai Bench, which approved a resolution plan submitted by Ashdan Properties Private Limited.
DSK Global Education and Research Pvt. Ltd. (Respondent No. 1) challenged this order before the NCLAT. The NCLT’s order was pronounced in open court on June 23, 2023, and uploaded to the website on June 26, 2023. DSK Global e-filed its appeal on July 25, 2023.
However, this e-filing was done without a certified copy of the NCLT’s order, as mandated by Rule 22(2) of the NCLAT Rules, 2016. Furthermore, no application seeking exemption from filing the certified copy or an application for condonation of delay was filed at that time.
DSK Global only applied for the certified copy on August 23, 2023, receiving it on September 7, 2023. An application to condone a delay of two days was filed even later, on September 22, 2023.
Court’s Analysis and Reliance on Precedent
The Supreme Court, opting to decide the appeal on a “purely technical ground,” found that the NCLAT had failed to consider the fundamental issue of limitation. The appellant, Ashdan Properties, had specifically contended before the NCLAT that the appeal was barred by limitation.
The judgment, authored by Justice Sanjay Kumar, noted that Section 61(2) of the IBC provides a 30-day period for filing an appeal, with a further condonable period of 15 days, provided “sufficient cause” is shown. The court emphasized that the limitation period began on the date of pronouncement, June 23, 2023, not the date of uploading.
The bench heavily relied on the three-Judge Bench decision in V. Nagarajan v. SKS Ispat & Power Ltd. and others, which settled the law on this issue. The court quoted from V. Nagarajan, stating:
“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… 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.”
The court reiterated that Rule 22(2) of the NCLAT Rules “mandates that an appeal has to be filed with a certified copy of the ‘impugned order'”. It was observed that while the NCLAT has powers to grant exemptions under Rule 14, such discretion “does not act as an automatic exception where litigants make no efforts to pursue a timely resolution of their grievance.”
The judgment also referenced the recent decision in A Rajendra vs. Gonugunta Madhusudhan Rao and others, which affirmed the legal position laid down in V. Nagarajan.
The Supreme Court found that DSK Global’s “casually e-filed” appeal on July 25, 2023, with neither a condonation application nor an exemption application, rendered it defective.
The Decision
The Supreme Court concluded that the NCLAT had erred by not examining whether the appeal was filed in compliance with statutory norms, especially when the issue of limitation was explicitly raised.
Holding that the NCLAT’s decision on merits was untenable, the Supreme Court stated, “the impugned judgment delivered on merits is essentially a superstructure erected on an illusory foundation and cannot, therefore, be sustained.”
On this ground, the appeal by Ashdan Properties was allowed, and the NCLAT’s judgment dated July 1, 2024, was set aside.
